Business, Interview

How Airtel Became Nigeria’s Leading Telecoms Company – Segun Ogunsanya

Segun OgunsanyaChief Executive Officer of Airtel Nigeria, Mr. Segun Ogunsanya, spoke with journalists on several industry issues, including service quality, spectrum auction and rollout, broadband penetration, as well as the company’s commitment to driving  development in the telecoms sector. Excerpts:

You have clocked one year since you assumed office as Chief Executive Officer of Airtel. What have you achieved in one year?

I must say the journey has been very interesting and we have recorded several milestones as a company. Aside the many awards and accolades we have received from our customers, independent assessors and other stakeholders, we have remained committed to our vision and passionate about creating real value for our customers and other stakeholders. We have seen growth in terms of numbers and other relevant indices but what is more important is the way we are connecting with our customers and internal stakeholders.

We have succeeded in building a great organisation where employees are not just passionate but very proud of their company. We have employees who are passionate about the business and committed to delighting our customers. The Chartered Institute of Personnel Management (CIPM) for the second year running has adjudged us the best company within the telecoms sector. Today, Airtel Nigeria is not just a great place to work but an employer of choice.

What is your assessment of Airtel’s investment, especially in the area of 3.75G expansion?

Since acquisition of Zain in 2010, Airtel has invested well over $1.5 billion and we are still investing. We are driven by the vision of becoming the most loved brand in the daily lives of Nigerians. We currently have the largest 3.75G in the country, and we have presence in the 36 states and the Federal Capital Territory in terms of 3.75G coverage. We were the first to launch high definition voice service in Nigeria and also the first to complete the Long Term Evolution (LTE) technology trial in the field in Nigeria. Essentially, we are leaders in innovation in 3.75G technology and we shall continue to blaze the trail in the Internet domain in demonstration of our vision to become Nigeria’s leading Internet company.

Where lies the strength of Airtel. Is it in voice telephony or in Internet data?

As a leader in new technology and innovation, Airtel has repositioned to become Nigeria’s leading Internet Company.  While we are still very much active in the voice market as one of the dominant leaders, we are now defined as a data centric organisation. It is no surprise that a report by the regulator adjudged us the fastest growing data operator. It is because we have since realised that data is the way to go and that is why we currently have the largest 3.75G network in the country.

Presently, our focus is to continue to deepen our network quality and coverage and also offer Nigerians the very best bouquet of data value offerings.

What is your assessment of the Nigeria’s telecoms market and how would you benchmark the industry in Nigeria and other jurisdiction?

According to the Pyramid Research Report, Nigeria is Africa’s largest mobile market, with a unique combination of large subscription volumes and fast growth.

Mobile penetration stood at 66 per cent at the end of 2012, from less than 1per cent in 2001. Annual average subscriber growth over the past five years was about 20 per cent, one of the world’s fastest growth rates over that period. Nigeria is the largest mobile market in sub-Saharan Africa in subscriber terms and the region’s second largest in revenue terms.

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What impact has the growth created on Nigeria’s economy in terms GDP and employment creation?

The direct contribution of Nigerian telecoms operators to the country’s GDP is estimated at around N400 billion in 2012. Taxes and regulatory levies are the most important source of direct contribution from network operators in Nigeria, accounting for about 55 per cent of the direct contribution. By our estimates, network operators pay close to N160 billion in taxes annually, with another N55 billion paid in various forms of regulatory levies.

In addition, Nigerian operators have paid close to N640 billion in license and spectrum fees since 2001. Further, 3 per cent to 5 per cent of Nigerian telecoms services revenues are paid out in wages and benefits for some of the highest skilled jobs in the economy. Other contributions to the economy include payments to contractors, corporate social responsibility (CSR) programmes and dividends to shareholders. CSR programmes have been of particular significance, with many operators investing a material portion of their revenue on such programmes despite not breaking even on their investments.

Telecoms operators also contribute to the economy through their wider ecosystem; the ecosystem includes the entire industry value chain, from contractors for base station deployments and system integrators to resellers of devices. The third channel of contribution comes through multiplier effects and productivity gains from the society at large using telecoms services.

The telecoms sector is a major contributor to foreign direct investment in Nigeria, along with the banking and oil and gas sectors.

From your statistics, what would you say are telecoms’ contributions to employment generation in Nigeria?

The contribution to employment has been visible in the volume of new job opportunities created and in the variety of required skill set. Nigerian operators have created close to 10,000 direct jobs since liberalisation of the telecoms sector, and a pace of nearly 1,000 direct, full time equivalent positions created each year. On an indirect basis, the total number of jobs created by the telecoms operators hovers between 1 million and 3 million depending on the estimates.

The issue of poor service quality cuts across all networks. As CEO of Airtel, how are you repositioning the company to address poor service quality on your network?

Nigeria’s weak power infrastructure has long been an obstacle for the country’s telecoms operators. In a country with over 30,000 Base Transceiver Stations popularly called base stations, and a need for around twice that number over the next ten years, the power infrastructure challenge is a contributing factor to poor service quality in the country.

The power costs of a site connected to the power grid are only about 1/6th those of a fuel-powered site, but only about 10 per cent to 15 per cent of base stations are connected to the electric power grid. The implications of such absence of reliable power infrastructure are far-reaching. Nigerian operators spend around N8 billion to N10 billion a year in diesel costs to power up their base stations. Such costs account for about 60 per cent of operators’ network costs. Primarily because of such fuel costs, average network costs in Nigeria are 2x to 3x higher than in a number of other African markets.

The multiple taxation of telecoms operators represents another challenge facing the industry. And there are other issues bothering on multiple regulation, frequent fibre-cut, community issues and other problems that are making it difficult for the common man to experience the desired service quality.

