Miko Rwayitare had the first black-owned wine estate in SA
Miko Rwayitare, who died in Brussels at the age of 65, was rightly known as the father of telecommunications in Africa.
The mansion that Miko Rwayitare Built in Sandhurst, Johanesburg South Africa
Telecel International, the telecommunications company started by him in 1986, now commands the greatest cellphone network across the African continent.
It has more than 15 licences, operates in 14 African countries and has around 40 % of the sub-Saharan cellular market excluding South Africa.
Born in Rwanda on December 2 1942, Rwayitare did most of his schooling in Germany, where he also completed a degree in telecommunications engineering.
On his return to Africa he settled in Kinshasa in what was then Zaire. He became a close friend and confidant of Zairean dictator Mobutu Seso Seko, which opened the door to several lucrative business opportunities.
Mr. Miko did his primary education in Rwanda and completed his secondary education in the DRC, before proceeding to Europe to further his studies and obtain a BSc Degree in Electronic Engineering from the prestigious Technical University of Karlsrushe, Germany, in 1975.
Upon return from Germany in 1975, he became Vice-President of Research & Marketing at Gécamines, the state-owned mining conglomerate in the DRC. The extensive exposure and experience gained at Gécamines opened wide horizons for his business instincts. Thus, while holding his top executive post, he gained recognition of the emergence of information technologies in North America and Europe and quickly realised their impact on global business.
He soon successfully negotiated to become a distributor of Hewlett-Packard and Rank Xerox products in the DRC and its neighbouring countries. For this purpose, he formed a company called Computer & Industrial Engineering (“CIE”) in 1977 in Kinshasa. CIE became so successful that it soon expanded the distribution of HP products in Africa, namely in Gabon, Rwanda, Cote d’Ivoire, Senegal and Ethiopia.
Mr. Miko being a born visionary soon realized that he can not work for someone but for himself. Having been frustrated with the poor landline infrastructure in Kinshasa, he saw an opportunity to start a wireless telecommunications business.
In 1986, he founded Telecel International with the objective to design and operate cellular telecommunication networks. After many months of arduous negotiations with the Congolese Government, Telecel was allowed to develop in 1987 in Kinshasa, the first ever mobile cellular network on the African continent. Mr. Miko made the first ever mobile call on the African continent, prelude to the African renaissance. This network was a great success and it rapidly expanded to other towns and suburbs of the country.
Motivated by the success of Telecel DRC operations, Mr. Miko devoted himself to the introduction of wireless telecommunications in other African countries. He indeed played an instrumental and trailblazing role in deregulating the telecommunications sector in Africa by influencing African government to open this sector to private investors. Gradually, Telecel International obtained cellular operating licenses in other African countries and became a key African cellular operator with 12 operations in the following countries: Benin, Burkina Faso, Burundi, Côte d’Ivoire, Gabon, Niger, Uganda, Central African Republic (CAR), DRC, Togo, Zambia and Zimbabwe.
In order to achieve his Pan-African dream, Mr. Miko in the year 2000 decided to join hands with the Egyptian giant, Orascom Telecom. This historical deal opened the doors for Telecel International to more opportunities for expansion within the African continent.
Mr. Miko decided to make South Africa his new home and formed Mikcor Investment Holdings (Pty) Ltd, a holding with diversified interests in various sectors, such as broadband communications, real estate, hotel, and wine farm.
Miko believed that the future world of telecommunications exists today through Broadband Power Line Communication (PLC), which converts the existing electrical grid into a high-speed data, voice and video network.
Imagine a world Where every power socket in your home or office is a broadband communication point, without the need for separate cabling, Where Internet telephony is of high quality and does not require you to have a computer, a world where high quality surveillance and security systems are cheap flexible and easy to implement, and video streaming and video-on-demand through IP TV become affordable and available to more communities, previously could not afford or access. This is the vision for which Miko had begun when establishing GTS. At the time of his death many homes in South Africa and rest of the African Continent had this opportunity a large number are currently enjoying these services.
From his very first contact with the founders of GTS at the end of 2004, Miko saw that it was the cornerstone of the Next Communication Giant. In July 2005, Miko took a majority interest in GTS and provided finance allowing the hiring of staff and purchase of equipment. The conversion of a business idea into practical implementation had started. Over the next two years, Miko drove the acquisition of what was to form a complete chain of broadband communications to the homes and a comprehensive provision of broadband services to individuals. Today, Miko’s dream has progressed in such a way that it will indeed change the lives of the people of Africa, providing a level entertainment and knowledge unknown before. Much more than only finance, Miko provided to GTS unequalled leadership and business expertise.
As a contribution to the society on poverty alleviation, Mr. Miko was invited by the United Nations to join the Advisory Panel to the UN Secretary General. This Panel was accredited with the task of advising with the ways to ease the sufferings of the people.
Mr. Miko was also working on another momentous project the “Academy of Excellence”, which is conceived to be a Pan-African, world-class university of academic excellence for the Africans. This project highlights Mr. Miko’s deep commitment to investing in the youth who represent the future leaders and thinkers of the African continent. Through this high-tech school, the youth will be trained and shaped into leaders in the key fields of development in Africa, notably Agriculture, Health, Genetics, Leadership, Human Resources, Education, and ICT.
