As preparations hits top gear for the launch of the 5th Network Operator in Nigeria, the management of NTEL felt it was expedient to meet with the members of the ICT media to present their goals and objectives. At the interactive session where the company’s logo was revealed for the first time, NTEL’s CEO, Mr Kamar Abass answered a number of questions from journalists. Excerpts:
Question: There are reports about you planning to invest over 1 billion dollars in the next few years and we wonder where the money will come from, can you tell us your business plan?
Answer: Let me say first of all that it is true that certainly over time, we expect to spend a significant amount of money and a figure of over a billion US dollars is not an unreal expectation of people coming into this market. But the market has evolved a little bit of late. For example, we are not going to have to build our own cell towers, at least for a short time, probably because have inherited some towers and also because we can collocate on the towers existing in the market place. So, that reduces our need for capital expenditure, although we have to make some operational expenditure to compensate. In relation to data centre, we are doing well, but it might be impossible for us to lease space in the data centre and not build our own. There are many platforms we can access on a share basis and therefore save capital expenditure and replace it with operation expenditure, which we can easily match with revenues and that is a safer bet for a new business like ours. So, certainly, we wil be investing and we are working with partners. We will share the investment load. As I speak to you now, there a a number of international partners who are in the telecom space and are very keen to expose themselves, not just to the Nigerian market but to the very exciting opportunities we see around 4G and total telecoms in Nigeria.
How will you like this company to be addressed, is it NATCOM or Ntel and what is the meaning of Ntel and possible time of roll out?
We prefer to be called Ntel because that is the business name. And honestly, when we conceived the name Ntel, we didn’t imagine that it will be a short form of anything but it is a happy coincidence that it also means Nigerian telecommunications. So, the brand name is Ntel. And on the time of roll out, we are working to put everything together, we are optimizing the various services to make sure they give you the best experience and tuning the network to make sure that resources are properly allocated to all the systems. Those works are on-going and once we get a lot closer to rolling out, we will share that news and you members of the press will be the first to know.
Are you going to revive fixed network and how much of the NITEL infrastructure that you inherited you can still build upon, especially fibre networks, yes, you have talked about SAT-3 and we can relate with that, but do you still have NITEL fibre network that you can build on or revive or are you going to build new ones to deliver fixed network? And is it real that you are building a 4G mobile network?
Yes, we will build a fixed network and we will use none of the technology that we inherited because frankly, that is as old as the hills in technology terms. Even technology of four to five years can only be improved upon significantly or sometimes thrown aside but for equipment 10 to 15 years old and that has been switched off for eight years, it can only be used as a scrap. In relation to 4G, we will build a 4G network, which I have to tell you; can never be bettered by any other. It can’t be bettered because of the amount of spectrum that we have compared to what others have in the 4G space today and what is still to come. Generally in Nigeria, spectrum is sliced thinly, which means that people don’t get a huge amount of it and the size of the spectrum we have is capable of delivering services at around 300 megabit per second. Now, MTN has this stretch as well, so does Airtel, Glo and Etisalat, but the difference is this: They have many millions of customers on that spectrum and therefore, it is tied to 2G to serve those customers. So we are in the position of adding those customers, therefor we can apply the whole of that 300mbps to do 4G and it is revolutionary in that sense. And frankly, we are taking the ambitious step of adding carrier aggregation which is a technology that bonds the different groups of spectrum together and MIMO which plus it out four times rather than twice and that gives the 300mbps. Even if you don’t care about the megabits of the of the seconds, lets just look at the numbers. On 2G, you do one megabit per second; on 3G, you do 42 maximum, but with our system, you do 300, which is like times eight, so I think that feels like a coming revolution.
We have seen some investors come here and are making more here than where they come from without building any huge infrastructures that Nigerians can point to. What is your philosophy on investment and returns?
