Competition impacting positively on Nigeria’s telecoms industry, says Ikpoki

Michael Ikpoki, in July 2013, emerged the first Nigerian Chief Executive Officer of MTN Nigeria. He was earlier appointed CEO of MTN Ghana in April 2011 after successfully heading MTN Nigeria’s Sales and Distribution Division as its Executive from 2006.  His appointment as the Chief Executive Officer of MTN Ghana made him the first Nigerian in the MTN Group to attain this height. Ikpoki obtained an LLB from Rivers State University of Science and Technology and called to the Nigerian Bar in 1991.Since then, he has continued to amass an impressive academic profile which includes various senior executive programmes at the Harvard Business School, INSEAD Business School and the Lagos Business School. Ikpoki joined MTN in 2001 as a Regulatory Affairs Advisor after a six-year stint with the Nigerian Communications Commission (NCC’s) Legal Division, where he was responsible for giving legal advice and making important input to telecommunications policy and regulation. Ikpoki oversees the largest telecommunications firms in Nigeria, which started operation in 2001 and currently has over 60 million subscribers. Lately, industry watchers, including competitors, are of the opinion that the rate at which the MTN Nigeria, which has a South African root, is going, other players in the industry may be smoked out. But Ikpoki, at a post-event interview with ADEYEMI ADEPETUN, thinks otherwise. According to him, telecommunications service is about competition, which is centered on better customer satisfaction. He also spoke on some germane industry issues. Excerpts.

MTN is known to be a telecommunications firm, but of late, it is regarding itself as an Information and Communications Technology (ICT) firm. What is driving this new nomenclature?
I think the reality of our business is that MTN has been primarily a voice business. But we have grown our core business, which are voice and databeyond imagination. However, about a few years ago, we recognized a new opportunity in ICT, which redefines our focus, by so doing investing in infrastructure.     
   
Today, we have 47 data centres across Africa. We have fibre all over Africa. We have technology platform that enable us provide other services, especially to support other sectors of the economy. That is why we have expanded to become an ICT business. It was part of the reason we created MTN Business to focus on how do we service corporate, the Small and Medium scale Enterprises, to see how we can enable them with all forms of solutions, and make  businesses a lot more profitable and efficient. So that is really how we have evolved. Our focus now at MTN, even as a group is to support business developments beyond the horizon.

Our believe is that to grow our economy in Africa, there is need to grow business and we believe that our role at MTN is closely and significantly tied to that.

Becoming a full-fledged ICT firm, what are the new challenges encountered by your operations?
I think they are the usual challenges if you are in key business like ours. We are used to have challenges, which include fibre cuts, vandalism; multiple taxation; over regulation and the rest. To me, what I considered the biggest issue, which is a challenge, also an opportunity is how to we create more digital literacy. For instance, when we talk about SMEs, if you are one today and planned setting up a business, you don’t have to spend money on IT, because MTN has cloud services where you can download information from the cloud at a fraction of a cost. From there you can get software that helps you run your business efficiently.
   
But the biggest issue today is how to get more people aware of these opportunities. How do we create that literacy so that more and more people, businesses, even established ones can find that some of these solutions can become useful to them for efficient business management.
   
So I think that is real the big issue. Our core business of voice is natural, people can pick up a phone and talk, but tide is fast changing and technology is developing at the speed of light, so we believe that Nigeria and indeed Africa should not be left behind. As such, it has become necessary to create digital awareness. For me that is the challenge, which is a good one and if we can overcome it, then it means we can have more people becoming digitally literate and our ecosystem becomes robust for it.

Looking at the informal sector from the angle of SMEs, it has been said that these set of businesses are critical to growing the economy. How does your solution help in addressing their challenges?
SMEs are critical to the economy. There are about 17.6 million SMEs according to the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN). They are contributing about 46 per cent to the GDP and employing between 30 million to 32 million people. It is a big sector. But I think the challenge is that if there are no supports for the SMEs, they start and eventually die. That means we are actually depriving ourselves the opportunity of growing the economy.
   
