We see massive collaboration among telcos in Nigeria
About three weeks ago, a Canadian, Miriam Tuerk, managing director of Clear Blue Technologies of Canada, placed a call to business a.m. to announce that she was coming to Nigeria and would like an exclusive interview with this newspaper. Being only five weeks in the Nigeria print media market, it came as a surprise that our reputation had gone ahead of us to far away Canada. The interview led us to the novel work being done by Raeanna Group in Nigeria, trying to use solar to shake up our rural areas, by not only powering street lights, but also working to see how rural telephony can have a shake up too. Our team of PHILLIP ISAKPA and STEVE OMANUFEME sat down with Tunji Alabi, executive director, and Tola Yusuf, director of operations, of Raeanna Group, who provided eye-popping details of the work the company has been doing in Nigerian since 1999, and with an Infraco licence just obtained from the Nigerian Communications Commission (NCC), they have a good idea of how rural Nigeria can benefit from telecommunications, and indeed, the shape of things to come in the Nigerian telco marketplace.
Raeanna seems to have its hands in many pies; what is the company really about?
Raeanna is an infrastructure service provider; we have been doing this for seventeen years. When Raeanna first started out, it was one of the foremost indigenous companies that built the cell sites for operators, such as MTN, ECONET, among others. About six years ago, we had a rethink internally and we asked ourselves: “Do we want to go on building for other people or are there any other ways we can add more value to what we are doing in Nigeria?” At that point in time, we decided we wanted to focus on two major areas broadband and rural telephony.
On the broadband, we began to roll out a lot of fibre for the operators and we are maintaining fibre for quite a number of them. Because of the kind of work we have been doing in the fibre space, the National Communication Commission (NCC) awarded us an Infrastructure Company (Infraco) license to roll out our own fibre throughout the South-south of Nigeria.
For those that don’t know much about Infraco, the Infraco is the government’s attempt to increase the penetration of broadband, especially fibre, throughout the country.
What the government has done is that they have divided the country into six geo-political zones and awarded a license to six indigenous companies, that is one in each region, to provide the broadband access for everybody that needs to use it. Today, what you have in the country is each telephone company running its own fibre, and what you find out in that system is that it is only the pro table routes that telephone companies go for. There are so many areas within our regions that have no fibre because it is not pro table.
What the government did was to license an indigenous company in each political zone to roll out fibre in that region, own the fibre and that license is valid for about twenty years. So we will do the investment in the region, we will get the subsidy from the government for doing that investment and be able to lease it out to all the telephone companies and any other of the taker. Last week (March 8), we got our license and now the clock is ticking for us to begin to roll out about 3000 kilometres of fibre in the whole South-south region. I think they have awarded Lagos to MainOne, they have awarded the South-west to Samira; the North-west has gone to Backbone Connectivity; the North-central has gone to IHS; the South-east has gone to Zinox, and the North-east has gone to Brinks. Over the next ve years, we are going to be rolling out backbone fibre and at least seven to ten metros within the city. So, that is on the broadband side of things.
What we intend to do is not only to provide the backbone but to provide a data centre and content within that region, so that we can distribute content. We are not just in fibre, we are going to a higher level. Whether it is TV we are providing to homes, but the whole idea is to put fibre to the homes so that everybody can access the internet with a high speed in the South-south region.
You know for a long time the general talk was about the last mile problem; is this going to solve the last mile problem?
Not necessarily. What we intend to do is, although we say fibre to the home, we are looking at fibre to the hub. So the last mile will be with different technologies that we have, whether it is WiFi, WiMAX, fibre itself, 4G. Whatever technology we can do to be the last mile, we will do.
But the fibre will get to an important point and the backbone will be fibre.
So from that hub, the different operators or technology companies will be served?
Yes, we can serve the homes and individuals. What we will do is to connect it to them.
Will the different mobile phone networks reach the customers through what you are creating?