It is important to note that investors who come to Nigerian come because they see opportunity for good returns on their capital. However, we too have got to get something out of it and it is about bargain for everybody to gain something. What we gain is access to a good amount of capital, which frankly sometimes can be a struggle to raise locally. And secondly we also get some access to expertise and the experience in the telecoms market. This is what we look forward to; being able to get access to our fast growing market, give them secure returns and secondly access their expertise. Of course, after 15 years of telecoms in Nigeria, we have plenty of local expertise but there are some areas where we have some interesting learning points because of the relative immaturity of that sector in Nigeria.
You are dwelling on 4G mobile broadband service and you have not said anything about voice service, though the other telecom companies have been complaining about dwindling revenue on voice services, does it mean you are not going to do voice at all? Also, what are you going to do about NITEL properties littering different parts of the country?
Taking your second question first, we are working very hard to take proper control of all of our assets across the country and we have taken steps to secure the premises and to maintain access control at each of those locations. In relation to your other question about voice, it is quite correct that the voice market is not growing as many will like it to and we see the evidence in the number of 3G customers. The fact of the matter is that the market has moved on from just voice to data and we are looking to address that data story but also to give our service the opportunity to make voice call. We will offer them the opportunity for voice over LTE, also for voice over the top, such as whatsapp call, fibre etc. All of these options will be offered to our customers so that they can use our data network to its best.
I often say that if you are building a mobile network in 2001, you were voice centric; if you are building a network may be five or six years later, you were thinking of accommodating voice and data. Now, building a network in 2015 and beyond, the prime consideration is not just data, but the demands of video over a data network. And that is exactly what we are doing, but we are not forgetting about voice. So people can bring all of their business needs to us and we can support its entirety.
Looking back, NITEL/MTEL appeared to be offering cheaper services compared to other telcos, and now that you have bought the company, Nigerians would be expecting that you also offer cheaper services. So what is your pricing going to look like?
I have to say that one of the things I haven’t paid too much attention to is NITEL/MTEL pricing policy, and maybe I should. But of course, our goal is to make sure that Nigerians get access to high quality broadband, rather than just cheap broadband because in some senses, the power of broadband is a necessity to boost productivity and with higher productivity, you will earn more money and that will improve your power to spend on the best. So, I am not clear about the relationship with cheap broadband, but what I do know is that we will give to you consistently a high quality broadband experience that will increase your level of efficiency and productivity, which are game changing for you in your business.
A relatively trivial example is the Uber Taxis. An Uber Taxi driver told me, if he had a reliable data connection, he could arrive quickly at his destinations for pick up or to deliver messages. That means every day; he would probably achieve an addition of three or four trips, which means more income for him. That applies to everyone and our focus is on high quality broadband and we also need to find a way to make sure we can find a decent return to allow ourselves to continue in business. And I don’t know the reasons why NITEL/MTEL were not commercially successful but I can help thinking that it is important for us to be able to earn a decent return on our investment and everyone in this room knows what the starting investment is and how much we plan to invest going forward which runs into billions of dollars.
It is believed that SAT-3 service is quite expensive, and now in the hand of a private company, how do you plan to make use of SAT-3 efficiently in the midst of other options?
We are already selling SAT-3 services and I am delighted that we have in fact, got one contract in our hand and we have got many expressions of interest that are being negotiated. We are at a pricing level the customers are finding appealing. What we are determined to do is to fill the capacity that we have and we need to fill it in a reasonable short time frame because the cost of running a tier 3 data centre is significant. So we target customers who have genuine interest in capacity and we try and give them appealing cost to encourage them to give us a trial and a commitment. We will offer good solid value and excellent quality service so that we can get ourselves firmly into the market place. So, our focus is value for customers.
In any business, there are always challenges, what challenges do you foresee in the course of this business?
