Michael Jele and Hilkia Jacobs
Finance came at just the right time for telecoms livewires
“Business Partners Limited will be our first stop when we need expansion finance,” says Michael Jele, co-owner of BlueTel Communications, a fast-growing telecoms company that was financed by Business Partners Ltd at a crucial stage of its inception.
About seven years ago, Michael and his co-founder Hilkia Jacobs were coming to the end of an incubation period for their fledgling business. The multinational corporation from which they were spawned was finally winding down their operation in South Africa, and BlueTel needed to find its own premises.
BlueTel, which specialises in “lighting up” optic fibre cables after they are laid, had been in business for only two years. Although their prospects in the rapidly expanding industry were extremely good, “we didn’t have much of a credit record, so the financial institutions would not talk to us,” says Michael.
They had identified an ideal building in Centurion that could house up to 30 desks and had some warehouse space, but could not find a bank willing to deal with such a young company.
Fortunately, an estate agent pointed them in the direction of Business Partners Ltd, who agreed to finance the purchase of the property. Instead of requiring them to put down a deposit which would have hurt their cash flow, Business Partners took a 35 percent share in the property-holding company that was formed to hold the new BlueTel head office.
“Only Business Partners Ltd were prepared to listen to us, and that played a huge role in developing our business. They are people who believe in new ideas and they were prepared to take a risk with us,” says Michael.
Hilkia says the finance and move into their own premises came at a critical stage of their business. “It gave us a lot of credibility when our clients came to visit us. They could see that these are not just some guys working out of their garage. This is actually a fully-fledged business with proper equipment and processes in place.”
Furthermore, the fact that they now had premises with warehousing space, instead of just rented offices, meant that they could offer warehousing as an added service to manufacturers such as Nokia and Infinera, whose equipment they install, commission, and maintain on fibre networks.
Today, Michael and Hilkia work with 25 staff members in their Centurion head office, and have a fully-fledged branch with warehouse space in Cape Town with a team of five, as well as warehousing facilities in George, Port Elizabeth, and Durban.
They are now on the brink of getting approval from the South African Bureau of Standards to introduce their own equipment to support some of their customers’ supply shortages. This innovation stemmed from a project Bluetel delivered in Malawi where the client needed power units but could not buy them from Europe because of Covid-19. Bluetel jumped in, produced the units and installed them at more than 30 sites.
They have come a long way since their first contract in 2012, which was for the roll-out and maintenance of a Telkom optic fibre transmission network across South Africa. Back then, they did all the work themselves, shared a car on the long road and stayed at cut-price motels to complete the job at the quality standard that became their benchmark and the reason for their success.
Nowadays they send teams of technicians to activate fibre lines as far afield as Angola, Lesotho, Malawi, Namibia and Swaziland. After seeing the quality of their work, their clients are also increasingly asking them to train local teams for the continued maintenance of the lines and equipment.
Due to the boost in demand for internet connectivity over the course of the Covid-19 pandemic and its lockdowns, their fibre work has only increased. “We’ve had our best financial year in 2020,” says Hilkia.
However, some plans were put on hold because of the pandemic. Hilkia and Michael are looking to expand their property portfolio by buying more commercial properties. It is the ideal business to run alongside their rapidly expanding telecoms operation, as it won’t require too much in terms of resources over and above those needed to maintain their head office property. A growing portfolio can be used in future as collateral to finance further expansion.
They recently initiated talks about acquiring another investment property with Business Partners Ltd when Covid-19 struck and pushed it onto the back burner.
Chances are looking good that these plans will revive soon, although it might be eclipsed by the expansion of their telecoms operation. As things stand, they can scarcely keep up with the opportunities coming their way in Southern Africa after the activation of the under-sea optical cables that need inland connectivity. As for the rest of Africa, the opportunities seem limitless.