Africa has been orphaned by this untimely death when Mr. Miko had not finished his contributions to Africa.
We would like to end by thanking God for the mercy he has shown us at this sad time. Above all we give thanks for the life of a man we are all so proud to be able to call a special friend who will forever be immortal in our minds
The Family and Friends of Miko.
http://mikorwayitare.com/legacy/index.php
MIKO RWAYITARE AND AFRICA’S FIRST MOBILE PHONE NETWORK
“To succeed in life, you have three components: chance 60%, work 20%, and 20% is imagination and ideas.”
- Miko Rwayitare, Founder, Telecel
The reds, purples, and oranges in the South African sky mixed together to create the type of sunset that Miko Rwayitare could not ignore. It was March 14, 1999, and Miko, from the top floor of Telecel’s headquarters, poured a glass of Shiraz and admired the day’s close, and the beautiful colors blending with the vastness of Johannesburg’s roadways, office parks, and factories below. It had been more than a decade since Miko founded Telecel and made Africa’s first mobile phone call. Back then, there wasn’t a single private telecommunication company on the continent, as each nation maintained a state-run telecoms monopoly. And barely anyone had heard of a cell phone. He remembered the aggravating procedure that was making a phone call in those days – enduring countless dropped calls and hearing other lines’ conversations come through the receiver – and that was if he could find a phone in the first place. Miko looked down on Johannesburg and smiled at how the world had changed since then.
By 1999, 18 African countries had privatized their telecommunications providers. 1 Over the last two years almost 20 new mobile phone networks had come online in Africa 2, increasing the number of cellular subscribers to over 3 million. The price of a telecoms license had skyrocketed and the price of a cell phone call had plummeted. A cell phone had evolved from a futuristic contraption to become a part of everyday life for many Africans.
Telecel had changed along with the industry it helped create. From its first operation in the DRC, it now had a presence in ten markets and was looking to expand further. Miko had grown the company from an initial team of two to over 700 employees across the world. Yet Miko and Telecel were facing many tough decisions.
Telecel’s DRC operation was in trouble. By 1999, 80% of Telecel’s sales came from the DRC, and Miko was worried that the company was too reliant on this struggling market. Telecel-DRC was experiencing major cash flow problems, chiefly due to the government’s refusal to pay its bills. In addition, Telecel’s operating costs were 50% more than those of the DRC’s newest market entrants. Could Telecel remain competitive in its most important market?
Competition was a serious concern. For most of Telecel’s history it was the number one or two mobile carrier in each of the countries in which it operated. Now, larger carriers were acquiring licenses in Telecel’s territories. These carriers were implementing pre-paid plans, meaning that customers didn’t need to enter into long-term contracts. They could purchase minutes in very small increments and only
This case was authored by David Acker. It is meant as a basis for classroom discussion and learning. It is not intended to illustrate the effective or ineffective handling of a situation or to endorse a particular set of values or decisions. Any opinions expressed in this case are the opinions of the protagonists and do not reflect the opinions of African Leadership Academy.
Copyright © African Leadership Academy 2010. All rights reserved. For more information on the case learning program at African Leadership Academy, contact info@africanleadershipacademy.org or write to African Leadership Academy, PO Box 529, Hurlingham, Sandton 2070, South Africa.
Miko Rwayitare and Africa’s First Mobile Phone Network
pay for what they used. Telecel, on the other hand, used a post-paid model and billed its clients at the end of each month. The competition was also erecting Global System for Mobile Communications (GSM) networks, which utilized newer and more customer-friendly technology than the Advanced Mobile Phone System (AMPS) networks that Telecel relied on in most of its markets. GSM networks could also accommodate much larger subscriber bases than AMPS ones. Consumer trends worldwide suggested that GSM was the wave of the future. While Telecel was investing in GSM in its new markets, the vast majority of its sales came from countries in which it operated AMPS networks.
The decision about whether to invest in GSM networks had caused tension between Miko and Joe Gatt, Telecel’s co-founder. Miko wanted to upgrade the remainder of Telecel’s existing networks to GSM, which would require an immense amount of capital that Telecel did not have. The company would need to solicit outside investors to contribute the funds needed for the GSM networks. In doing so, it was likely that Miko and Joe would lose decision-making power as new investors came on board. Miko knew that Joe was hesitant. Joe had voiced his reluctance to give up control of the company he helped build, and Joe still wasn’t sure that GSM was the way to go. Miko was torn. Was upgrading to GSM necessary? If so, could he convince Joe that this was the right decision? Miko and Joe had recently discussed the possibility of parting ways if they could not maintain a joint vision of where the company was headed. Miko was hesitant at the thought of marching on without Joe. He closed the window blinds as the sky went dark, Telecel’s future unclear in his head.
