<h3>Jide Zeitlin</h3>
<h3>Country of origin: Nigeria</h3>
<h3>Industry: Finance</h3>
om Jide Zeitlin’s office, on the 44th floor of a sleek building on Manhattan’s Fifth Avenue, you can see the soaring skyscrapers and iconic New York City landscape stretching out ahead of you. Standing self-assuredly, hand in one pocket, the man himself cuts a dashing figure in a sharp black suit over a white shirt.
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Zeitlin isn’t even 50 yet. But, he has spent 20 years at Goldman Sachs, rising to partner and global operating officer of investment banking. He owns a telecommunications outfit in India, has his own investment firm, The Keffi Group, and is a director of Coach Inc, one of America’s premier luxury brands. He also sits on the boards of various philanthropic, educational and commercial organizations. He looks like a man who has always been destined for success.  Zeitlin’s life could have turned out very differently.
He was born in Ibadan, Nigeria, to a young single woman who worked in Lagos as a domestic servant. Her employers were a foreign family who were working in the bustling, dense city. While his mother was working in the city, Zeitlin lived in the Nigerian countryside with relatives.
By luck—which Zeitlin says is a major thread in his life—one of his mother’s jobs was with an American family. The father, who was a journalist, was there with his homemaker wife and their two young daughters.
One weekend, Zeitlin went to spend the weekend in Lagos with his mother and her employers. There, he met the American family and quickly formed a friendship with their eldest daughter, who was roughly the same age. Encouraged by the good relationship between Zeitlin and their daughter, the American family came up with an idea. Rather than send the young boy back to live with relatives in the countryside, they proposed that he live with them and that they place him in the same school as their daughter. His mother agreed; and the boy went to live in with the American family, the Zeitlins, and was put into a new school in Lagos.
Eighteen months later, the Zeitlin family was due to be posted to Pakistan where the father was going to work as a correspondent for the Associated Press. They asked the young Jide if he would like to go with them. If he did, they would become his legal guardian, providing him with the opportunity to have a much better education than he would get if he stayed behind with his Nigerian mother.
“She was an amazing mother who just didn’t have a lot of resources,” he says.
“My American family did not have a lot of money. They were solidly middle-class—but the one thing that they both had was they both came from strong educational backgrounds. On my mother’s side was a long line of university professors and even though she was American she had been born in China and lived there until she was a teenager because her father was a professor there. So the family was very big on education.”
Jide left Nigeria when he was just five years old and moved to Pakistan, which was going through the Pakistan-India war, with his new American family, and became Jide Zeitlin. Five years later, the family moved again to the Philippines—which was under martial law at the time—where they lived for three years before being given 48 hours to pack and leave the country because of critical articles that his adopted father had written about the then premier, Ferdinand Marcos.
By then, his American mother had decided to go back to graduate school and was admitted to Boston’s Massachusetts Institute of Technology (MIT) to get her PhD in biochemistry. The family moved yet again, this time to America, to Cambridge, Massachusetts. Although he’d paid some visits to the US during vacations, this was the first time that Jide, then 11 years old, had spent any real time in America.
On the recommendation of a friend who’d advised his parents that public schools in Massachusetts were not very good, Zeitlin was sent to Milton Academy, a top boarding school where the Kennedys were educated.
Having spent the previous 10 years of his life in developing countries that were going through political and social upheaval, he suddenly found himself thrust into the very traditional elite world of Milton Academy. It was something of a culture shock, but he survived. He is still proud that on graduation from the school, he was awarded a prize for being someone who most epitomized the school’s strongest values.
Then it was on to Amerhurst College to study economics and English. To this day he is still very much involved in his alma mater, sitting as chairman of the board of trustees. In his role, he has helped transform it into one of America’s most diverse and selective colleges.
It was in his sophomore year at Amerhurst that his journey into the finance world in New York City began. Summers spent washing dishes at McDonalds to pay his college fees became boring and he decided an office job would be nice. One of his father’s cousins, who had gone to Harvard Business School and was working at Morgan Stanley, gave him the names of some firms to write to. He wrote to them. Every single bank wrote back, turning him down.
