Kamal Abass was managing director of LM Ericsson Nigeria before he assumed office as Chief Executive Officer of ntel, a position he relinquished last week. Young, urbane and articulate, Abass had a track record of providing technical advice to some telecommunications companies on their successful commercial rollout of services even before he helped birth ntel. Highlights of his stewardship at ntel include steering its affairs to emerge as the first advanced 4G/LTE network providing superfast internet access for voice, data, video and TV on demand; and the first network to make a 4G data call. Abass holds a Bachelor’s degree in Civil Engineering from the University of Lagos; an MSc in Transportation Planning & Management from the University of Westminster, London; and an MBA from Cranfield University’s School of Management, Bedfordshire, UK. In this interview with Tokunbo Adedoja and Olaseni Durojaiye, few days before he stepped aside as ntel ceo, he bares his mind on the challenges and prospects in the Nigerian telecoms industry and what ntel is doing to expand its market share. Excerpts:
Slightly over a year ago, your organization rolled out commercial activities, how has it been, particularly because your company was coming after four major telecommunication companies?
We did start commercial services in April 2016 but the journey started considerably before then. I first became involved with the shareholders of what is now ntel when I was with Ericsson as the Managing Director for Nigeria; we gave advice to them on the best strategy for their Nigerian market place, over a time we refined the advice and we participated in the RFP process that was initiated by the Bureau of Private Enterprises (BPE) and the liquidator, ultimately we were successful in winning the RFP process and I was asked to be the CEO; so at the time I became CEO around April 2015 I’d been working on the project for around two years. It was a further 11 months after before we took over the assets that we required before we started commercial services. It was a short window between acquisitions of the license through to pretty much comprehensive commercial activities.
We started our commercial activities with skeletal services in Abuja and Lagos, which has grown and grown, and we started out with a clear mission which is to improve on the broadband experience of customers today. We saw and continue to see a very large market for broadband. Today there are more than 50 million broadband customers, all of those 50 million broadband customers will be better off on our network because our network is 4G, a next generation network while a lot of the existing broadband customers are on 3G, which is a lower generation and means less efficient and gives a less good quality experience. It is impossible to argue with the fundamental science of the issue and all we’ve got to do is give them coverage in the areas they work, live in and play and certainly give them access to a device and thorough proposition that they would consider to be attractive and we have certainly done that to tens of thousands of customers today.
Considering the inroad you have made so far, one would have expected that the network would have extended its coverage area beyond what it is presently. What are your thoughts regarding this?
Where we are today, I think, is the best possible place where we can be within our resources. We rolled out several hundreds of circuits, we have got pretty full coverage in each of our three cities, in fact, we have the largest areas of coverage among 4G in each of the three cities that we’re present in. Rolling out beyond those three cities requires us to raise capital and we are in the middle of that process of raising capital. And to keep to that network extension will consist of adding more sites to Lagos, Abuja and Rivers State, may be add another 50 percent of what we have and then extend to, may be, South West, to the South East and then to the North.
One of the expectations of the public at the inception of ntel was that the acquisition of Nitel and Mtel facilities will facilitate a speedy actualisation of the much talked about rural telephony initiative of the federal government, some industry stakeholders insist this has not been so. What is your take on this?
There are two things to say in relation to the assets that we acquired: The first is that we acquired assets that have been dormant for roughly seven to eight years, that is the vintage of the assets that we acquired. The bulk of the assets that we acquired were last used in 2007 or 2008. By 2015 when we took over, many of the assets have not been operational for many years, many of the assets had been superseded; they had 2G mobile, that was pretty much the first generation of 2G; they had fixed telephony switches which were no longer connected by copper or by fibre to anywhere, they had sites and base stations that are all 2G and some CDMA, all superseded not only because they were old technologies but they had also become disused; so all of these were very much irrelevant to where we wanted to take the ntel opportunity.