On our part, Airtel is doing all it could to address the issue of service quality on its network, through investment and expansion of our network.

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There are fears that the move by telecoms operators to sell off tower sites will result in loss of jobs of thousands of telecoms engineers. What is your take on this?

Yes, indeed there are plans by operators to sell off, not necessarily outsource, the towers, and it is a global trend.

Indeed, the telcos had already outsourced their network operations to experts like Ericsson and Huawei, who in turn outsourced maintenance services like fueling, cleaning and security to local companies.

It is therefore evident that the eco-system of telecommunications business is growing a wide value-chain, which has Nigerians at the epicenter. So, more jobs would be created rather than lost, given that the new owners will definitely like to grow their businesses. Regarding the Call Centres, which were outsourced to BPOs, it is an incorrect to say jobs were lost. On the contrary, the number of people employed in the Call Centre business has grown exponentially by over 300 per cent.

So, rather than create fears in the minds of our Engineers, who will be moving to the Tower Management companies, and disaffection in the hearts of Nigerians, who have been beneficiaries of the GSM revolution in 2001, we should highlight the immense advantages inherent in this strategic business move by the telcos.

How would you assess the state of the competition in today’s telecoms sector?

Airtel is an innovative company and we always stay ahead of our competitors. Aside offering innovative products and services, we also place a very high value on our customers.

This singular focus inspired our brand promise of becoming the most loved brand in the daily lives of Nigerians. As you may know, Airtel is not just perceived as the most customer-centric network but we are passionate about giving our customers the very best.

We are not just interested in winning awards, but we are committed to ensuring that our customers always have the best service and network experience. This has influenced the upgrade of our network, making us the largest 3.75G provider in the country.

It is also on record that Airtel revolutionised the tariff landscape in Nigeria. We will continue to excite and delight telecoms consumers with innovative value offerings.

We also place a lot of premium on our people. Airtel is an employer of choice in Nigeria. And while we take good care of our employees, we are committed to impacting positively on our society and that is why our CSR programme focuses on providing educational opportunities for Nigerian children.

What is the potential significance of 700MHz allocation and what does this portend for telecoms consumers in Nigeria?

With 700MHz allocation, the possibilities are endless. With the spectrum allocation, GSM operators can significantly increase their capacity, improve quality, and also reduce capital expenditure, and the savings from operating costs will translate to affordable telecommunications services.

Without a doubt, the release of more spectrums can potentially impact positively on Nigeria’s GDP and may lead to the creation of more jobs,

The 700MHz spectrum allocation can lead to duplex arrangement of 45MHz uplink (going leg) and 45MHz downlink (return leg) with a minimal duplex spacing of 10MHz. The 45MHz can provide 15MHz assignments into three times.

We commend government for the role they have been playing in developing the telecommunications sector and we urge them to urgently finalise and conclude the 700MHz allocations. There should be effective coordination between the Nigerian Communications Commission, National Broadcasting Commission and National Frequency Management Council to ensure that the 700MHz spectrum band is cleared and released for telecoms services as recommended by the International Telecommunications Union (ITU).

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It is instructive for government to apply administrative charge regime in setting Reserve Price for future spectrum auction, and should not be seen as a revenue generation activity, but rather an avenue to drive the socio-economic development of the country.  It is vital therefore for reserve price of future spectrum auction to be kept low, so that the initial financial outflow in respect of the spectrum fee does not adversely impact the capacity of the successful bidders to satisfy immediate rollout obligations.

What are the issues with the demand and supply chain of broadband growth in the country?

On the demand side, application development is key, and on the supply side, there is a need for rollout obligations and financial incentives to support broadband growth. There is also a need to address issues relating to multiple regulation, taxation and willful destruction of infrastructure.

There is a critical need for timely availability of spectrum for 4G services, and there is a need to declare telecoms infrastructure as Critical National Infrastructure to give needed protection to these infrastructures in view of their critical importance to socio-economic well-being and also national security.

What should government do in terms of policy formulation to address broadband development in the country?

The Nigerian National Broadband Plan is a milestone and we applaud the government for this. The next step will be the implementation of the plan.

Airtel is urging the federal government to implement the plan as the move will open a wider window for us to serve our customers with the latest broadband value offerings.

Nigeria has a lot of broadband capacities on her shores, through the landing of several sub marine cables like Glo1, MainOne, and MTN WACS, yet the cost of broadband remains high in the country. What could be responsible for this?

Yes, we have lots of untapped broadband capacities on the shores of the country, but the challenge is moving the capacity in-land, criss-crossing the country with fibre-cables. The limitations of moving the cables to the hinterlands have been right-of-way issues, multiple taxation, multiple regulation and digging of fibre negatively impact on the rollout of fibre in the country.

The good news is that the challenges have been identified in the Nigerian National Broadband Plan and it is our hope that government will continue to give the right support for the implementation of the plan. Again, the Lagos State government has signed a memorandum of understanding with the telecoms operators, to reduce right-of-way cost and other telecoms charges by 90 per cent and this is commendable as it would help in deepening broadband penetration in the country.

The International Telecoms Union has a 40 per cent bench mark for broadband penetration in developing countries by 2015. Is Nigeria on track to meeting that target?

The newly approved Nigerian National Broadband Plan envisions a five-fold increase in broadband penetration by 2017. As a key player in the telecoms sector with 3.75G in 36 states of the federation and the federal capital territory, Airtel is well positioned to assist government drive the plan, given positive policy action by government.

How will you project Airtel in the next five years?

The vision is always to be the best and provide innovative and quality service that will delight Nigerians.

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