So, for SMEs, one of the things we have done at MTN Business is that we created what we call the Yhello Directory. This is because the most important thing the SMEs need is for people to be aware of their services. So be it a confectionary business situated in Ikoyi or other places, you can be located through the Yhello Directory.
   
I can say that we have about 600 firms on that directory. So what we have done is to encourage people to come to the directory, where they can sell their business and people get to know them and their business and by so doing, they gradually gets customers.
     
Through the Yhello Directory, we have provided avenues and opportunities to sell other forms of services to the people. For example, I talked about cloud technology, you can now have your infrastructure been hosted in the cloud, which just require a service fee on a monthly basis. Such reduces cost and which at the same time give access to more customers. We at MTN believe that SMEs will survive if they have access to knowledge on how businesses should be run.

We are also working with other partners on enterprise development centre at Lagos Business School so that we can create more awareness and grow the base in the economy. We are equally in close partnership with SMEDAN on how we can support would SMEs with required solution. I believe that whatever is being done to assist the SMEs to grow, there should be a form of coordination. For SMEs growth in Nigeria and other part of Africa, there should be institutional support from all areas including government, business owners, NGOs and the rest. 

There have been sporadic growths in data business, Internet services among others. What infrastructure is MTN putting on ground, especially as Nigeria prepares to deepen broadband penetration in the country for improved quality of service?
I think the issue about data is about investments and more investments. I can tell you that we have invested quite heavily on infrastructure. For example, on the International bandwidth, we have the West African Cable System (WACS) cables, a huge investment has gone into that. We equally have investment in data centres; metropolitan fibre, but I think the reality of data, if you remember, there was a time we didn’t have voice coverage every where, but today, voice coverage has gone to over 90 per cent of the country, but in data, it is just about 50 per cent of the country because it takes time. We have to upgrade our sites to 3G, build in fibre to support it; provide backhaul structure, the build out of all those infrastructure take time. What we are trying to do is to focus on lots of places where we have more densed coverage and as you know, data unlike voice, where you can talk for about three to five minutes, data, people are on it all the time.

So, the experience, the speeds are very important and the more customers you have on data, means you have to continue to roll out services and improve your coverage.
   
Our focus now is densifying coverage in lots of the key markets. We are monitoring new customers that come in and we are ensuring that we improve coverage in most of those of markets, so that we can give the right kind of speed that is required. The reality is that data, just like voice, it will take us sometime, but we shall continue to invest to ensure we meet the need of our customers.

May be you should shed more light on what MTN is doing to improve services generally?
Generally, the most important thing in managing services is about investment. This is because at the end of the day, if you are acquiring customers, you have to make sure that you have enough infrastructures to support good quality service.
   
The most important as I said earlier is having quality investment on ground. As you know, MTN shall continue to invest aggressively to making sure that we acquire more customers and give them required services. Another thing is operational improvement, last year; you will recall that we did some changes in our organization structure by outsourcing the management of the network to third party. Last year, we moved about 230 of our engineers into Ericsson and Huawei, because these are technology companies, which have the responsibility to manage the networks. We have done that and equally made some changes in our organizational module, where we sold our towers to third party, a company called INT. What they will be doing is that they will help us manage our towers with focus on ensuring that the infrastructure is working, they can deal with the many issues around by making sure there is adequate availability of service, among others.
   
So, with that whole model, we are seeing improvement and I think our focus is to make sure that we continue to invest and support the partners to deliver on the right quality of service expected. Having said all these, there are other factors, which are also reality. For instance the environment in which we are in; power supply, which dropped significantly last month to about 1.5  megawatts, so that tells you lots of the outages we have had are power related.
   
The issue about having a robust power sector is very critical, no matter how hard we try; it is still an issue we have to contend with. It is however an area been given lots of attention by government.

There is this issue around Internet of Things (IoT). How is MTN championing that revolution in Nigeria?
Well, lots of ways. IoT is a simple way by which machines talk to themselves. The most basic example is machine to machine, vehicle tracking. Tody, by putting a machine in your car, you can actually track where the car goes to; track location; the speed and others. So, it is basic tool. For example also, today, if you look at the economy, the logistics around putting such chip in your vehicle, you can easily track and manage the efficiency of how you use your fleet, so that is a basic step.
   