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| Telecel Growing |
THE ORIGINS OF AN IDEA
The Telecel vision grew from Miko’s diverse professional experiences and engineering background. Miko’s path to becoming a talented engineer began in 1958, at age 16. Academic success and an affinity for science led him to leave his family in Rwanda and enroll in a Burundian secondary school, and then College Notre-Dame de la Victoire in the eastern Congo (today the DRC). The school was known for its science department. As Miko’s life-long friend, Gabriel Twagira, remembers, “Miko was very naughty, very intelligent though, and he was always in the top 10 (of his class).” Miko’s hard work and intellectual curiosity won him a university scholarship to Europe as part of an elite group of students from Rwanda, Burundi, and the DRC. He chose electrical engineering as his field of study and, in 1970, graduated from the University of Karlsruhe, Germany’s oldest and most prestigious technical university. 3
Each job Miko held over the next few years proved instrumental in shaping Telecel. He returned to Zaire 4 shortly after graduation to work at the Republic of Zaire Data Processing Centre. There, Miko was responsible for building an information database to help attract foreign investors back into the country. Zaire’s economy had worsened during Mobutu’s rise to power. Successful businesses had been nationalized and then mismanaged, and foreign capital fled the country as corruption caused European investors to leave. 5 Miko witnessed first-hand the extreme aversion of foreign businesses and capital to entering Zaire, and the continued economic hardship that resulted.
Next, Miko was hired as the Vice President of Marketing of Gecamines, Zaire’s state-owned mining conglomerate which was then the third-largest producer of cobalt and copper in the world. In this position Miko traveled extensively and gained exposure to the role foreign technology was playing in how business was done. The engineer in Miko was fascinated with the technical advances in the US and Europe, and was intrigued at the thought of bringing this technical revolution to Africa.
The entrepreneur in Miko wanted to try to do so. Twagira recalls that “his sense for business started around this time. He was looking for opportunities; he wanted to leave and start his own business.” 6
In 1978, Miko created his first company, Computer & Industrial Engineering (CIE). Based in Kinshasa, CIE distributed Hewlett-Packard and Xerox hardware and office equipment in the DRC, Gabon, Rwanda, Cote d’Ivoire, and Ethiopia. Running CIE provided Miko greater insight into Africa’s demand for US technology. It also introduced him to the sales process needed to convince unsophisticated clients of the benefits of implementing the latest technological trends. Miko learned how to build a successful, albeit small, company. Miko was a builder, and it was during this time that he identified his passion for creating something from nothing, for building long-term value. The idea for Miko’s next – and most prolific – creation would emanate from the frustrations of doing business in Zaire.
A Country in Need of Connectivity
Zaire’s PSTN (Public Switched Telephone Service) land-line system, like that of most nations in Africa, was in shambles. Phone calls rarely went through and those that did often experienced loud static and long delays. It was common for people to cut and steal the public telephone cabling in order to sell the copper inside, and the current infrastructure had not been updated since at least the early 1960s. But poor infrastructure wasn’t as much of a problem as no infrastructure at all. In the mid-1980s, Zaire had 24,000 telephones for a country of 30 million people, or a teledensity rate (main telephone lines per 100 inhabitants) of 0.08. This was ten times smaller than the African average, and over 600 times smaller than that of the United States.
The political and economic climate provided very few avenues for telecommunications improvement. The sector was run as an inefficient, state-owned monopoly. With no competition or even threat of competition, there was little incentive for investment in new lines, technology, or customer service. In addition, global telecommunications firms were reluctant to expand to Africa, citing unstable political environments, unpredictable economic performance and inflation, the growing incidence of HIV/AIDS, corruption, poor regulation, and deficient infrastructure as the major deterrents. Latin American and Asian economies were deemed better investment opportunities, with higher projected economic growth. And some Latin American governments had already begun the process of privatizing their telecommunications sectors. 7
Miko was irritated with the state of existing communications technology in Africa. Business was conducted inefficiently, especially in Kinshasa, as it was nearly impossible to reach a customer, vendor, or employee when one needed to. People working in the cities couldn’t contact their families back in the villages. The sick couldn’t call a doctor or clinic. Information spread at a snail’s pace. Miko had seen how the adoption of new technology had impacted growth in other parts of the world and was confident that Africa could follow suit. His success with CIE assured him of this. The demand was there, pent-up and ignored by highly-regulated government entities. All that was needed was someone willing and able to meet that demand.
The idea for an African mobile phone network was born. Investing in land-line networks was too expensive, and the required maintenance was too cumbersome. As a South African phone network specialist commented, “the disadvantaged areas are lacking in infrastructure and the geography of the region means that [economic development] is not going to be solved overnight – it’s difficult to lay cables across large fields with wild animals in them.” 8 Miko saw an answer that most other Africans overlooked: connectivity, and hence development, could be achieved without any cables at all.
PUTTING THE PIECES IN PLACE
Finding a Partner
Miko knew that in order for his idea to come to fruition, the company would need skills that he was lacking. As Jean-Marie Nyaruhirira, who managed all of Miko’s personal investments, remarked, “Miko was professionally and socially fantastic. Charismatic, intelligent, he had a flare and a knack for doing business. He always had a premonition of what would work and had no problem taking risks. But he would always say, ‘I’m a thinker, not a manager.’” Miko was not detail-oriented and didn’t enjoy managing people. He also had no experience in raising capital and little understanding of the corporate environment in the United States, where he expected to purchase Telecel’s technology and equipment. And in 1985, Miko undertook an extensive search for a partner whose background and talents complemented his own.
