With no fewer than 568 out of 756 licensed Internet Service Providers (ISP) out of business as of March 2022, the Nigeria ISPs sub-sector has been struggling to stay afloat. A harsh operating environment among several other challenges is the contributing factor. Telecommunications in Nigeria is a trillion-naira highly competitive industry. In this interview, BUKOLA OLANREWAJU speaks with the Chief Executive Officier of Information Connectivity Solution Limited (ICSL), Mr Yemi Oshodi on measures put in by the Nigeria telecom regulator to ensure other smaller players in the industry thrive.
What are ICSL’s expectations for the year 2023?
With all the crosswind we are seeing, you know, no cash, no fuel, increase cost, we are having to buy some fuel on the black market at N300 per litre, also costs are going up, business remains good but executing the business is a bit of a problem.
I expect all that to clear off towards the middle of the second quarter, once that clears off, I think we are going to be fine and business expectations will be good. Once the election is over, the Nigerian economy is going to boom, pure and simple. We are positioned pretty well to take advantage of that.
As a player, how will you describe the pace of Nigeria’s Broadband Penetration and its impact on digital infrastructures?
Nigeria has a very large population and if a large percentage of that population is financially challenged, so getting internet, you know there is a cost to providing service and that cost needs to be covered. Until we have more ideas from USBF, I think the pace of penetration will be slow, it’s not going to be as fast as everybody wants.
Once the economy gets better, the pace will accelerate again because simply put, nobody will pay for the internet if they don’t have a job. What is the use of the internet for someone that simply cannot afford it?
My engineers have expenses too, I have to pay my staff, and service providers have expenses, so until the economy improves, I think the penetration rate is not going to be as fast as everybody expects.
The GSM players are doing a good job, but unfortunately, they can’t get everywhere, that’s why you have players like ICSL who can do Rural Telephoning, and set up rural base stations with 2G/4G for people to use. Also, we have a better cost structure than the MNOs.
Once we get into that space, the penetration is going to increase but financing is always an issue. But I believe once the election is over, things will pick up.
The Broadband Penetration target of 70% by 2025, do you think it is achievable with the point you just laid down now?
Absolutely, I think it’s achievable. We have noticed in our Rural Telephoning program, that when we go out to set up a base station in a rural community; these are people that never had service, the minute we put up the Base station, we are seeing people, we are seeing volumes.
We have rural base stations that are doing 6 to 7 thousand voice calls a day and 12,000 data calls a day. These are neighbourhoods that didn’t have phone service before and we are not even sure where they are getting the phones to be making all these calls because we are not going there with phones, we are just setting up a base station and people are all of a sudden making calls.
I think the NCC is very keen on this program and the returns on investment are there if you are a smart player and if you know what you are doing, if you are not taking stupid risks, the returns are there.
Last year at the TSSF event, we analysed the activities of MNOs and their impact on ISPs. We’ve seen that MNOs have rolled out services that ISPs are also rolling out. What is your competitive advantage and how do you react to this in general?
It is a bit of a concern, you know, you are a small player competing against somebody with a balance sheet that is a thousand times the size of your balance sheet. This is a bit of a concern, but I will point something out. An MNO is not going to sell if it’s competitive, I will deliver the best results for my customers, I will use whatever technology we are nimble, and we can respond quickly. If an MNO has built a 4G network, it’s not going to run or sell a 2G service.
We are not like that, we are very nimble. So as a result, we can take advantage of certain niche areas of the market where returns are better and we can operate in those areas. So yes, it is a threat but it’s always been a threat and we always survive, so it’s not something I do a sleepover.
The Nigerian President tweeted that with the emergence of Starlink in Nigeria, we are now 100% Broadband covered…
We have always been 100 per cent Broadband covered, if you want service from ICSL, I can give you service anywhere in Nigeria. I can guarantee you 90 percent uptime, virtually anywhere in Nigeria, I can do it with Micro-wind, I can do it with Fiber, I can do it with Vsat where infrastructure does not exist. The country has always been 100 percent covered, this is just for marketing.
