Today’s 3G Services Partially Address Customers’ Needs – Abass
Mr. Kamar Abass is the chief executive officer of Ntel, Nigeria’s fastest growing mobile operator running on fourth generation long term evolution (4GLTE) technology, which acquired the assets of Nigerian Telecommunications Limited (NITEL). In this exclusive interview with CHIMA AKWAJA, he talks about the massive demand for broadband data, state of the telecom sector, new investments and other burning issues.
You launched your Advanced 4G/LTE Network when the nation was in a recession. How have you been able to cope?
Well not as such. The thing is this, the journey that took us to our market launch in April 2016 started in 2012. We could not predict the circumstances in the marketplace at the time we got to the position to be able to launch our services. We had to take the economy very much as we found it but we had a very robust plan; it was a much matured plan. We had considered all the options and we launched in the most efficient way possible and we continue to run our business in the most efficient way possible.
We certainly had to be very, very judicious as to where we put money and as to how we prioritize various alternate investments and I do hope it serves us well, it certainly as so far and I do hope it continues into the future. Another point to make about areas of slower growth is this, people are always looking for ways in times of less than perfect growth to do this more efficiently and more effectively and that is exactly the hard land of the broadband promise.
So in some ways the circumstances that many people find themselves are ideal for them to take advantage of broadband and for them to invest as it were in this productivity of ingenuity and that is the key thing that people are finding. Rather than travel to a place, they can video call to that place, rather than have to download or have to print out loads of document, they can search the web in real time and access lots of materials, so the productivity opportunity around broadband are exactly what the doctor ordered for these slightly challenging times.
Can you tell us what has happened since you launched a year ago?
We launched our business to customers in April 2016 and after less than a year of development and roll out of our networks so that makes us the fastest ever network launch in Nigeria, we did it in 11 months, which is the fastest. At the time of our launch, we had network in two cities, a relatively low network in Lagos and substantial network in Abuja and by the end of November we had a modest network in Port Harcourt which we have since built on.
So in fact, we now have a very substantial network in three cities of Nigeria and I dare say that if you were to look at our coverage in those cities which approaches about 70 per cent of the population in each of those cities it is probably among the largest broadband networks in those cities today and it is largest because we have a large number of sites but also because we have deployed fourth generation (4G) network on 1800 Mega Hertz and that gives us the advantage of good spread of the signal and then good capacity transmitted via those signals between the network and smartphones.
It is a very, very solid network and we intend to build on that going forward. We are impressed with the progress we have made and we are very pleased with some of the feedback we are getting from customers, we are really excited about that.
You have covered Abuja, Lagos and Port Harcourt as promised. Where are your next phases of expansion?
Our plan is always going to be expanding our network so that we can cover every aspiring broadband customer that means in the first instance, we are going to the locations where there is third generation (3G) coverage today. 3G was the initiation of most people into mobile broadband but 3G is an incomplete solution. Its capacity is limited and its coverage is limited too. We are going into those areas where there are 3G today and we are providing 4G and 4G is faster.
It has more capacity and frankly for us as an operator, it is a more efficient means of addressing the broadband demand. That is what we are going to do and that means that certainly, in relation to our existing three cities we are going to make sure that we have full dense coverage and that means adding more sites into those existing cities but in addition, we will extend to the north, west and east to make sure we cover the areas where 3G customers are.
Today’s 3G services only partially address the need of customers. Certainly, the southwest will see our presence beyond Lagos, the East will see us very strongly moving out from Port Harcourt, going northward and southward from Port Harcourt and then importantly also from Abuja we are going north to cover that area.
How has been the reception in terms of subscriber base?
We knew that we were coming into a marketplace that understands mobility, that understands mobile access to the internet and understands broadband, so what we sought to do was to give customers another level in terms of the volume of data they can access and the speed with which they can access it and we are pretty pleased that we have achieved that objective of high volume and high speed.
What we need to work on is that the stability of our speed is everything that customers want and expect and broadly customers are delighted. We are recognized for the speed, we are recognized now for having a relatively large network with solid coverage in three cities and frankly, we are recognized for standing out internationally in terms of the speed of our network in Lagos. An Internet access speed benchmark company has named us the fastest network in Nigeria and that was done literarily within a few months of our launch.