At the time of Miko’s search, Joe Gatt was managing the Intercontinental Hotel in Kinshasa. Miko and Joe had met seven years prior while Joe was the CEO of Air Zaire, the state-run airline. Air Zaire solicited vendor bids for a new computer for its finance department, and Miko and CIE won the bid. He and Joe became quick friends after Miko came in to sign the contract. Joe had considerable experience in international financial markets, having structured financing from the World Bank and abroad, and knew how to deal with large US corporations and banks from his days with Pan American World Airways in the early 1970s. Miko respected Joe, found him an accomplished manager, and felt that Joe’s conservatism would be a necessary match to his entrepreneurial style. Incidentally, Joe was fascinated with mobile technology and closely followed Motorola’s establishment of the US’s first mobile network in Washington, DC two years earlier. Miko discussed his idea with Joe, and the two agreed to be equal partners in developing Telecel.
AMPS Technology
They decided that Telecel would implement an AMPS network, an analog system that was first introduced for commercial use in the US in 1983. It was the most advanced cellular technology of its day. Without the capital necessary to develop their own AMPS system, Miko and Joe resolved to purchase the technology from a third party. Joe identified Cellular Development Technology (CDT), a struggling US mobile technology firm, as an acquisition target. Though Miko and Joe were not interested in CDT’s business, they were interested in the AMPS system that it had created. With Miko’s life savings of $200,000 and a loan from a Canadian investment fund, they purchased the firm, opened Telecel headquarters near Washington, DC, and further developed the technology.
Securing a License
Next, Miko and Joe needed to obtain government permission to bring Telecel to market. But there were no private telecommunications companies operating in Zaire or elsewhere on the continent, and few thought that securing such permission was even a possibility. What Miko and Joe needed was an inroad to the Zairean government and a way to make Telecel an attractive proposition to them. Would the government even understand what a mobile phone was? How could Miko and Joe convince the government officials that they would benefit from the advent of this technology?
Fortunately, Joe had a 15-year history with President Mobutu. While running Pan-American World Airways’ Zaire unit, Joe had helped Mobutu charter airplanes throughout the early 1970s. The two had continued to cross paths in the 1980s while Joe was CEO of Air Zaire and Kinshasa’s Intercontinental Hotel. With Joe’s history, he and Miko would not need to prove their credentials to the Zairean government. But they would still need to prove the viability of the AMPS system, and they would need to impress the government officials, who had little interest in giving up the telecoms monopoly. Towards the end of 1985, they got their chance when Mobutu flew to Washington, DC to meet with President Reagan.
Joe convinced a National Rental Car franchise to rent them ten phones. This was particularly difficult given that National Rental Car had never before loaned out a phone without a car, but that is what Joe requested – after all, he had no need for ten cars. With the phones in hand, Miko programmed them to operate on a local AMPS network before meeting with Mobutu and nine of his Ministers and bodyguards in Mobutu’s DC hotel room. The Zairean officials thought the phones were walkie -talkies. Joe remembers that “they were hesitating in making an overseas call. We showed them how to do it and thank God it worked because even then [the technology] was in its infancy in the States. But it did work and Mobutu was able to call his people at the palace and at his office in Kinshasa.” 9 Mobutu was pleasantly shocked.
The Zairean government was still hesitant to grant Telecel a license. In response, Miko and Joe came up with another creative solution: allow the government to pilot the technology for a year. The two had little doubt that the government would realize AMPS’s superiority over the current PSTN fixed-line system. But, by building a small network through which Mobutu’s influential ministers could experience the convenience and efficiency of mobile phones for themselves, Miko felt he would gain more leverage in negotiations with the government. In 1986, with $4 million in financing from Motorola and a $4 million contribution from Joe, an AMPS system was erected in Kinshasa. Miko and Joe purchased 200 phones from Motorola, for $3,000 each, and gave them to Mobutu and his government officials, who would be the only users of the network. The phones each weighed as much as a bottle of wine, with a long protruding antenna and large, awkward white buttons. The phone’s battery could only support 60 minutes of talk time, and the computing memory recalled only the last number dialed. These 200 Zairean officials called each other and overseas over the next year without paying for a single call. Telecel covered all expenses.
Miko asked the Zairean government to return the phones after the 12-month trial period. The officials refused; they were addicted to the phones. In the end, Mobutu and the Minister of Telecommunications granted Telecel the opportunity to build a consumer-facing network. But then there was the issue of the license itself. There were no private telecommunications licenses in Africa, and the Zairean government did not know how to construct one. Miko and Joe, not wanting to delay any further, offered to shoulder this burden. They hired a Parisian law firm to draft legislation that would allow Telecel to officially and legally operate a telecommunications network in the country. In 1987, upon accepting the draft and enacting it as legislation, the Zairean government granted Telecel an operating license in exchange for $1.5 million.
CONNECTING AFRICA
Zaire’s Status Symbol
Telecel signed up 3,000 subscribers in the first year of operations. Service was limited to the Kinshasa region, and these customers were comprised entirely of government officials, business executives, and expatriates. The price of a Telecel handset was $5,400. Customers also paid a $100/month subscription fee in addition to $0.36/minute for local calls 10 and $16.00/minute for international calls. With such hefty costs for the infant technology, Telecel did not market its product to the average Zairean consumer who could not have afforded it. In fact, the company did not market itself at all. Telecel’s high-profile customers so loved their newfound ease of communication that growth occurred organically within Kinshasa’s exclusive circles. Word-of-mouth expansion resulted in a 400-person wait-list to purchase a phone. Due to the limited network capacity of the AMPS system, Telecel could not grow its infrastructure fast enough to keep up with demand. The company was an immediate success.
