‘Ntel has always seen potential in Nigeria’s telecoms market regardless of the tough operating conditions’
Kamar Abass, the former Chief Executive Officer of Ntel, the newest entrant in Nigeria’s telecommunications sector spoke to Jumoke Akiyode before his resignation last week, on how the company was managing to stay afloat in the tough market, its future plans for expansion and Ntel’s need for more investors.
It has been a bit tough for telecoms operators in the last one year, we have seen Etisalat and Mtn struggle with challenges and even Airtel has been shaken, how has the recession impacted on ntel in the last one year and what is the company’s future outlook?
Ntel has always seen potential, no matter how much dirt it’s buried under. Ntel was not trading 13 months ago, so there is no comparison pre- recession because it started trading in the recession with the market that we found. We started selling in earnest and I think we have had a very successful first year, having performed very well. There is still an enormous amount of work to do because there is huge bourgeoning demand for broadband, our networks are congesting visibly, day in day out so we see the need to do a lot more work on our network in our existing cities and other cities across the country. The things people look for in times of less economic growth are efficiencies to do more with not so much more and that’s exactly what telecoms permits you to do.
Does ntel have any plans of raising additional capital?
Yes. The company raised its first round of capital to do the acquisition which was about $252 million and a second round to acquire the equipments that we have rolled out. So now, we are engaged in the third round of financing which is to expand the network which we hope to execute in the second half of this year.
How much is ntel hoping to raise for expansion? The discussion is ongoing with our bankers, so we are building a business plan and that business plan looks at what we expect to be our growth trajectory and how much cash is required. It is not a fixed number yet, but as soon as we complete the plan and we get all the commitments. People like to see that there is a balanced combination of financial instruments such as equity and loans. Once the overall value is set, it will be divided between the two types of financing, we would come to an agreement.
Is Ntel open to new investors for equity?
Yes. The investors that we have today have spent money on the business. The company has a small amount of debt today and so the investors that it currently has, carry the weight of the company and we expect that at certain times in the company, new investors come in as we develop. We don’t expect to have any investors leaving, rather we expect that new investors will be interested and come in.
Does ntel plan to go into the stock market anytime soon?
We would love to. It is an important part of making sure that we see ourselves as committed to Nigeria, both from the shareholder and customer point of view. We would be delighted to go to the stock market but of course that requires a good period of being in operation. It takes a long time to prepare and it costs a lot, so we need to make sure that we put ourselves in the position to cover all of these things, but certainly, that’s on the cards.
Ntel seemed to be the first mobile network operator to roll out 4G services in the country and it harped on that advantage, now that other GSM operators have launched 4G network, what is Ntel’s distinguishing selling point?
4G is a technology and our main selling point was to provide the best technology experience to our customers. Our conviction is that we have always and will continue to give customers the best experience on broadband. That there are other people offering the same service in the market doesn’t change that, and we say that we are going to give customers the best experience because the way in which we have chosen to deploy our technology to the service the customers want is based on the attributes of the spectrum we own and the way in which we have engineered the solution.
We have deliberately engineered it for a world that we see coming and this is a world where the demand for broadband is high and dense. In other words, there are a lot of people wanting broadband and a mass market world where demand from individuals is high. Now this may not be what other people see and if other people see a different picture in relation to the demand characteristics for broadband, they would build their networks differently. We have built our network for high numbers and individual high demand and that is what we see emerging on our network, people on our network measure their consumption in Gigabytes per day. Before we launched, we saw consumptions on the so called broadband at the levels of Megabytes per month, so that is a real difference. We see a world of higher demand in terms of volume and higher usage per individual not hotspots, limited numbers of high spenders and a lot of other people; that is more for voice calls. In the voice world, you have a lot of users but very little heavy users. The data world is different and that is what we see certainly emerging on our network because people can now do things on ways that they could never have imagined before.
You talked about the attributes of the spectrum you own, what is the difference between that spectrum and other data spectrums used by other mobile network operators in the country?
The differences between the spectrum that we own and the other 4G spectrum designed for data is that we have got spectrum on the 1,800MHz band and spectrum generally has got characteristics which are about propagation; the ability to spread far or attributes which favour high density and generally it is one or the other but on our 1,800MHz, you balance propagation (coverage), and the ability to create high dense levels. What’s on 2,600MHz however, is low propagation and very high throughput density and what is on the 700MHz spectrum is high propagation and low throughput. We are the balancing point, so if we compare ourselves to a 2,600MHz 4G service, then they have to build an extra three sites, so that is four sites in total to achieve the coverage of one of ours. If you look at 3G on 2,100MHz spectrum, it is three times the number, so an extra two sites to cover what we can cover with one.
700MHz spectrum is slightly better, in the sense that you have got a lot of coverage but it is hard to achieve high level of throughput and that is what these customers want, so it goes back to the fundamentals of what we see as the nature of demand manifesting in the market place. We see massive demand in terms of tens of millions of customers, each of them wanting gigs of data.
Do you see chances of reduction in average data revenue considering that data is becoming cheaper and can now be significantly compressed by users?
The driver for data pricing will be the volume of data people consume, and that volume is growing all the time. If people consume a lot of data then we have got to invest a lot in the networks, as we invest in the networks, we have to make sure that we find a way to get return on that investment. We want to encourage people to use as much data as possible and hopefully, if they use a lot of data, we will continue to buy more and give us the ability to sustain our networks. We don’t pride ourselves on providing cheap data, we want to provide our customers with value.
We sell unlimited packages and those unlimited packages give you the ability to buy a two day package, seven day package or 30 day package and they go for N1,500, N3,750, and 12,500 respectively and those are the prices for unique packages. Most people don’t offer the kind of unlimited packages that we offer. We also see that within the unlimited packages, we have fair use prices and are able to give customers the same level of priority.
How fast is internet connectivity on Ntel?
It depends on what is possible in the radio conditions and demand conditions on a site at any point in time. but what I can tell you is that through an overall site, our network can do 250MB per second through the site, and so all the customers who are attached to that site will share 250MB per second. Compare that to 3G which had a maximum of 42MB per second and 2G which has a maximum of 1MB on its most advanced 2G networks. So you can see that the industry has evolved and the standards have improved and the game has changed in terms of data offerings. Our network as designed today is doing a total throughput on each site of around 250MB per second. Theoretically, all the customers are sharing that through the network. I think it is easier for us to think about what is the typical speed through the network and what we target is that we have in downlink, a minimum experience of 10MB per second and in uplink, a minimum of 1.5MB per second.
Our target is to be above 10MB per second and we achieve that consistently in the downlink and uplink and I can tell you this without any shadow of doubt.
Considering the current subscriber average spend, what are your future projections for ntel and the telecoms industry?
What we see for the industry is an average revenue per user (ARPU) of somewhere around N1,500 per month, per SIM. This is an average across everything including narrow band, broadband, high speed, low speed and there seems to be some kind of dual SIM tendency so with individuals with more than one SIM the average is somewhere around N3,000, and what I can tell you is that we see broadband spend above that level because average spend is mostly higher in other markets and as I said, there is no reason why people should object to their spending on broadband because of the productivity and benefits they get. They save on transport, entertainment, and on the ability to get messages across to people, so it is a very good package and that is what broadband does. We are flattered, sometimes astonished at the sorts of levels of use that we see on our network. Completely unprecedented in relation to volumes of usage, frequency of use and consistency of use is astonishing.