‘Challenges limiting telecoms sector growth in Nigeria’
BIODUN OMONIYI is the Chief Executive Officer, VDT Communications. In this interview with ADEYEMI ADEPETUN, he spoke on how challenges are limiting successes recorded in the telecoms sector since the revolution started two decades ago.
How has technological evolution from 2G to 5G impacted service quality?
Service quality is a factor of so many variants, including the ability to invest in infrastructure. We have moved from 2G to 2.5G and to 3G, 4G and 5G and all these technologies have positively impacted on the telecoms sector and other sectors of the economy. Most times, telecoms operators face insecurity challenges and threats to telecoms facilities and all these could affect service quality.
If one telecom site is vandalised, it can cause a ripple effect on other sites that are connected to it. Again, if there is a cut on the backhaul transmission cable, it can adversely affect service quality. So, we need uninterrupted telecoms facilities, including investments in telecoms infrastructure, to achieve better service quality.
For players in the ISPs space, where you also play, the bigger operators have encroached. How have players in the segment managed this issue?
The revenue for voice did not actually drop. What dropped significantly, is the rate of growth in the voice segment of the business, because technology evolution is beginning to compel people to do more of data than voice. For VDT, even though we are a small industry operator, our business model has been centred around data from the very first day of our operations and we are not threatened by the incursion of bigger players into the data space, even though they were predominantly voice operators. The reason for this is that our services complement that of bigger operators and we partner them to provide quality service to customers.
Currently the data market is expanding because more people are using data and we all can comfortably play in the data space. In the data market, the enterprise is even slowing down because most of our enterprise partners like the banks are not opening new branches while some are even closing down existing bank branches because technology has made it possible for them to provide online services that enable bank customers to carry out financial transactions online without visiting the branches. So, what we are doing in VDT is to do more retail business where we have more customers to service.
Having access to funds for rural telecoms expansion has become really tough, but there is Universal Service Provision Fund (USPF). How accessible is USPF to operators?
The Universal Service Provision Fund (USPF), which is being offered by the telecoms industry regulator, the Nigerian Communications Commission (NCC), is like the equalisation fund that we see in the petroleum industry. The USPF fund is meant for network expansion in rural and underserved communities, but most operators tend to concentrate on urban areas where they can make quick returns on their investments, rather than going to rural areas where patronage is low.
The essence of the USPF fund is to encourage operators to develop rural areas that may appear unprofitable at the moment. What the NCC did was to use a certain percentage of the money from Annual Operating Levy (AOL) for USPF and only operators that are willing to invest in rural communities, have access to the fund. We are expanding in some parts of the rural areas and we are working with NCC to achieve further expansion in the rural and underfed areas of our country.
How true is it that fluctuations and accessibility of foreign exchange is affecting telecoms service in Nigeria?
Communication services, which we offer, have to do with different equipment that are not manufactured in Nigeria. So, we import every communication equipment that we use in Nigeria and we need foreign exchange (forex) to import communication equipment. The strength of our Naira currency has weakened against the dollar and this has raised the rate of forex and access to it has been difficult too, which of course, is affecting our business in Nigeria.
Since the COVID-19 pandemic, the Naira has lost its value the most and it is telling on importation of communication equipment because forex has gone so high and access to it has even become a nightmare. Before COVID-19, the value of Naira was N360 to $1, but today it has jumped to over N500 to $1, which is now eating deep into our revenue.
What is the way out of this challenge?
The best way out of this challenge is for the government to protect and promote indigenous manufacturers of communication equipment. The way to promote indigenous manufacturers is to cut down on importation of equipment. Again, the government must give ample opportunities for telecoms and communications operators to have easy access to Forex in the interim. As of today, many operators do not have easy access to Forex.
How have operators like you survived the negative effect of COVID-19 on businesses?
COVID-19 is a pandemic that affected global economies and businesses, but for some of us in the technology space, COVID-19 presented us with an opportunity to develop alternative strategies and solutions that have become the new normal for surviving businesses. The truth is that challenges also come with opportunities, but it takes skills, knowledge and patience to identify the opportunities and leverage them. For us in the technology and telecoms industry, it was easy for us to migrate online and still keep in touch with our customers during the COVID-19 era, when economies were shut down and people were isolated from each other.
What is your take on the ban on Twitter operations in Nigeria?
VDT is a customer-centric organisation and our focus is on customers, who make use of our connectivity services. We provide Virtual Private Network (VPN) for customers but that is strictly private to gain access to connectivity. We also have VPN servers in the cloud where people can log on to and get connectivity to carry out several online activities. The suspension of Twitter operations in Nigeria is not affecting our business growth. We have built security around our networks to protect the data of customers. The Nigerian Data Protection Regulation (NDPR) is another policy that is helping to protect customers and organisations’ data.
Telecoms revolution will be 20 years by next month, and VDT is among the pioneer operators. How has it been?
Telecoms revolution and 20 years of VDT operation have been eventful. I will say I have so many experiences to share, but my greatest moment has always been the joy that I derive when customers are delighted and satisfied with the quality of services we offer them. We have delighted our customers in so many ways through our service offerings and they are happy with our services and this gives me great joy and great moments. Today we are closer to our vision than we were when we started 20 years ago. God has been faithful to us and we are grateful to God.