With a background in cybersecurity, CEO Charly Bahaous is from Israel and relocated to South Africa in 2006. Under his watch,  Touchnet has grown to encompass over 300 employees across various sub-sectors. The Company's portfolio includes a fibre management and construction business, cybersecurity sourcing and distribution, and a recently initiated remote hand's smart driving system with approximately 250 personnel on board. There is a 40-member staff based in South Africa dedicated to the Internet Service Provider (ISP) operations, complemented by numerous partners such as 251 in Ethiopia and Wasp in Ghana.

Fortune: The global cloud service is dominated by centralised systems. Competing with giants like Google and Amazon. What do you plan to do to penetrate the market share as a decentralised service provider?

Charly Bahaous: We bring proximity. Falling within the standards and regulations of the country while being easily accessible to local clients addresses latency and data protection. Decentralised clouds also spare expenses. Having access to localised mini-cloud environments will give businesses the flexibility to scale on demand, instead of laying out capital investments and waiting for long-term returns.

Q: TouchNet is operational in eight African countries. Does the underdeveloped digital infrastructure in most parts of the continent affect its services?

It is tough, but we are hopeful. ICT hubs, undersea and terrestrial expansion of fibre and increasing content are all planting the seeds to slowly make the change. We are observing the emergence and expansion of data centres; Raxio in Ethiopia, Paratus in South Africa, Pikes in Ghana and others in northern Africa represent hope. We depend on their expansions but patience is crucial.

Q: What parameters led you to recognise the Ethiopian market as promising?

We sensed the liberalisation following Safaricom Ethiopia's traction and started setting things into motion as of January 2023; here we are 12 months later. The ability to provide local sovereign cloud while paying in Birr makes the services convenient and affordable with access to global markets for software service providers.

Q: Evolved threats are challenging the cybersecurity with development of Artificial Intelligence. What strategies does your service employ for data protection?

There are compliance issues in any infrastructure as a service; from both data protection and a privacy perspective. Most controls were already enabled from the access control perspective while we have added certain anti-ransom technologies. Our minimum requirements are ISO 27001 from a standard perspective and the GDPR in terms of data privacy. There are additional requirements in each country which we happily adjust to. Countries like South Africa have introduced the Protection of Personal Information Act (POPIA), which adds layers of protection.

Q: With the pending Data Protection Proclamation law, do you rely on local partners to analyse new markets or conduct independent analysis?

As a responsible business, we check and verify the direction a country is heading through publications and available statistical data. However, partnerships play a major role where enabling growth would be beneficial for both.

Q: What benchmarks do you apply when selecting partners?

People and values make or break a business; there is no other way. We also try to give smaller Internet Service Providers (ISPs) and telecoms a fair fight in competing.

Q: Data sovereignty is an essential part of the business. Has the African Union's Data Protection Act factored into your operations?

Having control measures is very welcome and the AU policy hit the sweet spot. It allowed for building blocks and modelling capabilities that can slowly grow to unlock the full potential of a covering cloud without the massive capital expenditure associated with it. That is exactly what we did.

Q: What is your value proposition in terms of interoperability?

We are agnostic when it comes to co-existing with other cloud providers in parallel, on-premise, in the data centres. We do not plan to charge for migrating own data from one system to another, which is a major sticking point for businesses alongside Application Programming Interface (API) integration with other service providers one might already be using.

Q: What potential market segments do you seek in Ethiopia, observing other countries you operate in?

A big growth has been witnessed around sports betting platforms recently as they need local data for their transactions in other countries. Manufacturers, financial institutions and insurance companies desire secure, encrypted services with anti-ransom capabilities with growing threats to cybersecurity. E-learning is also massive. Most businesses with high hardware costs are inclined to adopt cloud services in software provision. Content creators are also a big part of our strategy in 2024-25 for self-service, as the number of our nodes has increased to 500 globally.

Q: Ethiopia has been making headway in digitisation. Where do you see your business in the next couple of years?

Keep opening up and the sky is the limit. The ICT space is expanding with more programmers and a large youth demographic which is an immense potential.

Q: Are you still optimistic about the growth potential considering the proliferation of conflict and economic instability in parts of the continent?

Why not? Look at Europe and the Middle East. There is instability, but I am always optimistic if tomorrow is guaranteed. I trust my people and what I observe on the ground. Rolling out into eight countries in a single year is unheard of; people need these services and we will give them a technology that works.