Zeitlin was unperturbed. He’d known from the age of three or four that he liked business and would pursue a path in that arena.
“When you grow up in Nigeria, you have it in your blood—it’s a very commercial kind of environment. I didn’t know what kind of commerce or business but I knew that I enjoyed negotiating for things and trying to create things. I’d always had little businesses, like shoveling snow for $5 per hour. There was always that commercial side to me.”
One day while visiting his father’s sister outside Philadelphia, he was told that her neighbor’s best friend was a partner of a firm that Zeitlin had never heard of. That firm was Goldman Sachs.
He wrote to the partner at Goldman Sachs, receiving a response which said that while Zeitlin basically seemed like a nice kid, there were no jobs available for him. However, the partner added, should he ever be in New York, he would take him for tea.
On receiving the letter at his room in Amerhurst, Zeitlin immediately, not recognizing it as a brush off, decided to board a Greyhound bus to New York City. He showed up in New York, at Goldman Sachs’ offices, and ended up going for tea with the shocked partner who eventually decided to give him a chance, offering him a summer internship at the investment bank. When, decades later, Zeitlin became a partner of the firm he was shown the original letter that he’d written.
After that first summer, he ended up going back to Goldman Sachs every summer while he was an undergraduate student and then while he was at Harvard Business School after graduating from Amerhurst. When he earned his MBA, Goldman Sachs offered him a full time job.
Starting out as a Merger and Acquisitions banker, a pure generalist working across multiple industries, one of the first people that Zeitlin got to work with was Hank Paulson, who later became the chairman and chief executive officer of Goldman Sachs, and then 74th United States Secretary of the Treasury.
It was Paulson who encouraged him to run Goldman Sachs’ global healthcare business. It was also Paulson who, after being promoted to CEO of Goldmans, asked Zeitlin to come and work in the company’s executive office along with himself and the company’s co-presidents which he did for three years, cutting costs and helping rationalize after the dot com bubble exploded.
After Zeitlin was promoted to Global Operating Officer, Paulson came to him yet again. Remembering that Zeitlin had lived in Pakistan as a child, he asked him to go and figure out what the company’s strategy should be in India.
While in India, Zeitlin met with a number of Indian government officials and business people including Sunil Bharti Mittal, owner of one of the largest telecommunications companies in the country. Zeitlin noticed that Mittal still owned large parts of his physical infrastructure whereas in the US and some parts of Europe, they’d mostly been sold off to third parties. Spotting a tremendous business opportunity, Zeitlin asked Mittal if he’d be willing to sell some of his assets to Goldman Sachs. Although Mittal didn’t give a firm answer, Zeitlin began looking further and put a team on the case. Over three months, he attempted to convince Goldman Sachs to do it but having never invested at that scale in India before they ultimately declined.
Spotting a tremendous business opportunity, Zeitlin told Paulson that since Goldman Sachs wouldn’t invest, he was going to leave to go and do it himself. “It was an interesting opportunity, given my childhood, and where I could see the global markets going. I didn’t want to just be in New York with contacts in the west. I wanted to start reaching out into the emerging world more.”
Zeitlin eventually retired from Goldman Sachs in 2005, although retirement is hardly the right word. He went on to build a wireless infrastructure business in India, a place in which he’d never done business. He also had no experience in telecoms. However, over a period of three years, he built out a “modest” sized business. Bharti Mittal eventually decided not to sell his assets but endorsed Zeitlin’s business concept.
His company, The Keffi Group, currently invests in wireless infrastructure, life sciences, and financial services in India, Israel and West Africa, respectively. Since leaving Goldman Sachs, the father of two, has also been asked to use his finance experience in wider roles. He spent some time on President Barack Obama’s economic transition team and was ultimately offered a role as a representative of the United States of America to the United Nations for UN Management and Reform. Although he eventually turned the role down, he was pleased to have had the experience of Washington, especially as he increasingly acknowledges the intersection and convergence of business, civil society and politics.
Zeitlin is proud of his African roots and his Nigerian mother. He is equally thankful about the opportunities that were afforded to him by his American family. Whether it’s being adopted early on or meeting Paulson when he started at Goldman Sachs, he says about his life: “It is just a huge amount of luck from one step to the next.”