I think I will like to talk about how we are building this business and that will give you an idea of how we are going to address any challenge that might come our way. The first thing that I can say is that this business, in fact, everything that we doing today have been in gestation for no fewer than three or four years. My first exposure to this project occurred in October 2012 and we have evolved the business to the position where it is today and that has given us a chance to review, update, correct and adjust our thinking and that continues to modify everything we say and everything we do. The second important thing we have done is that we have selected a team that is formed within the industry and with a depth of experience that is probably unmatched in a start-up. We have people that have several years of experience in the telecom industry in Nigeria, across Africa and across the world. So, that experience will allow us to operate in a way that will be quicker but potentially less problematic. The other thing we are benefitting from is in the excellent ecosystem. There are many companies out there that are offering services for telecom operators and that is a big change from the situation 15 years ago when MTN was coming out. That ecosystem allows us to create a slimmer organization and rely more on outsiders to do a lot of the works that would otherwise have to be done by us. So, those are just few examples of the things that we see as having simplified our business and make it easier for us to move quickly.
I was just wondering about the name Ntel and Nitel, there seems to be no difference, and in any business, confidence is very important. With the experiences Nigerians have had with NITEL/MTEL, how will you build confidence in Nigerians and what unique selling propositions are you bringing?
You are right because a brand is what it does and what we want to do is to start with something which is visually appealing and which stands for something: Nigerian telecommunications. What we intend to do is to build that brand with meaning that is in tune with the services that we provide. So, the first available is SAT-3. SAT-3 is of course a well-recognised service across the world, but we will build a layer of security and redundancy to give customers a better experience. And we are giving the customers the opportunity to understand what we are doing differently, so for a start we have a tier 3 data centre; we have highly experienced people, including people who have worked in data centres for many years.
In mobile business, it’s the same; I mean the mobile business is going to be yards apart from any other. Most operators today operate in the 2G and 3G space, and as you know, 2G growth has ended and as far as 3G is concerned, it’s a growing technology and it has been in the waiting room for 4G. And we will differentiate on the 4G experience given that our 4G experience will be far apart from the existing 4G, because we know the existing networks are capable of doing and we will be yards apart from that. So, Ntel will have an enormous push from the quality of the services we offer into a place that we will become a company that stands for something meaningful. The reality is that we will change the perception of the brand and change it relatively quickly. We will create and maintain great experiences.
You recently said that about 65millions Nigerians are accessing the internet using 2G, don’t you think there is a problem somewhere that makes the existing telecom operators to be unable to move these people to 3G and now you make it sound so easy to move Nigerians to 4G, what magic do you intend to perform especially in getting to the last mile?
I will say the answer to your question is in the very heart of the way telecoms markets develop globally and the way it has developed in Nigeria. First of all, those who have got the majority of the customers today have 2G and 3G spectrum. 2G spectrum has only a hundred and seventeen (117) million customers and the only way you are going to get those customers off 2G is to give them a new phone. But that is costly, so you dare not go there, you just have to wait for them to come out of their own volition and go on to 3G enabled phones. Then you encounter another problem; in Nigeria, 2G started on 1800 and 900, which means that the great of base station that was built was built around that standard, which means that the distances between the base station and the customers to be covered was defined by 1800 spectrum. When 3G came alone on 2100, the 3G radios and antennas were put on 2G base stations because that was the most convenient and most cost effective way to roll out 3G. However, the feature of 2100 3G that is problematic on the 1800 grade is the problem, it doesn’t travel as far as the 1800 spectrum does, which means that it doesn’t provide the coverage. And with a heavily loaded 3G networks, 3G coverage breathes and that makes the coverage to shrink. What is required are in-field base stations and when I last looked for example, a major operator needed 600 additional in-field base stations just in Lagos to improve the coverage of 3G to a level that will make it stunning in quality. Again, cost prohibitive. Frankly, it will take them until the end of 2020 just to get all of those sites built. So, the opportunity is for a new standard of radio to try and address this problem. 2G was the starting point and you can’t get the customers off 2G, 3G was built on the 2G grade and has failed to cover the people adequately. So what is this 4G? Firstly, it is on 1800, so exactly a fit of the existing grade of site. Secondly, there are 20 Megs with no customers on it, so ideal for refarming and more importantly, there is technology today: carrier aggregation and MIMO which boosts it up to 300 megabits per second.
