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Delta forces the agenda

July 23, 2007 3:09 by

In a city of new businesses it’s always good to hear a novel start-up story. Six men working out of a golf club house on a telecoms strategy and consultancy firm certainly catches the eye. Eighteen months later and Delta Partners employs 85 staff and has outgrown its Dubai Media City offices. Clearly the humble beginnings - warning, appalling pun alert - proved to be no handicap.

In truth, this is not strictly a tale of six blokes on their uppers. The team formed the management core of the regional office of Diamond Cluster, a major US management and technology consultants. They had been commuting from DCI’s Barcelona office to work regional telecoms deals and saw huge opportunities for the sector. When the Americans got cold feet deciding whether to back a major push in the Middle East, the six decided to set up their own specialist telecoms consultancy.

Rogier van Driessche, partner and one of the original six, points out the consultancy business is simple enough to fund. Start-up capital is minimal and revenues grow with business wins: “It’s auto-financing basically.”

“As a business the biggest strategic challenge has been recruitment,” he says. The firm quickly grew to 50 people on the back of business wins from MTC, the region’s biggest operator, MTN, Africa’s largest, and Du, the UAE’s second mobile license.

“The first wave came through our personal relationships; we’ve worked with lots of good people over the years and Dubai is an increasingly easy story to tell. We communicated the business idea, our passion for project, and people had confidence in us. Especially numbers seven and eight - having them leave Booze Allen Hamilton or McKinsey, to leave Madrid or Amsterdam to join us in the golf club. It shows a great entrepreneurial spirit.”

The next wave is proving trickier. Delta is scouting business schools, MBA programmes and is working with a head hunter. “We’re a specialist in the telecoms sector, and we have to keep the quality up,” says van Driessche. The net is wide; there are 24 different nationalities among the staff of 85; Bolivia, Japan, Vietnam and Mexico are all represented.

From the off the intention was always to be more than just a specialist consultancy. A Capital division was created to identify and invest in new business ventures in the telecoms sector. A $78m fund has been created, there is a pipeline of opportunities under review and the first two projects expect to be greenlighted within the month. If these investments prove themselves a second fund will be raised.

There is a huge opportunity here, says van Driessche. The regional telecoms market is growing at between 12-15%, yet the value of outsourcing market is only around 1-2%. In Europe, with a more mature market, this figure is around 15% and growing.

“We’re not going for the big licenses - $78m wouldn’t even pay for the coffee - but as competition enters the market, operators realize they can’t do everything. It doesn’t make sense for operators to manage call centers, do retail, make phones, manage networks, develop content…they’re not good at it. The opportunity is to find companies that are best in breed to perform these duties for them. You will always find people that are better, quicker.”

The future, he says, is not to expand out of telecoms to take their specialism to other emerging markets. An African office is the next step, along with a possible investment fund for African projects; a move into India is a possibility, though not currently on the radar.

“There is a saying in the consultancy business ‘no one gets fired for hiring McKinsey’, says van Driessche. “But clients see there is now definite value in being focused, on both the sector and region. You can’t always compare what was happening in the German market 10 years ago with Saudi today. Having a team of generalists flown in is not the same as having people who live and work here and know the market.

“Emerging markets, or high growth markets, is not a pejorative term, not a negative thing. You don’t neeed to turn to people from New York to tell you how Saudi or Africa works. Hopefully we’ll be McKinsey of emerging markets.”

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