Mr. Ernest Akinlola, managing director/chief executive officer, ntel, Nigeria’s 4G LTE-Advanced Broadband Operator, in this interview with CHIMA AKWAJA, opens up on plans to raise fresh funds, the expansion programme, fast rising market growth and the new national roaming which is set to bring broadband network’s coverage to all the 774 local government areas. Excerpts.
You have entered a national roaming agreement with some operators, when is it kicking off and what does it mean for Ntel?
You see, we could do one of two things. We could both backwardly integrate and build legacy like 2G and 3G services or we could adopt a model which enables us to have those services without having to invest in the capital expenditure. So, on my fourth day, I went to see the CEO of 9mobile and we agreed on national roaming. They have excess capacity. We get national scale while they get additional revenue for it.
The Nigerian Communications Commission (NCC) is encouraging. What we did was liaise with NCC fully and I said look, let us do a trial in the market with 9mobile and they came and said well, if you guys agree, as long as we can witness it. So, our head of regulatory services and marketing director worked like bulldogs trying to make this to happen. We did the preview concept, it worked very well and NCC has reviewed it too. We are now at that stage of waiting for final approval and the growing commercials.
As it happens, other members of the ecosystem have woken up to this fact and have engaged with us as well, because it is also revenue for them. We currently are at advanced stages of national roaming. We’re very strong on data, our margins are the best in the industry because we are data-centric business but we don’t have the voice scale yet. What national roaming does, right now for instance, if you’re in Ogbomoso, you can’t use our service.
When we launch national roaming, you’ll be able to use Ntel’s voice service in Ogbomosho, Abeokuta, Aba, Enugu or Katsina because the customer will be totally agnostic as to who the provider is. Wherever our roaming partners have network, we will be there live. Another thing national roaming does is, it helps us pinpoint where our next state of rollout should be. Its gives insight as to the next state/city we should go and launch.
What are your plans for expansion, how do want to disrupt the market?
So, in 2018, 2019, there are two things we are going to do. First of all, where we currently have our presence in Lagos, Port Harcourt and Abuja, that accounts for 40 percent of telecoms spent, we’ll improve our services. As we speak, we are actually enhancing our radio links and our fibre links to Port Harcourt, to Abuja.
We’re intensifying Lagos because there are parts of Lagos where we can improve our quality of service. Quality of service is absolutely crucial to me and to the team. We have some very innovative products and services which would be launched in 2018 and we’ve established for the first time in our history, a very good and robust marketing plan.
What Nigerians will see in 2018 and 2019 will be better quality of service, national coverage for voice and a rollout of our data services in areas where it makes sense for us. There are some really exciting propositions that we are bringing into the market in the second half of the year. The beauty about being where we are is that we’re fearless because we’ve got nothing to lose.
So, we could be disruptive of international traffic. We are aggressively pursuing asymmetrical interconnect. That will also help us from the margin perspective. So, the team is really fired up. We want to disrupt the market. We want to win the minds. We’ve got this new proposition out in the market as we speak, ‘WAWU’, it’s tearing up the market. The only thing that is lacking is our above the line awareness but even on grassroots, we’re spreading it.
We have various technologies that we want to deploy like USSD and we want to provide a strong Value Added Service for content providers to provide their services and I already have some really disruptive proposals for the lottery industry which I think will help. So, we can do those things because we are small, we’re humble but we’re aggressive.
How big is your war chest?
We’re coming with various discussions to raise funding to our network. Within few months that we began, our customer base has been increasing. But we need to increase at a faster rate which is where your question really comes from. So, the working capital, in order to execute all these, we need strong, robust working capital. We are constantly talking from day one up till yesterday. I’m always talking to investors, potential investors. I knew, from the very get go that it’ll be challenging for an investor to look at our story around September and say, great, let’s put money in this
Now with the advent of national roaming, with the advent of consistent growth of the last five months and the belief from our customers using our services, we’re now seeing a strong interest from investors. In fact, the requests are now inbound not outbound. Before, we were chasing them but now we have to really manage our management time because we have business to run and we have to be able to quickly qualify in and qualify out those people that are serious about investment and business.
As we speak today, I can honestly say that at the end of February, you know what they say, you wait for something, you wait for a bus for a long time and all of a sudden, three of the buses come at the same time and they are all going to your destination, you spot for choice. We’re kind of getting into that zone. Last week alone, we’ve had three very credible, in fact, we are on due diligence. We started due diligence today and I’m very encouraged. The wall chest will be significant. We are a very frugal company, we know how to spend. They call me Baba Ijebu. We know how to spend money very audaciously to get the best.
So, in the next two months, we’ll start to see impact of those inflows. Nobody is going to give us a multimillion dollar war chest, it’s going to be based upon draw down. That way, there’s investor confidence and it’s a combination of equity, debt, some monetization of our assets. As you know, we have substantial assets which we use. The foundation is getting stronger and stronger.
I won’t give you our capex (capital expenditure) number but what we do now is, we have a seven-year plan. The first three years are the ones we can really predict and by the end of this year, I am aiming to have one million subscribers and by the end of year three, that’s 2020, we’ll be at 12 million subscribers. So, there’s a strong capex growth because of expansion but even without that, remember, with national roaming, it will limit the extent to which we need to expand because we’ll only expand on the capex side of things but we know for sure that we have the capability. A lot of our expenditure has to go into online, above the line awareness.
You said you have a 7 year plan, can you shed more light on it?
We’re talking about a significant amount of time here and we’ll be a national player. We’ll definitely be the most innovative telco in Nigeria because of where we are starting from and that’s what we can do to continue to survive. We’ll see a much more integrated telecom service. We’ve fixed lines and that’s a very strong enterprise business. Because of our heritage of being former NITEL, there’s lots of assets that have not been optimised, they need to be perfected.
I think we can really hold the last mile, it’s going to take a long time and investments but within that seven-year period, we are going to be the BT of Africa. Everybody knows that the BT (formerly British Telecom) has mobile, quadplay, everything. And that’s my vision for Ntel. In Nigeria, when we get the funding, I can see us becoming at least, number one in the fixed line, in enterprise, no doubt. I think we can be number two in mobile but when it comes to profitability and output, I think we’ll definitely be number one.
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