But the second and more important point is that we felt it was fundamental to add to the potential of the customers to access the best broadband. Broadband is not a thing for Western Europe or North America, or a thing for economies in different climes. Broadband, like the desire to communicate, like the way we communicate is universal and we have all seen or experienced the power of broadband to transform, and the same potential and I don’t mean typical, average or half, I mean exactly the same potential for broadband to transform wherever on the globe that you execute broadband. Yes, the numbers may be different, but if you put a broadband in the hands of human beings it would transform their lives because it gives you access to information, to productivity and efficiency that would be impossible to do without it. That was why we felt in the world in which 2G was as complex as 3G, in a world that actually recognises that broadband is a firm need and gave ourselves and Nigerians the opportunity to experience the best broadband.
And we have another ace off our sleeve, when the licences and spectrum were granted to Mtel and NITEL in 2001 it was the very beginning of a mobile age and the very best spectrums were carved out for the beneficiaries of spectrum at that time, they were MTN, the predecessor organisation to Airtel, Glo, NITEL and subsequently it was Etisalat. All those networks had built 2G networks and subsequently built 3G networks; NITEL’s network was used for 2G and was no longer being used for 2G use but happily it can be used for 4G; so you have a meeting of the best for the bests. You have the best spectrum that was available at a time that spectrum was fresh and newly instituted. Therefore, it was the best spectrum available at that time now married to the best up to date, most advanced technology for communication; and we have not only launched a broadband that would do voice and messaging, but most importantly that can offer the most demanding use for data these days – video. And that’s what we do, that’s what we will do well into the future. We will hold ourselves up to the very demanding standard for video and for broadband. We want to be known as Nigeria’s broadband operator and I am so pleased because that in fact was what we said at the beginning because that was exactly how we wanted to be viewed, the broadband operator of choice.
You did mention that ntel is in the process of raising capital for network and coverage expansion and that brings to mind some of the interesting happenings that border on numbers that have been playing out in your industry for some time, first was the huge fine imposed on MTN, then lately the drama of Etisalat, now 9Mobile, and some banks. From your experience, what does this mean for your industry especially with investors and borrowers?
In my own experience, this is frankly speaking the natural progression of an industry. Many times operators in Nigeria have been fined for various transgressions, if I can put it like that. There have been fines for quality of services, there have even been fines for registration processes in many parts of Africa, and these fines have been imposed. The consolidation of the entire business is well understood because, really, it is hard to be efficient as a top company if you are not of the scale, therefore people drive very hard for scale and the people who lose in the scale battle then have to consolidate. That is pretty natural.
The reality of Etisalat now 9Mobile is shocking but not unheard of. It is a successful company no one can take that away. It was a company that was hurt like many others by the very steep currency devaluation and frankly they had shareholders who, like many shareholders in other countries, lost patience with a company they felt should have returned more to the shareholders over time. It is about choices made at the board within Etisalat Nigeria. I have seen many variations of what has happened in the industry in many other countries of the world, they are alarming, they are distressing especially for those that were involved, even then I would say that they should not be seen as impugning our industry, or its fundamentals or anyone involved.
Frankly, I think they have been a little bit unlucky. When we sit in the cold night of the day we can look at what’s happened and we can be judgmental and shake our hands and talk light about it, but the reality is there is enormous amount of money going on in our industry all the time; we’ve had to deal with many challenges and this is not to say the regulatory rules are not to be observed or are not to be taken very seriously. But sometimes mistakes happened and we all pray for an environment in which we can fix our mistakes before they get out of hands and sometimes they do and we see the consequences.
So, I think we have a fundamentally strong industry with a set of very committed and talented professionals in the industry with a supportive regulatory regime and regulator, In the NCC, in the Central Bank of Nigeria, in the National Assembly and in the ministry that is enormously supportive of what we are doing and the contributions that we are making and in government as a whole; but sometimes things go wrong in spite of the effort of that community.
For a while now members of ATCON have been in the forefront of the clamour for local content in the industry arguing that it would boost the drive for local content in the industry, some other stakeholders have said it is premature and argued that the country lack capacity to effect the demands of the call at this time. What is your take on this, particularly the discourse around an ICT University?