By 1989, Telecel’s network reached beyond Kinshasa to the five largest cities in Zaire. The customer base was still relatively small and restricted to Zaire’s elite. Average revenue per user (ARPU) was $800/month, reflecting the quantity of time Telecel’s customers spent on their phones. At the time, the worldwide ARPU for all mobile phone networks was $120/month. The name Telecel became synonymous with mobile phone and was considered a status symbol. Bill Young, Telecel’s former Vice President of Operations, observed, “Someone with a phone on his ear meant he was important, and people talked on their phone every chance they could get, especially in public. The Congolese used more minutes than any other African nation.” A news article mused, “In Zaire there are four simple secrets to success: Hire a bodyguard. Drive a Mercedes. Always wear a double-breasted silk suit. Never, but never, be seen without a Telecel mobile phone in your hand.” 11 Telecel implemented a marketing campaign of magazine advertisements, billboards, and press coverage to reinforce and maintain its image. This further increased Telecel’s popularity, but the customer segment available to the company was only so large. To impact African development and communication the way he foresaw, Miko decided to expand Telecel to other markets.
New Countries, Same Story
Most African countries’ telecommunications sectors were still run as government-owned monopolies, and garnering licenses was going to be just as difficult as it was in Zaire. Yet Miko was more confident this time around given Telecel’s demonstrated success in one of Africa’s least-developed nations. He cast a wide net, approaching more than 20 countries as possible locations for a Telecel network. Miko was a gifted salesman and, according to his brother Albert, “knew how to approach foreign governments. He understood the African mind and how business was conducted in Africa.” This enabled him to ingratiate himself with government officials and set up meetings with telecommunications ministers. However, it wasn’t enough, and neither was the viability of mobile technology nor Telecel’s track record. These governments didn’t know Miko, and regardless of his alluring personality and talent, they refused to trust him. Trust came with lasting relationships, and lasting relationships could not be forged overnight. With Mobutu, Miko and Joe needed to prove their technology rather than themselves. In every other country, the situation was reversed. According to Joe, “government ministers didn’t really care about financial projections, reports, or PowerPoint slides. They barely listened to presentations anyway. Relationships were all that they valued.”
Miko Rwayitare and James Makamba Chairman of Telecel Zimbabwe
Miko realized that to appeal to government decision-makers he needed local partners with close, existing relationships with these decision-makers. He sought out local partners in each country in which it was looking to expand, targeting influential figures with good reputations who would bring cultural and business expertise to the partnership. The local partner would own a portion of the local Telecel operation in exchange for helping to secure a license and establish the mobile network. For example, when Telecel expanded to Zimbabwe in 1998, Miko and Joe owned only 40% of Telecel-Zimbabwe. The remaining 60% was owned by Zimbabwe Wealth Creation and Empowerment Council, a consortium of several black economic empowerment groups. 12 With such partners campaigning on Telecel’s behalf, private telecommunications licenses were easier to come by.
Growth Amidst Political Struggles
Telecel sales reached $5.1 million in 1990, 13 and, by 1993, the company had expanded to Guinea and Burundi. It seemed that all the business ingredients were in place—swelling demand, top-of-the -line technology, and barely any competition. Telecel’s road to success, however, was not a smooth one. France Telecom, the French telecommunications giant, fervently tried to block Telecel’s advancement into francophone Africa. At the time, France Telecom jointly operated the state-run telecommunications sectors of most French-speaking African nations. It did not want to share its
monopolies with a mobile phone operator. In Madagascar, France Telecom aggressively lobbied the government to make a private telecommunications license illegal. The company sat with government officials drafting legislation to support its stance until midnight on the day Telecel was scheduled to receive its license. But Telecel’s lobbying efforts persevered, and it developed Madagascar’s first mobile phone network in 1994.
In no place was Telecel’s expansion as bumpy as in its home country of Zaire. Zaire experienced consistent military and civil unrest as Mobutu’s authoritarian government grew increasingly radical and the country’s dire economic state worsened. The company could not depend on the Zairean government even though it had granted Telecel a license. The government was not credible, and it often broke agreements with Telecel without notice or proper reason. In 1991, the Zairean military pillaged Kinshasa, and military personnel broke into a Telecel office and stole $3 million worth of Motorola equipment. In 1994, Telecel suspended the mobile phone account of Faustin Birindwa, Zaire’s Prime Minister. Birindwa had incurred thousands of dollars in international calling fees that he refused to pay. In response, the Prime Minister sent armed troops over to Telecel’s offices to persuade Telecel managers to reconnect his service. Telecel acquiesced and never collected on Birindwa’s outstanding bill.
Miko worked tirelessly in new countries to acquire licenses and gain government approval, but these governments were often as unreliable as Zaire’s. Telecel first received authorization to enter Zimbabwe in 1993. The company spent $3 million on mobile phones, constructed network infrastructure in Harare, and signed up 5,000 initial subscribers. But the Zimbabwean government repeatedly blocked Telecel’s launch over the next three years. President Mugabe dismissed court rulings in favor of Telecel, denouncing its license and proclaiming it illegal for anyone to operate a cellular network without state permission. In 1996, afraid of imprisonment and further delays, Telecel backed out of the deal. 14
Telecel had grown to 400 employees and 15,000 subscribers amidst sales of $54.1 million by 1996. 15 The company was now operating in six countries after expanding into Madagascar, the Central African Republic, and Cote d’Ivoire. Each country’s operation was characterized by the same low-volume, high-margin model as Zaire. Telecel’s average customer used 680 minutes per month. In comparison, the average customer of US -based mobile phone networks used 100 minutes per month. 16 Land-line infrastructure in Africa was still so inadequate that those with mobile phones rarely, if ever, used a land-line phone.