ICSL is one of the largest satellite players in the old days, now that Fiber is out there, the satellite business has always been the window to a certain extent. But as I speak to you right now, no matter where it is in Nigeria that you want to service, I can provide it. So I don’t think Starlink is offering anything new, I think what you are seeing in that technology is that space via satellite is much better.
Therefore you might have line issues in certain places as opposed to the satellite that we offer which is a little bit higher in the sky, so a line of side issues is limited. They may have a line of side issues in areas that are heavily forested with a lot of overgrowths, they might have issues there and these are not issues that we have. So the idea that Starlink has now led Nigeria to be 100 percent covered is a false one, Nigeria was always 100 percent covered, no matter where you are in Nigeria, I can provide you with the internet.
As you can see the offshore players, are all connected by a satellite. So they’ve always been on, some of them even are connected by radio. So Nigeria has always been covered, I think that’s just marketing on their part. I mean they make it seem as if they have introduced something new, there’s nothing new under the sun. Anything they can do, we can do also, the technology is just a little different. Of course, there is a cost factor to this, when I say I can provide you internet anywhere in Nigeria, I can provide it at a reduced cost.
They have to charge you what they have to charge you and if in a remote part of Nigeria, we have a problem, who is going to come out and fix it? Whereas when you go with our service, we have engineers all over the country, anywhere we put your service we come back and fix it, no matter what is wrong with it, we’ll be out there to fix it.
In essence, you are saying Starlink operations in Nigeria will not impact or affect ISP’s operation?
No, it’s just another option for the customers. But you know most customers in Nigeria are very cost sensitive and the Starlink offering is a high-cost offering in places where there is Fiber, it doesn’t make sense, the Fiber will be cheaper.
As I said it’s just another option for the consumer, I’m sure I haven’t used the service, but I’m sure it’s good for other people that have used the service.
So ISPs have a more competitive advantage than Starlink?
Exactly, and the local knowledge is better obviously.
Recently there has been a lot of several submarine cable landing in Lagos and with many more to come. How would this Broadband Cable landing help ICSL to better offer internet services to its customers?
That’s an easy one, the more cables that land the lower the cost. We have a lot of capacities on the shores, so the more cables that land, the lower the cost.
It’s getting that capacity off the country that’s the problem, but you know when your input cost drop, you are willing to spend more to get the capacity of the country, your raw material, your landing cable is cheap so you don’t mind spending the extra money to move it up the shore, keep in mind that the landing cable is a monthly recurring cost, whereas the expense to move it up country is a one-time cost.
Once I lay a fibre from here to Ibadan, I can keep reducing the cost of my landing cable, but the cost of the fibre is already sunk, I’ve already paid for it.
The service I’m offering becomes cheaper for my customers in Ibadan, so that’s the advantage that the landing cables bring. So many of them, the prices are beginning to drop and customers should see that in their bills going forward.
As a player in this space, what can you say about the regulatory framework, in terms of promoting healthy competition and policy implementation?
The NCC is one of the better agencies out there. They are really on top of their game and they understand it. Where they might have issues are the other regulators; the infrastructure regulators, the state tax authorities, and the federal tax authorities, they seem to be an overburden of regulation. They need to roll some of these regulations back so that businesses can operate better. But with the turns of the regulatory framework for the telecom industry, NCC does a fantastic job. We are good there. It is only when you’re moving from state to state.
Can you talk a bit more about ICSL?
We are a premium provider of connectivity and we offer a bunch of manage services, including network management. ICSL do some software development for customers that need it and we have a consulting service for state and local governments. Most importantly, our connectivity is our biggest and largest business.
With ICSL service offering, we are always looking at new technologies that will provide our customers with better outcomes, we try and improve our service. We make sure that our employees are well informed about what is going on out there, and we train them on how to handle customers’ complaints and how to handle themselves around customers. So all in all, we are trying to build a solid business that can last for years and also growing. We are happy with where we are and I think we could do better, but we are certainly not doing worse.