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Israeli internet protocol provider sees Africa ripe for expansion

Viewing domestic market too small, Tikal Networks eyes promise in continent's limited telecoms infrastructure

Reuters, Wednesday 6 Apr 2011

Israeli voice over internet protocol (VoIP) provider Tikal Networks plans to focus on Africa as the next stage of its global expansion, its founder and chief executive said.

Most Israeli high-tech companies typically look to the United States, Europe and Asia but Tikal believes Africa offers the most promise since its telecoms infrastructure is limited.

"Africa is virgin land," Alexander Argov, 52, said in an interview with Reuters. "They are adapting fast to new technologies and that is why we want to be there.

He said the company already has deals with Zambia's main railway and banks in Mozambique.

Tikal, named for a Mayan city in Guatamala where Argov visited after finishing his Israeli navy service, sells VoIP systems and call centres to companies whereas Skype, Vonage and Google Talk offer Internet calling to private customers. It mainly competes with Cisco, Avaya and Panasonic.

Some 80 per cent of its business is in Israel, a market Argov said is too small.

"You need to go abroad, especially in our market," he said. "What we are selling in Africa in dollars is what we are selling in Israel in shekels."

Tikal's system allows companies and governments to largely forego traditional landline and mobile phone companies. Its service routes calls over the Internet for free from cell phones or landlines.

With calls encrypted, its biggest customer is the Israeli government's security forces. Another client, construction firm Danya Cebus, which operates in Israel, Russia and Romania, saves 100,000 shekels monthly on phone costs, Argov said.

Tikal was formed in 2004 and is owned by Argov and two other private investors. It has annual sales of about US$2 million but Argov expects that to reach $5 million in a few years as companies shift to cheaper internet calling.

Another focus of the company is to expand its call centres, of which it has 50 in Israel as well as Ukraine.

"Our goal in the next couple of years is to be one of the top two or three companies that provide call centre applications," Argov said.

It came close to going public in 2008 but opted against an offering. Argov said the company would never have survived the global downturn if it had got a stock market listing.

The company has no plans on becoming public in the near term. "But if all goes well, in 2015 maybe we will go public," Argov said.

He said the company was not looking to be sold, but such an option could be possible if the price was right.

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