The Lucky One

It cost two young, bright companies millions to grab a slice of Africa’s hottest telecommunications market. But now they are both limping and left out. What went wrong?
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It was a cold June morning in 2006 and Kenya’s telecommunication sector was buzzing. EM Communications Limited had just been awarded a license as the second local loop operator in Kenya, trading under the name Popote Wireless. The company had just invested almost $6 million in rolling out operations and the mood was ecstatic. Reporters trooped to their glistering headquarters in Nairobi, each angling to interview the company’s managing director, Eric Muthi, in his boardroom overlooking Nairobi National Park.
“We are like this park. It has a lot of opportunity but within it also lurks danger,” he said. It turns out there were more dangers than opportunities.
Local loop operators (LLOs) are small telephone operators with a nationwide license, set up to increase access to fixed lines offered by state-owned Telkom Kenya. The plan was to give callers connections in their own district, but the problem was that if you wanted to call further afield, you had to go back through national operators.
Back then, Telkom Kenya was an inefficient state-owned monopoly that took months, if not years, to connect a subscriber. This led to a long waiting list, keeping telephones away from the masses.
The Communication Commission of Kenya (CCK) thus licensed 24 operators. But of the 24, only Flashcom and Popote started operations. CCK told FORBES AFRICA that others were in the process of being deregistered, after failing to open up shop.
Flashcom invested $3.6 million; Popote $6 million. Initially, business was good. According to the CCK’s 2008 report, subscribers increased from 8,481 in 2006 to 10,312 by March 2008.
The growth was because LLOs had an advantage. While a subscriber could wait for months to get a Telkom line, they could walk into a Flashcom or Popote shop and walk out with one.
But more than five years on, the dangers Muthi warned of emerged snarling from the bush.
“Popote had ceased operations at some point due to internal challenges. However, they are now back, though in a limited scope,” says CCK’s acting director general, Francis Wangusi.
And it is not just Popote Wireless. Flashcom, though still in existence, is limping.
According to its CEO, Julius Kinyua, it has shed half of its more than 4,000 subscribers.
“It has been a rough business environment but we are determined to keep going,” he says with a chuckle. CCK no longer keeps count of LLO subscribers; the last time it did so
was in 2008. The regulator was unable to comment at the time of going to print.
How did two firms go from hot start-ups to examples of what can go wrong in Kenya’s telecommunication market in five years?
The privatization of Telkom Kenya dovetailed to the LLOs’ disadvantage, but other reasons were also at play.
“Inadequate investment, interconnection challenges, unavailability of spectrum, and more importantly, the market preference for GSM mobile communication systems were their undoing,” says Wangusi.
The first hurdle they faced was negotiating interconnect rates with the then fully state-owned operator, Telkom Kenya. According to Kinyua, Telkom considered them competitors; they refused to connect LLOs to other networks, saying that the networks were “not compatible”.
A Flashcom subscriber was thus unable to call other networks. This erased the efficiency advantage they had enjoyed.
“Then the agreed-upon interconnect rate with Telkom was changed to suit it,” says Kinyua. “It meant subscribers would only be able to call within its network and it became ‘an island’.”
For interconnection, LLOs were supposed to charge $0.12, out of which $0.08 would go to Telkom Kenya. The remaining amount, according to Kinyua, was too little to meet their expenses and make a ‘decent’ profit.
Also, the technology that the LLOs got was of higher frequency and thus lesser reach than the ones given to Telkom Kenya. Flashcom got
1 900MHz, while the state company got 800MHz.
“We thus needed more base stations to roll out our services, increasing our costs further in an environment where profit margins were minimal,” he says. To maintain its bases in Nairobi alone costs almost $24,000 a month.
When Telkom Kenya was privatized in 2008, the government ceded 60% of its shareholding to European telecommunication giant France Telecom. This was a bittersweet moment for LLOs. The new management was more open to negotiation and compromise on infrastructure and interconnection rates.
However, the sleeping giant had woken, threatening the LLOs’ business model. The entry of France Telecom injected more capital in Telkom and revitalized the formerly inefficient operator, which was rebranded as Telkom Orange. The days of long waiting lists were coming to an end.
Telkom Orange courted the customer aggressively and at cut prices. Its fixed wireless subscriptions soared from 10,685 in 2006 to 154,161, according to CCK reports.
“LLOs relied too much on Telkom Kenya’s inefficiencies. France Telecom changed all that. They had better change their modus operandi or they’ll sink,” says one telecoms analyst who requested anonymity as he works in one of the major firms.
Then in 2009, intense price wars in Kenya’s telecoms sector destroyed any advantage the LLOs had by halving call rates overnight.
When LLOs realized the tide was turning, they tried to change their business model.
Popote tried to venture into outsourcing but got its fingers burnt.
It was implicated in a fiasco that involved charging potential employees for non-existent jobs, by Kenya’s Business Daily in 2008. The company still holds the LLO license, and hopes for a buyout.
Flashcom, according to Kinyua, is looking beyond the voice and leveraging on the increased demand for data as the future business plan.
The decision by CCK to give telcos a unified license has given the firm a new lease of life and it is now banking on data for growth.
“CDMA (code division multiple access) speeds are like the 2.5G and very good for internet,” says Kinyua. The CEO hopes that advanced CDMA handsets that have modern features like cameras, internet connection and smart phones may turn the tide in the LLOs’ favor. But for now, it needs hope as much as technology to survive.