During this time, the effects of the 1994 Rwandan genocide spilled over into Zaire. It was common for angry mobs in Kinshasa to burn and loot the property of Rwandan, Burundian, and ethnic Tutsis. 17 In November 1996, Mobutu’s government decreed that all Tutsis leave Zaire on penalty of death. Miko was a Tutsi, and this solidified that the country was no longer safe for him. He decided to flee Zaire. Though born in Rwanda, Miko spent most of his life in the DRC and became a citizen in the 1960s. Kinshasa was his home office for ten years and represented for him the origin of his vision. Miko moved Telecel’s African headquarters to Johannesburg, and Joe took over Telecel’s DRC operation.
New issues emerged as Laurent-Désiré Kabila overthrew Mobutu to become president in May 1997. Though Mobutu’s government was untrustworthy and erratic, it usually paid its Telecel bills. Kabila’s government did not. Between 1997 and 1999, the DRC government accrued $25 million in payables to Telecel. The government was Telecel-DRC’s largest customer, and without its payments, sustaining operations grew difficult. Banks refused to provide financing for expenses or new technology, arguing that Telecel-DRC was an unsafe investment because it was unlikely to collect on the government’s debt. Telecel attempted to restrict the number of phone lines the government could use in an effort to make it pay its bills. The government responded that fewer working phone lines created a security threat for government officials, and enacted a police mandate to force Telecel to reinstate the lines. Scare tactics and intimidation were common. Bill Young, the Vice President of Operations, was jailed multiple times, as were other Telecel-DRC employees. This cumbersome back-and-forth fight lasted for years.
Despite the hardships, Telecel had expanded to an additional four countries by the end of 1998 – Zambia, Zimbabwe, Niger, and Togo – bringing its total footprint to ten nations.
BUILDING A TEAM
Miko and Joe: Partners, Shareholders, and Directors
“There were only two shareholders and two directors on the Board,” according to Joe. “Our board meetings usually ended with champagne or white wine.” He and Miko split everything 50-50, sharing the financial and emotional burdens of the company. They both reinvested all of their profits in growing Telecel with an eye for changing the way business was done in Africa and making economic development more attainable.
Miko was the face of Telecel. He represented the company with governments, local partners, and the press. He was the strategic visionary and monitored trends in international technology, adjusting Telecel’s business strategy as he saw fit. During the 1990s, the transaction price of a private license grew astronomically as cell phone use proliferated, sometimes to more than $100 million. It was in Telecel’s best interest to purchase as many licenses as it could. If operating results in a particular country failed to meet expectations, Telecel could sell the license at a profit to another market entrant. Joe recalls that “in those days, the real value of the company was in the licenses, not in the day-to-day cash flow.” As such, Miko, working from Telecel’s African headquarters, spent most of his time acquiring new licenses or restructuring existing ones.
Joe, on the other hand, managed the company’s day-to-day business from Telecel’s international headquarters in Virginia. He and his team oversaw the finances and worked with each market to ensure sales targets were reached and personnel issues were addressed.
Empowering Local Markets
Miko and Joe wanted each Telecel arm to operate as its own entity. Though the company was global in nature, they designed the organization to enable each operation to be as locally focused as possible, only relying on Telecel’s corporate functions for infrastructure support and oversight. Miko and Joe both had experience working for multi-national firms and understood that a strict, centrally managed organization operating in multiple countries – especially in culturally diverse ones – was likely to fail. According to Joe, “we needed to listen to the people on the ground. We couldn’t run a business in Madagascar from Virginia or Kinshasa.”
Joe staffed each market with a three-person management team, comprised of a general manager, a finance director, and a technical director. The team received guidelines on how to hire and follow Telecel’s operating systems, but also had a large degree of latitude in how the business was run. The general managers reported to Telecel’s Chief Operating Officer, while the finance directors reported to the Chief Financial Officer and the technical directors reported to the Chief Technical Officer.
All three managing positions were initially staffed with foreigners (usually from France, the United States, Canada, Switzerland, or Belgium) who were fluent in both English and French. But the goal was always to place local Africans in these positions. Each manager would indentify two or three potential successors and groom them for advancement, all while developing the overall office and local market. The manager then handed over his duties to a successor once the successor was properly ready. It normally took two or three years for a finance or technical director to prepare a local hire to assume a management role. It took a bit longer for a local hire to become a general manager. Once the succession plan was complete, the original general manager, finance director, or technical director would relocate to one of Telecel’s new markets and begin the training process again. Bill Young commented, “Most global companies at that time, making that amount of money, would have had many more expatriates than Telecel did. Miko had a great deal of trust in his people.”