Of all of the social engineering initiatives or corporate social propositions that you can think of, an ICT University has got to be up there among the best. One because there is the need for us to bring in talents into our industry in a big way and keep that supply of talent strong. Secondly because the route to advancement, I think, is very tightly wind up in the amount of technology that our young people study. If you look at the biggest companies in the world today, the largest companies, they are not just trading companies, they are companies that make significant technology innovation; I don’t even need to mention names but of course it is about people like Apple, Google and others. Even Uber, the thing that they spend money on apart from paying drivers – and they want to spend less money on drivers over time – is innovation on its platform and they are increasingly spending money on artificial telecoms technology. So it will make enormous sense for us, not just in Nigeria but across Africa to invest in this university; that is an important development for the future.
I can assure you of one thing which is to say even in the absence of a pure ICT university today ntel has managed to achieve a 100 percent result in relation to employing Nigerians in this company. Every last person in this company is Nigerian; we’ve managed to achieve that and we have the quality and professional standard and capability that is no less than that of our competition. So, yes, it’s true an ICT University would be beneficial and I would like to see that and it is possible without too much difficulty.
Even in the absence of the ICT University, we have achieved a 100 percent workforce. We don’t have to really stress ourselves to do so, it is something that we said we will do from the reason of cost efficiency. If you bring in the expatriates, you have to give them houses, give them cars, maids and you have to pay for them to go to their families every quarter or pay for them to bring their families here and then pay for schools and other things; all of these monies can be better spent on developing the business and improve experiences for customers. So, we are very proud of the fact that we’re a 100 percent Nigerian company in terms of our employees and to be no less effective. If anything, I’d say we show more of getting the job of giving the best broadband services to our Nigerian brothers and sister done.
Watchers of the ICT sector continue to make an issue out of the fact that almost all if not all of the fibre optic cables are located in coastal cities, including SAT-3 belonging to ntel. Why the concentration in Lagos and what is ntel doing to have it moved into the hinterlands?
I think we should be really specific on what the customers want. Customers want high speed access to the internet, they want high speed connectivity to the internet and, over time the capabilities of technology have changed in relation to fibre. In the past, it was absolutely necessary to have fibre to deliver a mega byte per second. In the old days kilo bytes per second is what we were talking about if we are talking mobile and fibre was about mega bytes per second; these days, over our humble network over a hundred mega bytes per second over a wireless connection. We have recorded speed and that’s why we have been advertising it. indeed we have recorded over 150 mega bytes of speed per second over a high quality mobile device. So what is required is a lesser emphasis on technology whether it is fibre, whether it is copper or mobile to what does the consumer want. They want high speed access to the internet, broadband access, so let’s find the most efficient technology to help deliver that access to the internet, and certainly today for most consumer users and small and medium sized business users, it can be done over mobile.
Now, for the situation where fibre is required and necessary we’ve got to look at the economics, it can be very expensive to deliver fibre to some non city center locations. Businesses generally want to be in the city centers because there are other challenges to doing business in rural areas; even in rural areas it makes more economic senses to deliver internet access to those rural areas via radio than fibre. But often if a company really wants fibre they can get fibre; it could be prohibitively expensive but we like to see a world in which the merit in mobile broadband is properly explored and elucidated so that the people can get access to the most efficient technology rather than just to fibre optic or one thing or another just because they think that is the solution.
These days with 4G and the 5G of the future, high speed bandwidth will be available in common places across mobile. There are countries that have achieved 400 or 500 mega bytes per second over mobile, we have achieved 150 but that’s nothing and on our network we have had a 200 mega bytes per second peak. Many countries in Africa have achieved between 400 and 500 so it’s no longer a case of fibre being absolutely necessary. That is at the level of the consumers. At the network level we use fibre to draw down traffic from our base stations back to our core network between cities, of course within metro cities we use fibre but that is pretty expensive to connect to consumer. Invariably, we use mobile to connect to customers whilst we use fibre to connect to our network because of the very high capacities involved.
Taking a general look at the industry, what would you say is the biggest challenge facing your industry and from your perspective, how is the lack of infrastructure backbone impacting the country’s operations of ntel?
