How I Entered Into The Cell Phone Business (Part 2)
Strive Masiyiwa
Image Attribution: Strive Masiyiwa Social Media (Facebook)
It took me more than a year of research and study to finally have a business plan. I then approached the best investment banker in the country, at the time. His name was Dr Nkosana Moyo, and he was CEO of Standard Chartered Merchant Bank Zimbabwe.
I called my new business, "Enhanced Communications Network". Dr Moyo read my business plan and his key comment was "can I suggest a name change? I think you should call it, ECONET. This is a great project, we are happy to fund it. I have put together a team to work on it. I also have the support of our head office in London".
Since we would need access to special radio frequencies, we would have to approach my former employers the public telephone operator, They were not only a monopoly they were also the regulator!
We decided that it would be best to propose that they form a joint venture with me. They could have 51%, and I would have 49%. I would also raise all the funding and manage the business. The bank wrote the letter on my behalf, to show them that this was a serious proposal.
What happened next must surely rank, amongst the greatest follies in the world of business: They could have owned the Econet Wireless Group, but Instead they declared war on me!
They told us that mobile telephony was a passing fad which would never succeed. And that they were too busy, with more important things!
I immediately, suggested that since they were not interested. Could they please allocate me the necessary frequencies, so that I could proceed to offer the service, to the public. This time, they read me the "Riot Act"; reminding me that they have a monopoly over everything telecoms.
I refused to go away: "How can you have a monopoly over something you do not want to do?" I asked. They responded by threatening me with prosecution, if I so much as tried!
One of the bankers in Dr. Nkosana Moyo's office, was a lawyer, by the name of Ian Donovan. As we sat in their offices, studying the latest reply, he pulled out the Telecommunications Act, and began to take me through it.
"...these guys are wrong about this Act. If I were you, I would approach the court and obtain a declaratory order, saying you have a right to proceed".
"Is it really, that simple?" I asked.
"Yes".
"Let's go for it!" I finally declared.
The bank said they could not get involved in a legal battle, but wished me well. And this is how the most celebrated legal battle, in the history of telecommunications in Africa began. It was to take five painful years.
To be continued…
3 Key Business Lessons
Thorough research and a well-constructed business plan are vital before pursuing funding or partnerships. Strive Masiyiwa emphasized that he took over a year to develop a comprehensive plan for Enhanced Communications Network before he approached potential investors. Entrepreneurs should invest the necessary time and effort to create robust plans that effectively communicate their vision, strategy, and potential for success, as this foundation can significantly influence a business's ability to attract investment.
When faced with resistance from established competitors or regulatory bodies, perseverance and adaptability are crucial. Masiyiwa suggested a joint venture only to face rejection from the public telephone operator. Instead of backing down, he proposed an alternative path by seeking the necessary frequencies to operate independently. Business leaders should remain flexible in their approach and be ready to pivot in the face of obstacles, as new opportunities can arise when initial plans do not go as expected.
Legal knowledge and strategic advice can be game changers in overcoming business challenges. The case highlighted an attorney's insights into the Telecommunications Act, which empowered Masiyiwa to take decisive action against the monopoly. Entrepreneurs should seek legal guidance and understand the regulatory framework within which they operate. This knowledge can provide valuable leverage and protect the business against unfair practices, thereby enhancing its chances of success.
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