Wrong Number—The Great Kenyan Telephone Blunder

Indian companies like Bharti Airtel are pioneering the telecommunications industry in Africa using bold business strategy and the experience they gained from opening up communications in their own country 20 years ago.
“When we took charge of Zain’s African operations, we made a commitment to bring world-class, affordable mobile services to customers in Africa and take our networks deep into rural areas,” says Manoj Kohli, joint managing director and CEO of Bharti Airtel’s international operations. This radical move immediately established Airtel as the world’s fifth-largest mobile service provider, immediately gaining 42 million customers. This unique business trend is being employed by Indian companies in Africa, who have adopted a strategically integrated approach to doing business. By integrating socially, politically and economically into 15 African countries, they differ in strategy from their Chinese counterparts, who tend to operate in isolation, importing Chinese workers and goods. Arthur Goldstuck, an expert analyst in telecommunications in Africa, says Airtel’s aggressive marketing strategy of cost cutting and increased volumes is making inroads into the East African market.
According to Goldstuck, this approach to price fighting in Africa and bringing down the costs of calls, SMS and data has dropped the average tariff in Kenya from 12 shillings in June last year to three shillings. Kohli believes it is incorrect to look at tariffs alone. “We have simply corrected the 20-30% premium that Zain was charging over the normal price. This was unsustainable and we brought the tariffs to more affordable levels for the customers.”
The socio-economic spin-offs of Airtel’s presence has contributed greatly to improving the lives of people, especially in the remote areas, says Dobek Pater, telecommunications and market analyst at Africa Analysis. An increase of 10% in teledensity (the proportion of cellphones in use by every 100 people in an area) is almost equivalent to 1% of GDP growth in some of these countries. However, technical challenges on the continent can be enormous. Initial investment is required to develop infrastructure, which can be very high. Extensive rollout of base stations is necessary for any network to expand into Africa, which is both expensive and time consuming from a regulatory and infrastructural point of view. Airtel has received support from governments across all markets, who share its vision of taking the benefits of telecom to every corner of the respective countries.
The Indian business strategy of social and political integration is key to doing business in Africa, and is the ingredient that has seen Bharti and Neotel successfully expanding their networks and distribution to cover a larger population, particularly in rural areas. The sharing of passive infrastructure in African countries also avoids unnecessary infrastructure duplications and helps bring down costs for the industry. Sunil Joshi, CEO of Neotel, says their approach to human capital development is unique and effective. The establishment of the Neotel Training Academy, where 30 people are currently being trained in telecommunications, is a benchmark of social and economic integration as 70-80% of these people will be employed by Neotel. “We believe in leveraging local resources within South Africa and getting the local context by engaging with government and ICASA. Our approach is to socially align with what the needs in the country are. For example, currently we employ 1,000 people in South Africa, of which the majority is local. We are also very proud of the fact that in terms of BEE we have a level three listing, which shows that we give the right focus in terms of the local dynamic.”
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Tag: Telecommunications

FORBES AFRICA SOCIAL MEDIA

The Lucky One

Wrong Number—The Great Kenyan Telephone Blunder

From India, With Ingenuity