We are going to be putting the fibre to their base stations; the base station to us is a hub. So all those base stations, we will be leasing out fibre to connect them.
What you are about to do is stand in the gap. They were not going there because they were not profitable and so you are now going there and they will ride on your back?
Yes.
They were not going there because it was not profitable. So, how do you hope to make profit?
You need to bear in mind that one of the biggest problems, with the way the operators have been doing business, is that each one has been doing its own thing. Another operator will not go there because it is not pro table for them to roll out fibre. But if I could roll out fibre, all of them will go there because it is pro table to share. It becomes a shared platform and the economy of scale will set in.
What we are asking is, if it is not profitable, how will it be profitable to you?
It is not profitable for one person, but by the time all of them share, it will be pro table for me. The idea is to make sure we are now carrying everybody in one pipe. Normally, on a route, you will probably have MTN here, GLO there and this that other place.
So there is no economy of scale.
But now only one pipe owned by RAEANNA will be carrying everybody; both in operation and maintenance, it is easier. So they can just ride on it.
How does this pan out with what Rack Centre is doing?
No, they are providing the content that rides on our fibre; they just run the data centre. We will plan on having such too. We want to put the data centre in the region, to put the content nearer to the people, so you won’t have to come all the way to Lagos to bring up content. The whole idea of backbone fibre is that you want to move the content nearer to the people or else they could congest the backbone to Lagos. We want to move the internet nearer to the people, so we will have a landing station in the region. They don’t have to come to Lagos to pick from the internet. We will have a landing station, we will tell all the providers (SAT 1, MainOne, GLO ONE) to come into the region and terminate in my data centre so that it just goes out from there. I don’t have to come to Lagos to bring it up.
So service effectiveness is increased. Cases whereby fibre will cut in the middle and they can’t get here and now that you have another route, it can circulate through here.
When you talk about things like this, the end result looks beautiful and it is the end result that people want to experience. In terms of timescale, when do you see this being actualized?
We are saying the build period will be between three and ve years. Because this is a very large capital intensive project, so the planning will take about a year. Roll out will take about two to four years, we are rolling it gradually, we are not doing a big bang. We will do the backbone and some metros. We have a five year build period.
For this kind of project, especially since it has been zoned along geo-political zones, how are you looking to finance for it?
The good thing about it, with the subsidy from the government, is that we have seed capital. So with our seed capital and the government subsidy, we have some comfort capital to concentrate on the bigger picture of the project. And because of the profitability of such a venture, we will always have off-takers. The government has a KPI, that in the next two years, they need to do about 30 percent broadband. We are only at about 9 to 10 percent. So you’ll nd out that there are a lot of companies willing to come in because this is a consortium; nobody can do it alone. So in terms of equipment funding, you will bring the equipment vendors in. In terms of cable funding, you will also bring the cable companies in.
And towards the end of last year, the US government spoke on a reverse trade mission to meet suppliers of equipment, suppliers of cables and funding partners in the US with regards to this broadband initiative. And from that trip, we can easily see that so many people are interested in coming into this market, to invest in broadband, not from an emotional, social perspective but from a commercial perspective. Everybody knows that the next billion users of the internet are going to be coming from the underserved and the unserved people in areas like Nigeria with the population of 200 million, of which over 100 million of them are cut o today. Just imagine what it would do if you bring those people on board. e kind of transformation that will happen, the kind of GDP increase that will happen, the kind of profitability that will happen, if everybody could be connected. So, the companies out there have seen the commercial viability of such a venture, so I don’t see raising capital as being an issue.
What range of capital are you looking at?