As we go further, the technology become more complex, by then, we will be looking at your fridge talking to you; your car talking to you. You will have smart home concept, meaning that within your home you can regulate how things work. The onus of it is you using technology to secure your asset, that is the stand point and as the economy continues to grow, more services of such will come on board.
In all of these, how will the IoT impact the Nigerian economy?
If you talk about SMEs for example, one thing that is key in this their survival is lowering the cost of entry, making it easy for people to do business at cheaper cost and by providing the kind of services we are providing, we can actually enable a lot of SMEs to survive because we lower the cost of operation, so if you get to the MTN Yhello directory today, and subscribed to some of the services we have, including Software as a Service (SaaS); Cloud as a Service (CaaS), among others, MTN is able to reduce the cost of entry. A lot of SMEs don’t survive the first two years because of the high barrier cost, which in itself is an opportunity. Secondly, I think even for larger companies, at the end of the day, every company must work hard to reduce cost and improve efficiency. A lot of the tools are there, even for bigger corporates. MTN can house your entire IT infrastructure in our data centre.
   
Today, we have a Tier 3 data center in Lagos, an international world class one, where we can host IT infrastructure, so today, for quite a number of banks, we host their infrastructure because it is not their business. So we take away those operational costs, which they would have had to incure while managing to kinds of IT needs. Those are examples and as we go along, we shall continue to impact businesses positively with our infrastructure. We have different tools to manage businesses using technology.

The regulator, even competitions have raised the issue of MTN being a dominant player and monopolizing the industry’s profit. What is your take on this?
Look, MTN is a company competing in a market like every other businesses. MTN, like other companies were given a license in 2001 and we have been running our business as efficiently as we can. I really don’t understand what this issue is all about. Nigeria is a very competitive market, which is the bottom line for businesses and the industry we have found ourselves.
 
What we have tried to do over the years is to compete, but we have invested very aggressively. With all modesty, we are not where we are today because we folded our hands and watch. We have invested heavily.
   
Today, MTN Nigeria has invested over $15 billion since inception into the Nigerian economy. We have paid taxes of over N1 Trillion; we have created jobs for lots of partners that you see today, which have had a multipler effect on the economy. So, we have run a successful business in a very difficult terrain. We don’t see why our quest for wider and improved service delivery should be seen as a threat.
   
All telecommunications players have equal opportunity to compete in the market. All of us are competing out there, so I don’t know why there is this whole issue about one player taking the whole profit. I can tell, we are running our business the best way we can, rendering services; enabling economic growth; investing, managing our channels, working with partners, employing people, among others. We are doing the best we can. So, for me, I think the market is a competitive one and the good thing about competition is that the value has been for the customers.
   
For instance, prices for these markets have come down on the account of improved competition. In the last four years, prices have come down by over 70 per cent in the Nigerian telecommunications sector. I think, the Nigerian market, like others in the world is a competitive one and we shall continue to compete.
   
My view is that all operators should compete; there should not be a case, where some players will be complaining about others. MTN don’t complain about other operators, we compete with them.

The Universal Service Provision Fund (USPF) in which MTN Nigeria, like other operators, is a major contributor, has not actually been utilized to develop broadband and other telecommunications infrastructure beyond the served areas. What actually are operators like yours doing in terms of communicating back to NCC to ensure that these monies are given back to operators and subsequently ploughed back into service provisioning?
As you know, all operators contribute to the fund and what is intended to be used for is to manage, subsidize rollout of infrastructure in some particular part of the country and the fund is managed by the NCC through the USPF board.
   
What has been happening is that for certain areas, the NCC has actually been issuing bids. They have been inviting operators to bid and participate in terms of accessing the funds. I think the challenge is sometimes that the priorities are a bit different. So, in terms of roll out, our focus may differ from that of others. For example, we may like to focus our broadband coverage in most of our key markets so that we can satisfy the majority of the customers who are using the service as opposed to rolling out in some far areas, where we don’t see the kind of uptake from the broadband point of view.