It is one of the most vibrant indigenous firms making waves in the Nigerian ICT industry and with the broadband revolution afloat in the country, VDT is repositioning its business to serve not just the corporate organisations but individuals in a better connected Nigeria. In this interview with MKPE ABANG and SAMSON AKINTARO, VDT’s Chief Executive Officer, MR ABIODUN OMONIYI unveils the company’s plans and efforts in making the government’s broadband target of 30 per cent increase by 2018 a reality.
Question: Basically VDT seems to have donned a new face very recently; can you tell us what informed this?
Answer: Well, Thank you very much thanks for coming around. I appreciate your finding time to come and talk to me on this. The New Image is generally part of our re-energizing our brand a number of good things has actually happened to VDT in recent years and we kind of felt we should refresh ourselves and actually do some form of re-branding to herald this. Also, some of those things that had happened had actually put us on a pedestal for a quicker growth in the industry so we came out more boldly to be able to herald such occasion and prepare the ground for our bigger self.
You are very much into the broadband activity, can you tell us how far you are prepared for the expected new wave of telecom revolution in Nigeria; broadband?
Yes! Broadband is a very welcomed development like we also all know that it’s been touted that Broadband is the next wave in Telecom and it’s going to usher in a new lifestyle For VDT. It’s clear that we have been at the forefront of the promotion of Broadband, we started being a data company, we actually had our grounding in the IP world and we also like you all know, Broadband is being ushered in through the IP avenue so we believe this is our moment and we need to actually seize that moment and provide leadership. We’ve seen several other people that started about the same time and had fallen by the way side but we thank God that we are standing and I believe and will say that we actually are meant for this period.
You said some people had fallen by the way side, which is correct; we know some of them. What has given you the fighting spirit to continue to stand even when others had fallen?
Well, I will say the Grace of God to start with and the fact that when we actually started we wanted to be an all IP house so, Grace of God and then conspiration of the elements like, I will say Destiny, I won’t say because we can see the future but then I will say like ten years ago we all know, we’ve heard about it that IP is going to rule the world we are just been fortunate, to be at this point standing at the verge of making the history, the turn around when IP is truly going to rule the world.
In delivering this your critical service, broadband, what are those key ingredients that must be in place that you believe are now in place or any other one that is not in place which you hope should be in place? I mean talking about infrastructure?
Well, I’m sure all the general things that is needed for good communication infrastructure build out is important and one of it is going to be power but of course, we can’t continue to talk about power every time. Government policy says things are actually going to get better concerning power, even if it’s not getting better; we have a way of managing that now. The other thing is the advent of sub-marine cables; we now have a lot of sub-marine cables that landed in the shores of Nigeria that means we have a lot of capacity right there on the shore and then. So we are actually at the distribution end of it. The seemingly taming of regular Power supply and then the advent of enough supply of interconnection through the sub-marine cables are actually in place now. The other thing is that the good distribution technology has matured. We now have LTE Advance, and this ensures that we can actually assure each and every individual of a minimum bandwidth of 6mbps being delivered on their devices and today’s smartphones are actually able to surf the net very well and have several functionalities that the individuals can use. It’s not uncommon that people watch videos on their smartphones these days, so it’s all these that actually had conspired. I have mentioned about four different things; Power Stabilisation, the Sub-marine capacity – Adequacy in sub-marine capacity, the advent of cheaper smartphone in hands of majority of the population, we also have matured Technology in LTE Advance, we now have one big station delivering about 300mbps and I believe in another year or so we’ll be having a big station delivering up to 600mbps. Before now was the 3G Era, which actually ushered in the smartphone and something that looks like a narrow band that’s what I’m going to call it. The 3G Big station hardly can deliver 30mbps but now we are having 300mbps capacity in a big station and that is what we are actually starting with. I believe in another year we’ll be having something about 600mbps. The lifestyle also is changing, people access videos on the go, we are now seeing that all these are being actually carried out using Broadband infrastructure.