As we said, the first year is going to be for planning. The actual amount, broadly speaking, we do not know. But we need to sit down now that we have got it because this only happened on Thursdayay (8 March, 2018). So, we need to sit down and begin that intense planning and we are going to be seeking assistance from those that have done it before, outside the country, to see whether we can learn from their mistakes and make sure we don’t make the same ones. We want to leapfrog most of the countries out there in terms of technology they have put in there, 10-15 years ago, because technology has moved on and we need to make sure that we leverage the technologies that can lower the cost of the planning and increase the availability. Now, we are talking about self-healing networks where a cable breaks and it heals itself. Those are the kind of things we are willing to invest in. So, we are going to bring all those platforms on board and we are going to strategically look at how we are going to roll these things out over the next three to five years.
What’s the nature of your partnership with Canadian Clear Blue Technologies?
That is the second part of what we are doing. We said we have got the broadband arm and the rural telephony arm. On the rural telephony arm, that compliments the broadband because the last mile is going to involve di erent technologies. We are going to provide sites that are solar-powered only, no generators on any other thing. And we are going to transform rural areas because our aim is to use technology to transform rural areas. The rural telephony is not the key here, the key is those unserved and underserved areas, we are in need of content for learning such as for E-learning, E-banking; E-health.
In the rural areas, it is very di cult to get any money, there is no well-spread banking facility. We want to setup the facility where we will put the site there but leveraging that site is going to be our E-banking facility. And with that, we want to go into partnership with the banks to do agency banking, nancial in- clusion. We will have a nancial hub, which will turn out to be micro finance bank over time, so that we can actually start giving agricultural loans and those kinds of things that can actively transform that community.
On the hub, we want to put in a station in there that allows us to do the rst trials in partnership with the hospitals. e person will sit in front of the computer, there would be gadgets in there that allow their temperature and other readings to be taken, that is then transmitted straight to the hospital and you have a live chat with the physician. at saves that patient from walking miles or more to the nearest hospital. On E-learning, we hope to provide a facility that allows the youths in the community to take up skills through web builders, E-curriculum and we want to see how we can partner with some schools and universities to o er online courses to be able to up skill the youth in the community. With all that, there is another pathway to see how we can provide a micro grid that can power certain aspects of the community, whether it is an e-library, a field house, something that allows us to use that solar technology to provide a grid in the community. So that is our second arm of the plan and these are the strategic directions that Raeanna is taking. We have been taking it since last year and it is the direction for the next three years, of course.
I have been to meetings with some telcos in the past where they talked about the huge cost of maintaining and keeping sites operational. Can this intervention help and what sorts of savings are likely to be made?
Let me just state that the biggest problem every operator has is power. Once you can solve this, not just the Capex or Opex. That is why we came up with a di erent kind of intervention, which is solar. Our radios are low powers, the operators do not use low power radios because they want to get maximum radius. We don’t want maximum radius, we want to provide coverage to about ve kilometres radius; they look at 10–15 kilometres. Secondly, these operators have looked at areas where the apple is high, we are not looking at high apple because for us, the cell site
This a means to an end; it is not an end in itself. The end itself is to transform the community with all those e-services that we are providing. So these are not what the operators do. Thirdly, our sites are maintenance free because we do not have to bring in diesel every minute.
The diesel issue is the biggest killer for any operator. So we are looking at low power because what we are doing is monopoles with satellites. We are not providing these heavy towers that cost a fortune; our sites are small sites (5×5 meters). Their sites are 12×12 meters with two generators; we don’t have any generators, all are solar and batteries.
That is why we go for one of the best in the market clearly, to provide us with the facility that allows us to sleep at night. And maybe I might have told you about the part that allows us to forecast the weather ahead of time and begin to do things that are event driven, that is 50 percent of the problem the operators face.
Did you say wherever they are, they have a system that will be monitoring you and every problem?
When I take power out of the site, I have taken 50 percent of the problem out. Those days, a minimum conventional site takes you an average of $100,000. But today, these sites are opti- mized in the range of $40,000 or less. This is about $20,000, and talking about Capex. When you are talking about the Opex it operates at near zero because of diesel, without adding the cost of maintenance of generator and diesel. It’s huge; but in the rural model, it is almost at low cost, it is very negligible. If it is going to be there it is going to be human resources, maybe, whether breakdown or corrective which is very rare. Today, we have site on air powered by Clear Blue Technologies and I can tell u for the past ve months we have not been there.