I think it is accepted that you don’t actually need the government in telecommunications. In the 1980s even European telecommunication companies were privatised, France Telecom, AT&T, British Telecoms, there is no national backbone in any of those countries, it’s all built and operated by private companies with nothing to do with government other than a historic relationship. In Nigeria, it is not different. In fact in Nigeria, the case is proven not by an act of privatisation but by act of simple market exercise that gave NITEL and Mtel some spectrum, gave same amount of spectrum to MTN, Airtel’s predecessor and Glo, may the best man win and of course we saw what happened, NITEL and Mtel went burst while the others thrived. In fact some might tell you that the place of government in telecommunication is actually at the level of its regulation to ensure a level playing field and on that it is difficult to fault this government – they have presided over the growth of 50 million subscribers from 400,000 in 15 years. It is Africa’s largest mobile market, it is seventh or eighth mobile market in the world; and frankly to the point you are alluding to now, it is one of the most vibrantly competitive and I think these successes have at their heart an emerging problem for us, which is that the market is so vibrantly competitive so much that the prices we see are approaching levels that will not deliver an acceptable returns on investment.
Now that is bad because if investors don’t see the scope for a decent return on investment, not a profited one but a decent one, then it’ll be hard to justify investment. If you don’t get investments, then you won’t be able to extend broadband, if you don’t extend broadband, there are implications for economic growth. There are well documented relationships between the spread of broadband and the speed of broadband in relations to GDP growth, and they are well established relationships. Therefore, I think it is pretty important for there to be a level of government scrutiny, may be in interventions around the pricing of data so that we can be protected a little bit from ourselves.
Competition is vibrant, it is vigorous and it’s to the point now where it is threatening the ability to deliver an acceptable return on investment, and that return on investment drives the spread of technology. It is also worth bearing in mind that we are only in the middle of the 4G evolution, 5G is already being talked about tactically; within three to four years we will be in a position where we will be forced to make 5G investment decisions.
So here is the picture: We’re two years in, in our second year in, we’ve got three more years to go, all of a sudden we have to move to the 5G latest technology to stay competitive and to give customers what they want! Hard to do if you are faced with the data prices that are among the cheapest in the world; my sense is it present risks to our market place that we see.
Ease of doing business is still an issue among business operators in the country even with the inauguration of the Presidential Committee on Ease of Doing Business in the country, what is your perspective of doing business in the country? What policies do you think will make doing business in your sector more friendly?
I think that the thing that we are trying to do more than anything else is to cover the population and once that is covered, to keep that coverage active and so we need to buy equipment in US Dollars and we don’t want to be competing in the same market for US Dollars for essential national infrastructure alongside people who are buying bathroom tiles from Italy, or who want to buy expensive shoes and leather bags from the streets of Europe. I treated it lightly but my point is that essential telecommunications infrastructure is of a different category, it adds to the investment in the economy, it adds to the value of the economy and adds to the overall multiplier effects; that should be prioritised for access to foreign exchange.
The second part of the issue is as we bring the equipment into the country and we pay duty on them let us recognise the nature of the investment that we’re making in Nigeria and we shouldn’t be taxed the same level of duties as other goods are taxed, so let’s attend to that. When it comes to building sites we would like protection on those sites so that we don’t fall prey to, for example, influences at the very local level, influences who want to extract pound of flesh; we want those infrastructure to be secured and protected and for us not to have to spend enormous resources just to maintain those infrastructure because those factors impact on our returns and our returns impact the investments that we make while the investments also impact our ability to spread. We want to also see all that happen as we connect those base stations to one another and to base; we want a situation that we can lay fibre, as you mentioned, at a reasonable cost and maintain that fibre also at a reasonable cost. Rights of way we’re re-issuing is painful in financial terms and it is also complex in terms of the amount of time it takes. These is just a summary of some the things that, within your learned journal, if you can allude to and have fixed will impact the industry.
Even with the challenges, a report on Business Confidence Monitor by the NESG indicated a growing confidence in the economy among business managers in the country, do you share this confidence?