So, it is pretty clear that we are ticking the box in relation to customers just like we planned to but we are going to build on that to make sure that even as our customers build and the level of activities on our network increases that we still maintain that position as the leading provider of high speed Internet services, so that is what our ambition is, to be the leading provider of high speed Internet services.
How has been the traffic on your network given the high consumption of data?
Video is definitely the biggest application of data on our network, somewhere between 60 and 70 per cent daily is accounted for by video traffic of various types. The most popular is YouTube but also of course, all the videos within the social media packages are strong too and you know it is the mark of the times. The other thing that is important about this revolution around data is the opportunity for people to do voice application as well over data.
It won’t surprise many people to know that real time ‘Over The Top’ communication such as WhatsApp, Viber, Skype and others are also enormous on our network. We do millions of minutes on these OTT bearers every month and that is another very big shift happening. We see ourselves as a very strong data player but our data network is enabling both the most demanding form of data, which is video and it is also supporting so-called conventional applications, howbeit in a data way.
About a year ago when you launched Ntel, you had a five-year roadmap and $1billion capital expenditure projection. Are you still on that?
We have done two existing rounds. The first round of fund raising was to acquire the company’s assets that we acquired and I think that is well known, that was $252 million that has been paid and settled. There was a second round of finance which was about buying the equipment and the systems and facilities which we have now rolled out.
Now there is a third round of financing, which is about expanding our network both in terms of coverage and capacity in the core network and capacity in the linkages between the cities and that third round we are on now and all of those are building up to that $1 billion figure. We may not be there yet but we are on the road to that $1 billion and certainly we anticipate that we will complete that $1billion and potentially we will go further.
Between now and two years, how much are we expecting to be pumped in?
It would be hundreds of millions of dollars but I wouldn’t want to be any more specific than that, if you permit me please. What we do know is that there is solid demand for high speed data and that demand extends way beyond the three cities we are in and we anticipate somewhere in the range of 3,000-4,000 sites over the next two years added in and that is significant in the way of investment. Those sites require transmission, connection between them, we also need higher amount of capacity in our core network and higher amount of capacity in the links and all of that is significant in the amount of investment required.
NCC said Nigeria requires about 70,000 base stations and we look to be half way there. What do you think the industry needs to do to meet that target and reduce the poor quality of service?
What we all need is a strong investment case because all of us have got to raise money from shareholders or from banks. The money that you invest must be paid back and that means you must be able to show a return on that investment. A return on that investment comes from an environment where prices are at level to sustain the marketplace. We don’t want prices that are profligate but we want prices that allow us to sustain the services to customers, earn a decent return and of course pay our liabilities.
The reality is that some of the prices in the market place are approaching levels that don’t support those broad and those quite normal ambitions and we need to have the industry address that formally because the investment that we make are about individual level productivity. Productivity increase income, income drives spending, spending drives investment and investments drives overall economic development and growth.
That is the cycle and our role in that cycle is fundamental, it is like roads, hospitals, schools. Telecoms companies should be seen as national assets because of the fundamental role they play in the economy. These days they are private enterprises and rightly so, but it is very clear to me that we cannot have a situation in which prices descends to levels that don’t support the business case for investment.
We are part of an industry move that is strongly pushing that the data price floor should be at a respectable level but also national infrastructure is protected, access to that infrastructure is properly regulated so there is proper sharing of resources so that we can have efficiency. We would even go as far as saying that there should be active network sharing. Passive sharing is happening now, excellent, let us move the game on to active infrastructure sharing so that the industry as a whole is much more efficient and much more on a sustainable footing.
You came to the market 15 years late, are you making use of the last mover advantage?
I think we are exactly doing that in relation to voice. The market that is 15 years old is the voice market and being the last mover is something to be proud. The voice market peaked two years ago and is in decline. We have no desire to join in that decline, so when I talk about the millions of minutes we are doing, we are doing it over the Internet protocol (IP) and that gives us efficiency that is not available to those who are using switching to deliver voice as it started 15 years ago.