Very interesting! You ended up at distribution; one critical part which we probably do not seem to have gotten into it is fibre to the home, a lot of thing is radio, microwave and all that. When are going to have fibre to the home in our country in such a way that broad is actually becoming very broad?
The Broadband arena does not necessarily have to just be on the wireless alone but what I’d actually address is the advancement in the wireless front because that is where we play more, bringing in, using wireless to deliver these. We do know that Fibre has an infinite bandwidth so to say, but of course, it also has its own challenges. Wireless also is becoming robust in terms of capacity that is what I explained earlier. Fibre to the home; Yes! I see a lot of companies playing in that area now especially in Lagos and other major metropolitan cities in Nigeria; Abuja and Port-Harcourt. I know of a number of companies doing this Fibre to the home. Yes it’s a gradual thing as you know, cable is a bit slower, wireless is something that is a lot more rapid so things are happening, I’m seeing the growth of Fibre to the home daily, I’m seeing several estates being cabled which wasn’t so some few months ago. So, definitely it’s just a matter of time and the pace with which fibre actually can grow but definitely the wireless will actually grow faster and with increased capacity on the wireless infrastructure, I think they will both complement each other. The two technologies have their roles to play but fibre is growing at it’s own pace and we can expect it to be slower in terms of reach than the way wireless can actually cover a particular area.
Tell us about triple play and how it’s been played in this arena. I mean video, data and voice; what are you delivering to your clients, using this combined services, for instance somebody can say I want only voice, data or video. Now how do you get to tell someone ‘look you need to get everything and even cheaper for you’?
Well, when we talk about Broadband, we are really not talking of a narrow service just like my joke about what you mean by a triple play. Broadband delivers all these instantaneously. Video is the main driver for the increased demand for Broadband services but once you have video which even needs higher bandwidth than voice, voice is just another application. What do we mean by Data? Most of the data applications are IP, we said the video is going to run on IP, we already are familiar with voice over IP which is even an old Technology but all these actually comes to play, they are parts of the bouquet that you get when we talk about Broadband penetration so Video is the main driver, Voice comes along, and then Data, so once we talk about Broadband we talk about all of them together.
You said you started 10 years ago; can you look into the future in another 10 years where do you think our industry will be?
Wow! Well like I mentioned, 10 years ago we couldn’t have expected that we would be where we are now, so another 10 years if I say I can actually predict the future, I’ll be telling a lie but generally what we expect to see is a situation where we are really not talking about the constrained that currently exist; where we want to actually push out 2mbps to the individuals today and even talking of about 6mbps to each individual. I’m seeing a situation where we are familiar with what is currently going on globally about the internet of things, we expect that everything will be interconnected in 10years time, we will have wearables and we’ve started seeing things in that realm. We will start to have driverless cars so everything, being interconnected, more automation in the world and all these will actually be happening because of Broadband advent. We are also seeing that even in, Nigeria the Government is embracing automation so we can fast forward that to what is likely to happen in 10 years. We’ll see that the President was talking about using automation or system to curb corruption so we are expecting that when many of these things are automated, there will be less human intervention and when we have less human intervention, things get programmed, things get audited, things get a lot more systematic so there’s going to be quite a lot of changes in our lifestyle, in how we perceive things so what we see today will not really be the way they are and that’s why I can’t really predict. But I want to just simply believe that the internet of things will actually be a big thing so we will not be talking about Broadband any longer because it will simply just be a basic infrastructure and then we will be talking about living life, and living life in an interconnected way, we will be a lot more interconnected so it’s very exciting to actually be part of the Broadband revolution introducing these things that will actually become a change in lifestyle.
The regulator is talking about 2.6 GHz licence which is going to be auctioned, can you tell us how prepared VDT is to take on this auction? I’m sure you’re going to play in it.