The crux of the matter is that for you to deliver 4G you need the right spectrum and the technology to boost it up and that is what we have done. Now, we know we need to optimize things around devices; around the right coverage and around the right quality and I can confidently say we are going to change the game.
Before now, there is usually disruptions in SAT-3 services due to cable cut and each time this happens, it takes about one or two months before it gets repaired and it has lost a lot of customers due to that. So what are you putting in place to ensure that this does not happen again?
Prior to now, that cable ran directly through the port of Lagos, which means that from time to time, a vessel will float into Lagos, rather casually, throw overboard a mighty anchor and cut the cable. And when that happens, of course, we in Nigeria have seen light go off and we know, but the ship captain is not going to notice anything at all. He will only be thinking of how he will offload his cargo and get himself back to South America. What we are doing now is different. The sea wall on Eko Atlantic was in fact the last thing that caused damage to the cable. As they built that sea wall, they were a little bit unconcerned about the cable that is our interest. What we are now doing is that we are creating a diversion; the cable is being diverted away from the sea wall and moves six and a half kilometres to the East. So that is well away from the port of Lagos and in areas where ships have no business going to. And as for the local fishing boats, I think we can tolerate them since they are a few hundred metres above our cable. So, it is now a much more secure cable and even so, what we are now doing is that we are swapping capacity with other cable systems. So if at all there is a cut, we can immediately relay the traffic over the other cable and they will do the same for redundancy.
Talking about data and video, do you have any plan for triple play?
Absolutely yes! We see 4G as a transport lane, which has no other real advantage than brilliant speed and fantastic latency, but generally speaking, that is the entry level. What we think will make the real difference is the applications and the services on top of that transport lane. So, our target is to build the best ever transport lane and a good layer over that with additional services ranging from videos to every conceivable service. So, our play is very much on building that excellent transport layer and then proliferate services by remarkably giving unique access on our network.
All you have said about your services appeals to those who could be seen as first class citizens, is there any service targeted at the rural populace?
That’s a very good question and it gives me the opportunity to talk about how we see the rural communities. First and foremost, I remember having a vigorous argument with the Chairman of one of the operators in Nigeria and he was arguing against rural coverage. I said its not clear to me that there is less money to be spent because the benefits of broadband on productivity is across nation, not limited to the city. Those in rural communities can also take the advantage of broadband like those in the city do. The problem, however—and that is what our argument came down to, is the cost of reaching those communities in relation to the revenues. The density of the people is low, so you need ultra-low cost base station. There are also many new technologies that you need to deploy to allow those base stations in the rural areas to function effectively; microwave and may be even satellite.
What we are going to do is to think carefully about how we can collaborate with third parties to do something in the rural communities. I will tell you why: One, there is somewhere around 40 million Nigerians who are living out of touch of the base stations. In other words, they are living so far from coverage and it is those customers some organisations are setting themselves up to address. There are two basic models, the first that has come to us as most frequently is ultra-low cost base stations. These base stations cost 15 to 20,000 dollars in total and a thousand to run in a month, compared to five thousand to run in other instances. Now, these base stations are often implanted in the rural areas in partnership with local communities and that makes it easy to deal with the security and of course to deal with commercialization of those facilities. The other idea, being championed by other people has to do with satellite coverage. I know a couple of organisations who are interested in using satellite to deliver services to rural communities. Now, our priority is to roll out our 4G mobile network, but on the heel of that will come our work in the rural communities because we see ourselves as fulfilling our purpose in broadband growth across Nigeria. So our relevance is very strong to the people whether they in the cities or outside the cities. And as a total telecom services company, we will address all those needs because we believe strongly, as I argued with the chairman some months ago, that there is commercial value, not just altruistic interest but real commercial value in serving rural communities.