But we are first mover around high speed data and so to that extent it is the best of both worlds. Last mover in a slow and declining market (voice market) and first mover in a brand new, vibrant and highly profitable market for data, one were even today, I kid you not, demand for data on our network outstrips the supply that we have put in place and we are having to busily and vigorously add capacity to meet demand.
We deliberately set out to attract heavy users and deliberately set out to understand how we can maximize people’s productivity and satisfaction from mobile and high speed access to the mobile internet and we have found that and now we are having to address on multiple fronts, expanding capacity, expanding satisfaction of customers but equally expanding the yield from the network for us and for our shareholders and this is very exciting and dynamic. We are pretty confident that we have got the means of doing what we need to do to succeed both financially and the demands of our customers.
In the last one year MTN was heavily fined, Airtel is having issues across Africa due to lack of profitability and Etisalat Nigeria is still in talks with the bankers. What is your view about the telecoms industry in Nigeria?
Well, it is certainly been an interesting year in the telecoms industry. The Chinese proverb that says may you live in interesting times was talking about Nigeria in 2016/2017 for sure. Look, I think that the thing to always look for is the nature of demand. The nature of demand today and what the forecast for demand are and there is not a single commentator who has anything other than strong demand going into the future for telecoms in Nigeria and globally, so there is strong demand in this country.
The second thing is how it contributes to the development of a nation and its citizens and also telecom has been shown to have very strong development for the economy and for citizens. The question then is what must be done to support those aspects to help meet demand and help to grow the lives of citizens and this is where the regulator comes in and the regulator in Nigeria is lauded as one of the best in Africa because they preside over phenomenal development, growth and investment in this industry.
That says to me that we need to continue to do more to support telecoms operators. More needs to be done to build on what has been done in the past that has been so successful and the regulator is looking at all the right things. They are encouraging new entrants, they are considering the impact of pricing, and they are considering support for new entrants. Going beyond getting them into the market place with new spectrum, they are also supporting them with things like asymmetry which is about making sure that there is no inherent disadvantage in the new operator having to work in an industry with very established players.
There is passive infrastructure which now can be shared and there are even discussions and support around roaming. So the regulator is doing all the rights things and we encourage and urge the regulator to keep on doing those things but as far as the industry is concerned honestly, when I was writing the business case for ntel, when I started that work four and a half years ago, I was optimistic and I continue to be optimistic, if anything even more so.
Last year, ntel announced General TY Danjuma as the chairman of the company. What prospect will that bring to the Ntel brand?
We are delighted to have persuaded him to become our Chairman. Here is a man who is respected as a business man, as a leader, as a statesman, so there is no question of him, all round we are delighted. He has given us enormous support. Of course, he chairs our board meetings, he and I review our performance on a monthly basis even sometimes more frequently than this. He (TY Danjuma) has given us valuable insights, valuable advice, valuable connections and valuable support all round.
We are pleased to have him on board. We see that the relationship has given him something back. It gives him an area of interest. He likes to see things developed; things that support Nigeria, things that support the economy. He is a world known philanthropist, it is the case that he likes to see things grow and he sees us in that mould. We like to have him on board and we look forward to many years of working with him.
Where do you see the telecoms sector in one year?
We see phenomenal growth; we expect to see more growth. Just that we are clear, we have seen in the last year the addition of thousands of 4G sites. When we started out it was just a small number below 1,000 4G sites existed in Nigeria. Between the time of our launch and today something around 6,000 to 7,000 sites has been added and we see that trend continuing. I suspect that over the next year the number of 4G sites will grow by 50 per cent if not more.
We will see a big shift in terms of 4G customers because people will come to recognize 4G as the standard for mobile data. I hope we see better approach to pricing so that we can all be in an environment where we are all more sustained. I expect the regulatory agenda open up in the efficiency in sharing on the landscape and I hope to see more investment come in not only to people like us but the whole industry.
Where are we going to see ntel in the next five years?
We certainly still are forecasting more than 200 million mobile customers in Nigeria in five years that is 2022. We see a significant growth by over 50 per cent 4G customers. By that date we expect majority of those 200 million customers to be data customers, over 100 million data customers and what we see is that most of those data customers will be 4G users. We see bigger overall market growth; a majority of customers in the market will be broadband customers and within that ntel expects to play a very big. We expect to see 5G in Nigeria within that time frame too.
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