Using cloud service as an entry point, 251 Telecom under Addis Alemayehu is venturing into the telecom sector. He recounts a journey spanning 25 years, initiated by the signing of an MoU with Vodacom in 1998 when the Ethiopian telecom market was closed. The Company had to bide its time until the regulatory environment caught up marked by the entry of Safaricom Ethiopia into the market. Granted a virtual Internet Service Provider (ISP) and mobile services license from the Ethiopian Communication Authority, the company's plan is contingent upon the ongoing viability of the policy framework.

Fortune: Why did you decide to enter the cloud service provision?

Addis Alemayehu: The main motive, like most businesses, was a point of pain. We invest in technology startups. Paying around 150 dollars for each of our 16 companies to host services has become a burden. Cloud services are in demand, with local companies paying for them in dollars.

Q: Ethiopia's digital ecosystem has often been criticised for inadequate infrastructure and a bureaucratic maze. What would you suggest?

Long-term investments should be put into consideration when accessing digitisation. Allowing hardware that empowers a generation to come in duty-free needs to happen immediately.

Q: What does the partnership with Touchnet entail?

We are their exclusive partner in Ethiopia. Although our contact dates back to about a year and a half, we had to wait until a data centre was up and running. As Raxio Data Centre launched in November, we started our due diligence with the server and the equipment on the way. I believe we will launch within three months.

Q: How much investment have you made in the business?

This is a shared infrastructure and investment. The server and equipment coming in are a little over 200,000 dollars. The total infrastructure is a huge investment that goes beyond one entity or our little monetary contribution. Raxio has spent north of 80 million dollars on its data centre, and we will be using Ethio telecom's or Safaricom Ethiopia's network.

Q: Efficient cloud service will significantly need a network that can handle large amounts of traffic. Will network limitations be a challenge?

I believe we can work with the available bandwidth, speed and reliability. Some companies use the existing network to provide Business Process Outsourcing services for clients abroad.

Q: What type of payment model are you planning to use?

We are studying what the market is looking for and is willing to pay. Looking at our investments in tech companies and their expenses on cloud services for email servers and market studies, we have recognised that being able to pay in local currency alone will be alluring to the potential market.

Q: How significant is the telecom sector compared to your investment portfolio?

It is our fastest-growing business. We are currently working with a 12-member staff as a large labour force will not be required for the service.

Q: Ethiopia's first Data Protection Proclamation recently made it to Parliament, designating the Ethiopian Communication Authority as the regulator. What do you think that represents in the evolution of the digital ecosystem?

About 27 countries have already ratified their respective data security and privacy laws. It is about time we do the same. This government is a bit more aggressive on the digital front and opening the market. The private sector is also ready to compete globally.

Q: What challenges do you anticipate over the next ninety days?

This is where my appeal for duty-free access comes into play as the equipment to be installed at Raxio comes in. But our license from the Communications Authority should make that less complicated. It is a matter of testing the equipment and optimizing it. We already have local talent and resources. It should be plug-and-play from here on.

Q:  Acquiring and maintaining talent is a significant challenge for the tech industry. How do you plan to navigate the skills gap?

No, no. That is a misconception. Ethiopia is filled with amazing talent with companies like Google and Meta already hiring them. They are just quiet about it.

Q: What are your plans to leverage the cloud in your long-term strategy?

It is a largely untapped market. The upsurge of social media influencers signals potential partners while a language barrier leaves a huge portion of content out of reach. We can bridge that gap.

Q: Do you plan on engaging in the E-government space through your cloud service?

If they allow it. But  I am confident that the price points, the security guarantee and the reliability we offer will nonetheless attract private sectors. We had a workshop with banks and fintechs this week with promising feedback.

Q: What do you think the realisation of capital markets will contribute to accelerating the financial resources of the nascent digital ecosystem?

I believe it is far too early for a meaningful impact on tech companies. But in the long run, capital markets will give young founders a space to raise capital. There are no venture capitalists, and startups rely on traditional fund-pooling mechanisms like Ekub, which is sad. Allowing foreign capital to invest in local companies is critical for growth.

PUBLISHED ON Jan 27,2024 [ VOL 24 , NO 1239]

How useful was this post?

Click on a star to rate it!

Average rating 0 / 5. Vote count: 0

No votes so far! Be the first to rate this post.

Put your comments here

N.B: A submit button will appear once you fill out all the required fields.

Editors' Pick