Miko and Joe encouraged local management teams and employees to speak with them freely. They periodically visited each operation and sat down with each employee, asking the employee to discuss any concerns he or she had with his or her job. They created a culture where it was not just okay, but encouraged for an employee to discuss a problem with the general manager or to suggest an alternative way of accomplishing a task. Instilling these values was not easy, however. Creating a sense of empowerment within each employee was unorthodox in African workplaces at the time. Corporations in Africa tended to breed workers who were good at listening to directives and rarely challenged the status quo. Joe candidly affirmed that “Telecel’s efforts worked with some of our employees, but not all.” Nevertheless, he credits the free flow of information at the company with alleviating many potentially debilitating organizational issues.
EMERGING COMPETITION
More and more mobile technology companies entered Africa as the 1990s progressed and mobile phone usage spread throughout the continent. Industry growth was driven by three main factors. First, an increasing number of African nations privatized their telecoms sectors. Inefficient state-owned firms required frequent, large subsidies to continue operating; this became a drain on national treasuries and was unsustainable for most governments. The World Bank and other international lending organizations were thus putting pressure on developing countries to privatize state-run industries. The World Bank even provided telecommunications loans to countries to spur private investment.
Second, the large profits garnered by Africa’s incumbent private telecoms firms, such as Telecel, attracted competition. The exorbitant ARPU figures for African mobile phone subscribers indicated that a captive market existed. Foreign firms were now more willing to brave the continent’s unstable political climate, poor infrastructure, and corruption in pursuit of earnings.
Third, new mobile carriers broadened their customer base and forever altered the economics of mobile telephony in Africa. Until the mid-1990s, Africa’s mobile phone networks had relatively few customers, with each customer using many minutes. This was Telecel’s business model. But with the advent of GSM technology and pre-paid phone cards, the industry changed. GSM networks allowed carriers to increase capacity with little cost. In addition, GSM handsets were approximately 66% cheaper than AMPS phones, and they were the first phones to utilize SIM cards, allowing customers to easily roam between networks. Pre-paid phone cards opened cell phone use to a new breed of customer. Mobile phone users were no longer required to enter into hefty monthly subscriptions, and they no longer needed to purchase an expensive AMPS phone. Thus, cell phones were no longer restricted to wealthy businessmen and high-powered government officials.
Telecel experienced this first-hand with Celtel’s entrance into the DRC. Celtel blanketed the country with pre-paid phone cards and set up kiosks at thousands of petrol stations, malls, and grocery stores. It advertised the Celtel phone not as a status symbol, but as a vehicle for convenience and economic possibility. The company relied on selling pre-paid cards instead of monthly post-paid contracts. As a result, Celtel received cash up front in exchange for the minutes a customer intended to use. It also was not exposed to the risk that customers wouldn’t pay their mobile phone bills. Within months of launching in the DRC, Celtel had eclipsed Telecel as the country’s most widely-used mobile phone network.
Miko wondered if the major factors that led to Telecel’s success still applied. Fourteen years earlier, he recognized before anyone else the potential that mobile technology could have in Africa. He understood the challenges inherent in building a business in a government-run industry, but was not deterred. Miko didn’t suffer from the “Africa Fright” that most global companies experienced in the 1980s. He saw opportunity rather than impediment, and used this to Telecel’s advantage to obtain government licenses. Miko also found a savvy, experienced manager in Joe, who helped Telecel build a world-class team.
But by 1999, telecommunications companies were no longer scared to enter Africa, and private licenses were less scarce. Both the industry and the continent had evolved. Miko’s thoughts turned to Telecel’s strategic government relationships. Were they still helpful? He wasn’t sure if Telecel-DRC could continue for much longer without collecting on the government’s long-overdue bills. And he was most anxious about the decision to invest in GSM networks. He knew he couldn’t have built Telecel without Joe, and he was reluctant to enter a new chapter in Telecel’s life without him. But would Telecel’s oldest operations even exist much longer if it didn’t change with the times? He picked up the phone, and dialed Joe’s office in Virginia.
Miko was born in Rwanda. He completed his primary education in Rwanda, attended College St Esprit secondary in Burundi, and then completed his secondary education in the DRC.
Graduated from University of Karlsruhe with a B.Sc. degree in electrical engineering.
Appointed the Vice President of Marketing at Gécamines, Zaire’s state-owned mining conglomerate.
Established Computer & Industrial Engineering to distribute Hewlett-Packard and Xerox products in Africa.
Founded Telecel International in Zaire. Made Africa’s first mobile phone call.
Moved to South Africa and formed Mikcor Investment Holdings, a holding company with diversified interests in sectors such as broadband communications, real estate, and hotels.
Participated and played an advisory role in the United Nations Advisory Panel on the topic of poverty alleviation.
Historic deal in which Egyptian telecommunications giant, Orascom, acquired a significant stake in Telecel.
Purchased an 82-acre wine farm in Franschhoek, South Africa. Was the first black African to own a wine farm.
Acquired Goal Technology Solutions, a broadband company based on powerline communication technology that aimed to convert the existing electrical grid into a high-speed data, voice and video network.
Began work on the Academy of Excellence, a Pan- African university that would prepare Africans to address key development areas such as agriculture, health, genetics, leadership, education, and technology.
Miko passed away unexpectedly on September 25, 2007, in Belgium.