At the moments you have sites, where are they?
We have sites in the South-south and we have in Yobe as well. The model ts best for rural area and I guess when we even say rural area, most of the suburbs do not have it. As he said the last time, I travelled to my town, maybe during the Christmas period, and there has been local government headquarters since God knows when! I will see people on the queue at an ATM and you say you want to join them; I will sometimes just withdraw and when I get there, I find that they are not collecting money, they are waiting for network to come; on a queue waiting for network, this is exactly why we came because who will provide this? What is happening is that there is one issue or the other and there is no network.
It’s a wide gap that needs to be covered and operators today cannot do. Because their model don’t t back again and that is where we come to bridge this world.
This is like it, our tactics is we got the broadband and we have got the rural, but we are also a tower company; so we are also doing collocation. We have sites that we collocates with the operators just like an IHS., an America Tower, we are a small one of that. The whole idea is that the places buy the whole value nine yards.
By the time we put the data centre there, we would be able to cover the whole nine yards because now we need to be driving content, whether, it is e-learning content, we need to drive content to the homes; we need to drive content to the sites, because that is the real value. It is not in, I have internet, it is the content that we drag down. We have realized that is where the next paradigm is; because knowledge is power and knowledge is liberation. If we can enlighten our populace especially youths, then I think Nigeria will be a benefactor of this initiative.
Would it be right to say you are not going to be in competition because you have been licensed and given different zones?
We need to see if the regulator would now say to us whether this area is doing well than the other area. You have to get to a certain stage before you can compete. Is just a power thing just to buy, let us buy it, the next five-ten years our task must be competing but we are not in a competition now, we have to cover that gap. It is a whole of a gap. The work they’ve done here is to try and accelerate the covering of the gap, that is why we are doing it not to compete against broadband, we will even collocate together to make sure nobody is going ahead in opinion to the other. So if I have a cheaper solution I will tell my guys. For example, you have recommended Clear Blue, but remember that Clear Blue is for my rural, it is another model.
Can you talk about your Clear Blue model that’s focused on solar power?
We also do street light as well. Street light is with the solar powered street light in the South-south. at is all right, both electricity and telecommunication; by the time you put those two together what you have in the rural community is transformation, because you know our concept on the street light is that you have Wi-Fi when you are seeing your street light going, you are able to browse so at the end of the end its driving rural area technology.
With the street lighting and the Wi-Fi connectivity have you been looking at buy-ins from the networks?
We have our own ISP licence. It’s called Torrent Wireless.
The idea is to connect the dots between broadband, last mile and content. If you connect those dots then what you get is increased knowledge; if any one of those pieces is missing you don’t leverage the asset you provide. If I had someone that was doing one of them, then I can say I can partner with them, but nobody is doing anything. What I have to do now is to provide the whole spectrum to be able to leverage.
You are working with Clear Blue with regards to your rural, who are you working with in your broadband internet push, local or foreign?
We have so many people, Cisco; so many of them. But as he said to you earlier on, the detailed planning starts now. The concept was what we did in the past, now is the planning. The concept was to obtain license, now we partner with people that have done it in the past; now is to actually put the commercial viability of what we are planning to do. So this is where the work starts, this is where the tide hits the road.
What do you see for the future of the sector? And what are the challenges that you face?
The good thing about Nigeria is that things are consistent. Even though they are consistently bad, we do not have any false sense of entitlement. Those issues that you raised are not the main real issues. It’s the unknown that are the issues. I just want to take us back, when we started this journey in 1999, with the Econet and MTN of this world, what tended to happen was that every operator had to build its own; there was no infrastructure sharing. Sometime down the line, they realized that it is not a sustainable strategy; that we needed to collocate on passive.