Well like I mentioned, we cannot be seeing this much opportunity globally and as a country not want to belong, so 2.6 is also part of the ecosystem that can actually usher in and deliver on the federal government’s objectives of 30 per cent Broadband penetration by 2018. So, liberating more frequencies is a welcome development whether VDT will participate will be depending on when it comes out. There are also other frequencies, we know about the 800; we know about the digitisation of the Broadcast Stations so these will also usher in more spectrum. So, it all goes to add to what I mentioned about the Broadband, about wireless being a more rapid way of making sure we have more Broadband penetration. Once 2.6 comes on, we’ll take a business decision at that particular time when it actually comes on again, we have the 2.3 like you are aware and we are also playing in that and the spectrum that we have is actually a big spectrum and we also need to actually contribute our own quota. It’s no use just acquiring spectrum without converting it to any useful purpose for the masses. Let it get to the masses so that all this then becomes things that actually bring down the cost of Broadband to the individuals.
Talking about the one you already have through your other company, Bitflux, you are the only one that won it. People have been asking, why have you not rolled out?
Not that we haven’t rolled out but generally projects like this needs a lot of planning, apart from the planning side, it also needs a lot of Capital but we are on course to roll out the service early this year, at least in the first half of this year. The initial teething problems are all things in the past, we already contracted a Vendor and you’ll start seeing our services in the market place soon.
That’s in interesting! We are waiting for it. When you say that it is capital intensive, we all know that. Like how much are you investing in rolling out with the Bitflux licence?
You don’t expect me to tell you how much we are investing but of course it obvious we bought that licence for about 25 million USD and so definitely the money we will be investing will be more. Rule of thumb says for you to have any meaningful impact, you need to spend at least, times four the cost of your spectrum. We also believe from what we’ve seen around in recent happenings, I will say we got the spectrum at a moderate price. Given the 2.6 that you saw, it was actually being advertised at a reserved price at about times three the cost that we got our own spectrum, from there you can conjecture if you have a spectrum you need to spend about times four of that minimally to make an impact in actually rolling out service.
Do you really think that these spectrums were over-priced, like the 2.6 you mentioned?
I already mentioned earlier, you cannot really say something is over -priced or under –priced. It’s about the market. What looks over-priced at this point, just like every economist they talk about the market at a point in time, may look under-priced at another point. Depending on what we have in Nigeria, is the political climate right now investor friendly or not? Now whatever is the price when you have a reserved price, if you have people coming to the table to bid, then it means they are prepared to pay at least the reserved price, then you can’t tell the regulator that he has over-priced it but if the regulator says this is the reserved price and nobody comes to the table, that is when we know that it’s over-priced. We know the recent thing that happened in the US about one week ago, we saw how much that spectrum was actually purchased for, so the cost of spectrum per unit is actually even rising higher and higher because these are actually limited resources.
When you pay this money for the spectrum like the $25 million, it is for 10 years, now when you are renewing, how much are you expected to pay?
Ten years is a long time, just as I couldn’t predict 10 years. It depends on what happens then but we had a 10 year renewable offer on that spectrum so I will not talk about how much we are going to pay but let’s first digest this first 10 years.
If you talk about licencing, VDT has its own licence/licences which expires once in a while, I think your current licence is running up to the next one or two years which you’ll need to renew, how much do you pay for the renewal?
You know it depends on the type of licence. There are different categories or licences that the NCC issues out, there is the operating licence. Operating licence is when you have the internet service provider’s licence, the Universal access licence, the infraco licences. These are operating licences, you can get on the website of NCC, the prices get fixed and change, you’ll see the renewal cost but those are just operating licence, there is the issue of spectrum licence. Spectrum licence is for those that want to play in the wireless world, so if you want to play in the wireless world, you need the licence for your spectrum, the other one that was bided for was because of the spectrum licence. Now along that line, we also had an operating licence that gave us the ability to offer universal access operation. So they are two different things, there is the operating licence and the spectrum licence.
You just mentioned InfraCo now, are you not playing in InfraCos, I heard they have given MainOne and IHS, did you apply for it?