APPENDIX 2. AFRICA IN THE MID-1980S
The mid-1980s was a time of hardship and transition in Africa. The world’s focus had turned to the continent as severe drought took hold of the Sahel and East Africa. Little rainfall, rampant dust storms, and high temperatures were the causes. Lake Chad all but dried up, and both the Nile and Niger rivers flowed more slowly than ever before. The drought curbed the availability of the food supply and a widespread famine ensued. At the time, Africa was enduring an economic downturn and many parts of the continent were experiencing violent civil unrest, which made for ineffective government responses to the famine. People starved, some sold their belongings and livestock at a fraction of their value, and many abandoned their homes and families to search for work in overcrowded cities. 18
The oil crises of the 1973 and 1979 caused a worldwide depression that did not spare Africa. While Egypt, Libya, Algeria, Nigeria, Gabon, and Angola benefited from high oil prices, the majority of Africa did not. The prices of most countries’ major raw material exports—coffee, cocoa, sugar, and copper—were at their lowest real levels since 1950. 19 In the face of this crisis, many African nations adopted structural adjustment reforms put forth by the World Bank and International Monetary Fund. These reforms aimed to establish market-based economies where inefficient government-run systems previously existed. By slashing government subsidies and tariffs on foreign imports, African markets would hopefully attract more foreign investment and competition. The reforms also aimed to reduce unsustainable levels of inflation and foreign debt that plagued many African countries. However, these long-term adjustments wreaked short-term havoc. As countries adopted the measures suggested by the World Bank and IMF in the 1980s, unemployment levels were exacerbated while exports and wages were depressed further.
The period from 1957 to the 1980s saw the end of European colonial rule. Most African nations gained newfound independence and were left to design their own governments. Ethnic differences and border disputes, many of them accentuated by the Europeans, came to the forefront and violent civil disorder resulted. In many countries, the military was thought to be the only institution capable of maintaining order. By 1986, one-third of African nations and more than one-third of Africa’s population was under
military rule. Many governments were set up as republics along with a presidential system. But a working democracy was extremely rare, with military coups and dictatorships common. Between the late-1960s and late-1980s, Africa had more than 70 military coups and 13 presidential assassinations. By the end of the 1980s, no African president had allowed himself to be voted out of office in three decades. 21
Newly independent African nations were also affected by the Cold War. When a country gained independence for the first time, it was expected to align with either the United States or the Soviet Union. Both super powers gave financial and military support to African nations that championed their respective economic ideologies. Angola, Mozambique, and South Africa’s African National Congress sided with the Soviet Union, as did many northern African countries. The United States, on the other hand, supported western and southern Africa. During the entirety of the Cold War the United States supplied over $1.5 billion worth of weapons to the continent. 22 The additional arms flowing into Africa, as well the additional conflict introduced by the United States and the Soviet Union, further heightened the climate of instability.
Miko Rwayitare's House in Sandhurst, Sandton, Johannesburg
7 Beds, 10 Baths
7 BEDROOM ALL EN-SUITE NORTH FACING MANSION ON 2 ACRES OF PRIME SANDHURST LAND WITH SWEEPING VIEWS OF SANDTON FROM EVERY ROOM!
Accommodation: 7 bedrooms (all en-suite), Gym, Movie Cinema, 2 Kitchens, 2 Formal Lounges, 2 Formal Dining rooms, 1 gentleman's bar, wine cellar, 3 story lift, night club, full office suites x2 with own entrance, swimming pool, fountains, koi ponds, 3 bedroom staff flat with kitchen 2 bathrooms and lounge. 4 electronic garages with parking for another 30 cars, full guard house with toilets and double electronic gates and state of the art security, under floor heating throughout all and placed on 2 acres of sweeping manicured gardens with boreholes and computerized irrigation systems. Value R100 million.
Mont Rochelle Mountain Vineyards
Miko Wine Cellar
Mont Rochelle has been producing wine since 1995 when Graham de Villiers (an eighth generation descendant of Jacques de Villiers) bought the property. It was initially a fruit farm, but after the farm’s soils had been carefully analysed, they decided they would produce wine instead.
So gradually, over an eight-year period, the fruit trees were uprooted to make way for vines. Today, vineyards on the farm consist of Sauvignon Blanc, Chardonnay, Viognier, Cabernet Sauvignon, Merlot, Shiraz, Mouvedre and Petit Verdot, as well as a small amount of Semillon.
The winery on the 33 hectare farm is an old fruit packing store dating back to the 1850s, which with the onset of the grape production, was turned into a 200 ton capacity wine producing cellar.
In 2001, the farm was bought by Miko Rwayitare, a Congolese telecommunications entrepreneur, who ran the farm until 2006. The La Couronne Hotel and Restaurant was part of the property but was severely damaged by a fire in February 2006.
With the temporary closure of La Couronne, well-known as a gourmet destination, owners Miko Rwayitare and Erwin Schnitzler used the opportunity to merge the hotel and their neighbouring Mont Rochelle Mountain Vineyards, to create the new Mont Rochelle Hotel and Mountain Vineyards brand. Sadly Miko Rwayitare died in 2007, while on business in Europe, and so today, Mont Rochelle is run by Erwin Schnitzler, an experienced German Hotelier who has previously owned Michelin-graded restaurants in Germany.
Two ranges of wines are produced at Mont Rochelle starting with the flagship Miko range which Erwin created in honour of his late partner, to the Mont Rochelle Hotel & Mountain Vineyards range.