I do. Firstly, if you drop a cheque of 252 million for assets, when you have to drop another cheque for 150 million to get yourself to launch and when you have operating cost that is many times your revenue for three years, that goes for levels of optimism and confidence that you can see anywhere in the planet. So, in the telecom business let’s agree we are optimists, there can be no other explanation for that kind of behavior, so I am wildly optimistic.
But you see, our business is special because it is brand new and it is addressing a particular vibrant need. Every month we see more customers, every month we see more usage, every month we see important evolution in the ways customers use our services and therefore ideas for us to serve these customers better and to produce a high yield. Of course I am very optimistic. In fact, I am at the head of the herd of optimists rising across the horizon to catch these new exciting marketplace.
What is your take on the spectrum management regime in the country?
Spectrum management is being done in line with best practice. Firstly, we have got consistent spectrum ranges and spectrum bands as defined by the Radio Council in the International Telecommunications Union (ITU), we have not missed it from that perspective; we have followed the rule of allocating spectrum, it is auctioned in a transparent process and it is released to all comers. I have no problem at all with the spectrum regime, what I would advise the government, and of course the NCC, in addition to the existing regime, is to consider a world in which may be the upfront spectrum payment can be balanced for role out targets and may be a share of revenue down the track. That is not to say government should be betting on market operators or business people – that shouldn’t be government’s job – but what this does is it allows the emphasis of operators to shift to roll out at the expense of giving government upfront cash; so when we spend N60 billion to N80 million on spectrum these money is not available to roll out, by definition network roll out will be slow. What we will like to see is spectrum payment being made over time rather than being made in advance; and so long as we achieve certain roll out targets, say 1000 sites in a year down to 100 sites a month then we should be allowed to pay over.
People could say, go and borrow money from the banks but this is perhaps harder… it is difficult to raise cash in an environment where treasury bills give a decent returns for customers with cash or banks; many will find it easier to put money in treasury bills than to loan it to a corporate when the treasury bill is yielding 18 to 20 percent; it is difficult for a corporate to match that level of interest rate, unless you are a very supportive corporate.
ntel is Nigeria’s first pure play 4G/LTE network. Why 4G/LTE Advanced when all others are 3G?
If you were coming into a market of between 130 to 140million people as it were, when we were gestating the idea the question comes up ‘Is what will you do differently?’ And the first question of we, that is, we in Ericsson doing the work on this idea was to say ‘where is the market going?’ We see it clearly going towards broadband, so what is missing? Clearly the answer that comes back to us is high speed broadband and so we do high speed broadband. 4G is demonstrably and inarguably the most advanced form of broadband and we know that implementing 4G LTE advance takes a number of features which makes it even more efficient and faster, and deliver better experiences and more value to customers. It delivers real value for money in building network and servicing customers; but the real thing is that it delivers enormous value for money and better customer experience. When it comes to broadband those are the things that matters.
I read a report sometime ago that there are about 7500 base stations put together in Nigeria, and that to have a wide and effective coverage of the whole country we need about 40,000 base stations …
(cuts in) It is true that today we have roughly 7000 may be about 8000 4G base stations and to provide full 4G coverage one operator may then need as many as 8000 to 9000 base stations, but it also really does depend on what you can achieve in relation to coverage in very difficult areas and of course what happens in the big population, like where they move to, and of course what happens too is that you’ve got multiple operators rolling out in parallel lines and therefore you get a replication of networks, so where you have five networks you probably have about 20, 000 base stations. In other countries there is a lot of sharing so the base stations are less, but certainly I would say within the next three to four years, the 4G companies that want to be competitive will have six to eight thousand sites, may be a shade more, to be competitive if you are on a spectrum that we are on. If a network is on 2600 you need three times or than that just to achieve that as you would if you are on 1800.
You said recently that when it comes to 4G/LTE all MNOs are taking off from the same starting block. Can you expand further on that sentiment?