Directly, no. But we are actually a member of the MainOne Consortium, and so we are happy that our consortium got Lagos. It is a very welcomed development and it goes a long way to talk about the fibre to the home, so having such an infrastructure in place will also develop the fibre to the home that you mentioned earlier and it will actually make it to come to fruition faster. Also, don’t forget that for the Bitflux licence, one of the major deliverables is that the InfraCos will hand over to Bitflux. So it’s important for us to note that the InfraCos will hand over their tail end; the last mile to the Bitflux which has the wireless distribution at every point where they are, so it is Bitflux using that spectrum that will actually carry these to the different homes.
That’s interesting! So give or take, you are winning everywhere. Mr Omoniyi, you are not growing any younger. You keep looking younger each time I look at your face; so tell me what you do outside these busy schedules. What do you do to keep alive, vibrant and to really keep going?
Primarily I must say I am an entrepreneur and just with every entrepreneur there is a driving force you’ll probably have a vision, one of the things we want to do is to key into this broadband revolution. We have been privileged to be entrusted with the leadership position, so we are rising up to that occasion and I stay focused in whatever I try to do and I make sure to stay focused at doing what I want to do. At the same time I do have time to unwind too. After work during weekends I go to social clubs socialise and play couple of games. My children are all in school now so I have more time for myself with my family. I will say if there is any seemingly way that I look younger, it must have been in the gene.
Now, another question about the InfraCos, some people have said that the government trying to give subvention to InfraCos to operate is like going back to the days of NITEL and how will it compete with those who didn’t get any such assistance. What do you think about this?
I guess this issue of subsidy or not, has been over flogged severally, I remember the EVC mentioning this and I also was even one of the people that challenged and said it should not really be so at one point but I have since changed my mind having listened to the other side of the story. What the Government has been saying is that, they want to actually participate in making sure that this infrastructure develop as fast as possible and because it’s a bid, nobody was excluded, so if we say that is going back to the advent of NITEL, no I do not agree. You are aware of the USPF fund, when USPF gives subsidy, does that take us back to the NITEL days? No! When Government wants rapid development, they can intervene and part of the ways government intervene is by giving subsidy. Subsidy is a form incentives and this actually happens all over the world even in a deregulated environment. In America subsidies are given when government wants investment to flow somewhere, government actually removes subsidy in form of tax or cash give back, or investment and this investment is based on actualisation; what has been done then will actually underpay. And also it is another form of controlling prices to some extent having control, it will be very difficult to say you’re a regulator and cannot sell more than this prize when you don’t give any incentive if it’s just purely a private sector investment. So, generally if government is giving subsidy, I believe it’s a way of bringing down prices, they can moderate the price the broadband gets sold so everything is tied to what the government policy is trying to achieve. We want to deepen broadband by 30 per cent by 2018. How do you do that? You need to actually give incentives if you see some kind of drawback, but was it actually given to this people through a back door? No, it was an open advert so the issue of giving subsidies to whoever wins had been publicised from beginning so if somebody now wins and somebody now say because I did not win so what happens to me, but you had the opportunity to have gone into the bidding and also take on that subsidy. I also want to add that government did not say that they are doing this on an exclusive basis but they are starting with this. They need to see how this run, maybe they are going to open bid for another one in few year time, so the people that did not get it this time around can actually come into that we all want this whole thing to be bigger and faster. There is nothing stopping anybody that feels he wants to enjoy the subsidy but needs to come under the control of the government through the NCC, by coming to join the consortium I still believe it’s still open it’s not closed it just depends on when you come into it.
Aside the capital issue you mentioned earlier, talking about Bitflux now, are there any other challenges delaying your roll out?
There are challenges everywhere whenever you are starting a new venture or new projects. These are not really something insurmountable. Challenges are part of life so there are challenges but these are natural things we need to find solutions to. There will be challenges in capital raising, there will be challenges in operations, we know what it is, there will be challenges in the current environment that we are now, there will be challenges when you consider the socio-political environment of the country. The issue is, are you determined to overcome? That has been decided since when we paid for the licence and we do not want our capital and whatever money we paid to be lost so it is left for us to surmount those challenges and make sure we deliver a solution to the masses.