After a while, you realize that they will say even passive collocation is not good enough, we need to collocate on active, and that is where what you call wholesale network operators come in. So, what you’ll nd out is that the MMOs will just be doing product development and marketing services, the guys that will provide the networks are going to be different from the guys that handle brand and the services. Each person would be buying their services from wholesale network operators; that is on one hand.
On the second hand is there is now a market for providing power. All that some of these people would provide is power. This is going to be operational power, and everybody would be buying their power from these people, not necessarily grid, but o grid solution, because the kind of investment required to correct the grid issues is massive. What you’ll nd is that people are going to begin to work on o grid solutions and that is going to be a market for some people just providing power. I will supply power to you at X amount per kilowatts and you work on excellence. The broadband providers, what we are seeing is the divergence in that area, where the network operators will not roll out bre anymore. They would be releasing bre from the Infracos; so the dynamics is changing. What is happening is that everybody is focusing on their core areas, when people are focused on their core area the end product is always better than what it used to be.
What we see in this market is that there is going to be the collaboration of many players in providing that end result. The likes of the MTN would not be able to do what they are doing now, the likes of Airtel, which I think are now becoming a product, too big to fail, because there are many players in that part that have taken out one of those.
The dynamics of the market is changing and we need to make sure that at every point in time we are looking at service e ciency and optimization. You told us now that the operators were complaining about the capital required. If they could offset that capex then everybody is in a happy medium. And that is what is happening now; the Nigerian Communications Commission (NCC) is facilitating that excellently well. They are doing a fantastic job of facilitating the whole thing to make sure that the services, overtime, improve. And then you have to think of the unserved and underserved. As I said earlier, the next billion users are going to come from rural; everybody knows that. Now the Facebook of this world, the Google of this world, everybody is working how to make telecoms a ordable in the rural areas because if I want to increase my market share, it is going to come from the rural. Bringing new people into the market that is saturated, that needs to breed the rural; once you breed the rural that place is no more rural. The more you bring technology into your rural it becomes a suburb. So, if there’s anything called poverty alleviation it is going to come from technology. So, the market is changing and we are in interesting times. We just need to make sure of that every time we take a step looking at the future and whatever hurdle that comes we can overcome them.
Can you still talk about the challenges, you know that governments come and go, and you talked about subsidy from the government; what happens if a new government changes that?
The one thing that we are clear about is that, since I came to telecoms in 1999, the NCC has been consistent. They might have changed governments, but the policies haven’t changed. This guy called Ernest Ndukwe, he had painted that picture so well that subsequent Executive Vice Chairmen (EVC) is just following the solid and consistent foundation.
We started the rural thing before the concept began and before we got the contract in 2013, they had awarded this contract, just as we said, and people vanished into the air after collecting the subsidy. We got 36 sites in 2013; because we know where we are going, we rolled it out. Of course, when you perform they will want to give you again. The last contract, they gave us another 15, we rolled it out. Even our contemporaries are still battling; we finished because our own group, to the best that I know, when we delivered for the milestone for which NCC needs to pay, you don’t need to call anybody, the e ort we used to get money for private sector is not even required in their own case. e moments you go there ascertain that the work is done, in 7 days you see your money in your account. So they have been very consistent and we well know that. We will not want to truncate, they have a long term deal on this; it is because of our efforts and the case of a right of way, going by what you are said. Today we have maintained more than six thousand kilometres of bre. For NCC we have built ve, now they have given us con- tract last year.
So right of way issue and all stu s are constant, they will be there but they are the problem that can be handled. They are getting better. You see what is happening in Lagos state where they have passed norms under one agency. The date is an issue because everybody thinks it is a source of income, but slowly but surely, they are coming around. But it is not going to be a bed of roses that is what I was trying to say. The ones that we know are not the problem; it is the unknown that is the problem.
The ones that we know we Nigerians would find a way through, when there is a will there is the way.