What I mean is we’re starting up with the needs of a new network; my particular point is that if you’ve got 10 million or 20 million, or 40 million customers on 2G you come to 4G with no inherent advantage over us other than cash, but with that cash comes some complexities because you’re going to match those customers that are giving you that cash. Here is a case of you’ve ran the 1000 super rowing and won the Olympic gold, good; but this is swimming, you don’t come here with advantage, if anything, I am fresh, we’re going to dive into the swimming pool at the same time and we are going to swim; your running doesn’t matter even your gold medal is hidden away in your cupboard. This is my key point here, when it comes to 4G don’t tell me how are you going to fight MTN; MTN is at the same rate rolling out its sites at the same rate with me, chasing the same customers.
The other point is this, when they say a customer, come to me I am 4G MTN, the customer has a choice because MTN has to invent a new device just like me, give them a new SIM pack just like me, give them a 4G price package just like me; so the customer is not going to say I can only speak to MTN, he’s going to take a look at everybody. So, it’s a completely different kettle of fish to 2G… If we have gone to the customers and say buy 2G, he says I’ve got 2G already; and I’m cheaper, they’re going to say show me your price? ‘Ok, you are cheaper’. So I’m going to take the customer that is looking to spend lesser money. Whereas, I am saying come to me I am faster than 3G, and by the way I have better coverage today in your area than MTN has done on 4G because I roll out faster.
Nigerians, according to figures released by the NCC, spent $6.6bn on telecom services in 2016 yet the same NCC has declared 2017, the “Year of the Consumer because of perceived QoS issues. Is there a contradiction in terms of revenue and poor QoS?
What the NCC wants to do and what it’s doing very well is motivating operators to make sure that quality of service is at the forefront of what we do. As networks grow, the amount of demands placed on them can be very heavy and I sympathise with people who built networks in 2001 expecting that the total market for mobile telecommunication in Nigeria was, I think somebody even said one million customers and they go there in nine months, then some people said 10 million and they go there in three years, then again they said it is 30 million maximum and then again they go there in five years; now the number is 50 million. With that sense of forecasting – and by the way, it’s not only we Nigerians that are guilty of underestimating demand, globally, it’s the phenomenon of telecommunications – so you’re building a network for a portion of one million all of a sudden, then a portion of 30 million and then 50 million, now you have no idea of where things are going to end so you are just building pipes to be available. That’s what we all do. Nowadays, people know better how to make the telecoms company spread and by spread, I mean you don’t want to add one $1 of revenue and add $2 of cost to cope with that revenue and that’s the challenge that these older networks can have; you add $1 of revenue and add $2 of cost, that’s crazy.
We’ve got brand new network therefore it’s got that scaling capabilities very efficiently embedded in how we operate and therefore it is attractive to investors, but in the old days it is different. In the old day you have to have significant incentives to make sure that people add additional capacities because it’s just too expensive to put in that additional capacities in some areas and that has been a challenge but the regulators have been pushing very hard to make sure that it is done across the board. But with new operators, it’s less of a problem, with the older guys it can be challenging.
It’s been over one year of your roll out, what is your subscriber base like and what are your projections for the next 12 months?
We are in the middle of a fund raise, we have got a very tight set of information memorandum and very clear set of projections, and at this stage, we have been in discussion and I don’t want to disclose too much. What I can say to you is, this year, which is our second year, we will get to the sixth figure in number in terms of subscribers and they are very pleased with us and I know that in the next few years we will get to the millions not surprising as such. What is really exciting for us is that when we look up our pool and at our apple and compare it with the apple of the market at large we are way ahead in excess of in fact, I go as far as to say that because of our focus on data we are achieving a very respectable level of our growth projections.
What makes ntel’s data different? Tell us also what ntel is doing differently from other telcos? What is your USP?
Here at ntel, majority proportion of our customers buy a bundle from us and they can choose a bundle for voice and data and they can have that bundle last for a little as a few days or for as long as several months. This is exactly the doctrine that we follow. We are the forefront of bundle, in fact we have a unique proposition to bundles and I think others are following our example, we are proud of that. We welcome people to join the fray in this manner but we encourage our customers to put away the complexities of guessing how much they are going to use to come to a bundle, if you run out there is a process of topping up, but to come to bundle and give themselves a peace of mind and extreme value for money for up to 30 days, in fact most customers buy from us a 30 day bundle.