VDT has got another ISO certification; please tell us more about this.
Yes, we started this journey about standardisation since about two and a half years ago as VDT, and one of the determinations that we had was we want to actually grow the firm to be a world class organization. Yes we started locally but our aim is not to just remain local, we also hope to actually grow and become a multinational and one of the ways to doing that is to standardize our processes such that our processes itself can be world-class. One of these is about two years ago we were certified in ISO 9001. In spite of the continuous improvement processes that we actually have just undertaken, ISO 20001 being an IT service management company is simply an addition. I won’t say we are just carrying those certification but we are simply trying to actually get matured in our processes so that those processes can be replicated and then we can actually measure up to world class standard.
What is the difference between the 9001 and 20001 certification?
Well as you can see, the 20001 certification is actually higher from the number than 9001. The 90001 is like the base, and is good to have, we wanted to start having a good base that tells anybody that this is a firm that has processes it has the basic processes that you’ll expect okay. Now the 20001 is a specialised certification that actually is pertaining more to our industry and I’m sure you are aware that even the manufacturing companies have the 9001, you’ll see food processors having 9001 and other different industries so the 9001 is a base standard so if you want to specialise, the 20001 actually gives us a specialization in the sense that it deals with the IT services which is what we actually provide. So the 20001 actually talks about your capability in providing IT services and the processes followed in providing that, instead of it being generic as in the case of 9001.
VDT as it is today is expanding its horizons, where do you see the company in the next five years?
Next five years like I said, the internet of things will be more around us. The internet of things simply means that I see the products being in the hands of the general masses; the individuals. Today VDT is only known in the corporate; among corporate organizations in Nigeria. So our poise has been that we want to take the same quality and assurance that we had given to the corporate organizations that are currently our customers and are enjoying our services, we want to actually push these to be in the hands of the individuals so I see VDT services being available, being used in homes, being used by the individuals, being worn by people, so that is my aim. Looking at it there’s so much we need to do in Nigeria which we really have not conquered and of course I’m not talking about going outside the shores of the country for now. In 5years time, it would be possible to take some leap outside the country but right now, there’s so much to be done given the support and the vision that the government has espoused.
Finally, as an operator, what do you feel most discouraged about and most encouraged about in the telecom sector?
I will not say I have been sad but there are rooms for improvements and I will be addressing these to the regulators to pay more attention to making sure it protects the smaller companies. I don’t really believe the regulators are doing enough. There are a lot of under hand deals that is being done by the majors in terms of unfair competition, squeezing out the smaller players. I mentioned it to you earlier about many fallen by the way side they had been victims and when we look at it these are actually SMEs. VDT also used to be part of the SMEs, we grew from them and we were a bit fortunate but if the regulators had paid more attention, we would have seen a lot of them surviving. In other climes, there are protection, not just protection, I am saying let them do their job if they see any anti-competitive behaviours, it should not just be that they are trying to create dormancy between majors. There are dormancy, unfair practices of majors towards the very small people; the SMEs and the ISPs they are being competed with in a very unfair manner. I want the regulators to put up a structure where they can be audited and a guideline where the police can see that there is even protection for these smaller companies because they are largely indigenous and what you’ll find out is that, the majors when they get to a certain level, they go for efficiency and when they go for efficiency, what they do mainly is shed load and these causes a lot of unemployment as you’ve seen recently when they were releasing their towers. It’s a good thing to do but what happens? They are outsourcing the services and what we see is net loss of employment, whereas this net loss of employment would have been absorbed by the SMEs but now those ones were destroyed. We see many of these people being let out on the streets and these compounds the woes of the populace so the regulators need to pay more attention to this. What gladdens my heart is that the opportunity is limitless, it’s immense now is the era of communication, we’ve seen what voice did to the economy. The Broadband even promises to do far more than that, the opportunities are immense. It’s something I wake up every morning and I say well, I have been so fortunate to be in the middle of these and we have even been so fortunate to be at the leadership position in the industry and so we need to rise up and make sure we do it well. So that gladdens me.