Nigerians starved of broadband amid international capacity glut

Ben Uzor Jr

Despite the enormous bandwidth capacity sitting on the country’s coastline, majority of the Nigerian populace are been starved of broadband Internet, Funke Opeke, chief executive officer, MainOne Cable Company told newsmen in Lagos recently.  At the moment, there are four active undersea cable systems ((MainOne Cable, Glo-1, MTN’s WACS and NITEL’s SAT-3) in the country. The existing submarine cables in Nigeria carry an installed capacity of over 19.2 terabytes, about 340 gigabyte combined, a significant increase in the capacity available to drive bandwidth dependent services. Opeke, however pointed out that only about five percent of the bandwidth capacity available on MainOne cable is currently being utilised, leaving 95 percent of the capacity redundant but available for use.

Speaking at an interactive session with journalists, Opeke blamed the poor utilisation of the cable on the absence of distribution and last mile infrastructure required to move available bandwidth capacity across the length and breadth of Nigeria. If Nigeria is to enjoy the benefits of broadband, she said regulatory and legislative interventions were required to address these challenges. Nigeria’s telecommunications market, according to her requires a well-rounded infrastructure sharing framework to encourage new entrants and stimulate investments in broadband in order to harness its potentials for wealth creation and economic development. “We strongly believe that it’s something government can set up in less than 60 days. It does no require years of study”, she stated.

The cost of moving internet traffic from Lagos to Abuja, according to her is four times higher than the cost of moving the same level of traffic from Lagos to London. This, she went on is because operators with huge fibre infrastructure have not embraced infrastructure sharing. Besides, those who have offer services at unfair and prohibitive prices. “Looking at the cost and competition policy under the Communications Act, there is absolutely no need for that pricing mechanism. We need to have more infrastructure sharing. “If people who build the infrastructure are running it over public right-of-way, and have received tax concessions to build those networks, I see no reason for such pricing mechanism.

“If private sector has built the infrastructure, then they certainly should make it available to others operators and networks on a fair and non-discriminatory basis. The federal government has done nothing about this so far”, the MainOne CEO added. Business Day learnt that there is more than 30,000 kilometres of domestic fiber optic cables to connect those international cables to more than 50 percent of the Nigerian population. But from all indications access to them is so far discriminatory and inordinately expensive. This, according to industry watchers has inhibited access for most Nigerian schools, hospitals, government agencies, young professionals and small and medium businesses.

Local PC makers gets new lease of life

... FG orders MDAs to buy made-in-Nigeria

Ben Uzor Jr, with agency reports

A wind of change is blowing in Nigeria's computer hardware market which has rekindled the hopes of local Personal Computer (PC) makers struggling to survive the stiff competition from foreign manufacturers, and prevalent business environment. The Federal Government has mandated all government Ministries, Departments and Agencies (MDAs) in the country to purchase computers by indigenous companies in keeping with its resolve to also promote local content in the Information Communications Technology (ICT) industry, Omobola Johnson, Minster of Communication Technology has confirmed.

Industry analysts say government is putting its money where its mouth is with the renewed push for Buy-Nigeria hoped to drive growth of local ICT industry. With the public sector seen as the biggest technology buyer in the economy at the moment, market watchers believe that it will once again throw up fresh opportunities for Nigerian PC makers like Beta Computers, Brian Technologies, Zinox Technologies, Omatek Computers, and Veda Computers, among others. Leo Stan Ekeh, Chairman, Zinox said that the new policy to patronise locally-made PCs by Federal agencies is a welcome development that will stimulate growth of the Nigerian PC assembly industry.

The CommTech Minister reiterated the government position last week while intimating participants of the eNigeria 2012 Conference in Abuja of some of the successful initiatives that the Ministry and its agencies are pursuing to improve local content development in the ICT industry. Johnson said that one of such initiatives is the launch of the Student Laptop Ownership scheme that is hinged on granting reasonably-priced loans to parents and guardians of students in tertiary institutions to purchase locally-assembled laptops.

Others include the establishment of two pilot ICT Incubation Centres at Tinapa Knowledge City, Cross River State and eLearning Centre, Lagos to encourage and nurture the development of successful ICT firms and the launch of a N2.4 billion venture capital fund specifically for ICT entrepreneurs to provide early stage financing of innovations. Under the plan, the Ministry plans to launch a one-year programme, InnovateIT, in collaboration with the banking, oil and gas industries to drive the development of indigenous software to support the needs of firms in these industries, she said.

Also, a Skills and Research Development Institute will be established by IBM in collaboration with the Digital Bridge Institute to build technical capacity and drive innovation in the ICT sector. The CommTech Minister said that the Ministry is in an ongoing discussion with the Ministry of Finance and the Budget Office to ensure that tariff reviews on imported finished goods and inputs into domestic production of ICT goods and services create a level and competitive playing field for all participants in the ICT sector.

Earlier this year, the National Information Technology Development Agency (NITDA) had announced a guideline for the purchase of Made-in-Nigeria computers by MDAs. The guideline strictly put a ban on foreign computers and technology products in public institutions and schools to encourage patronage of Made-in-Nigeria initiative and foster growth in the local ICT industry. This is in view of the huge number of hardware and software applications imported and used in the country, which have posed a considerable drain on Nigeria's foreign exchange (FOREX) according to NITDA.

The Minister’s latest confirmation reinforces the NITDA guideline, as she decries the low PC penetration in Nigeria, ranked as the lowest in Africa. She further added that the affordability and availability of the PCs and other devices and the slow pace at which ICTs were being adopted for teaching and learning in secondary and tertiary institutions were partly responsible for the low PC penetration in the country. Therefore, there was urgent need to boost domestic participation in the ICT industry by providing incentives to local hardware and software companies to increase local content.

Shanduka, MTN deal highlights SA scramble for solace in Nigeria market

Patrick Atunaya & Ben Uzor Jr

South Africa strategic investment drive into Nigeria is continuing apace with the purchase of a further $335 million stake in MTN Nigeria by Shanduka Group, the investment holdings group controlled by Cyril Ramaphosa, businessman and chairman of JSE-listed mobile phone group MTN. Analysts say it is an indication of the scramble among South Africa investors to seek solace, amid the European crisis, while at the same time increasing their intra Africa investment drive. “The intra Africa investment drive is a strategic effort underlined by their competitive advantage,” Bismarck Rewane, chief executive officer, Financial Derivatives, told Benuzorreports.

In the past few years, South African firms have been moving fast to tap into Nigeria’s huge consumer market. Last week Rand Merchant Bank, South Africa’s second-largest financial company, got a license to operate as a merchant bank in Nigeria. The minimum capital base for merchant banks is N15 billion ($952m). In September, Tiger Brands, another South African company in the foods business, bought 63 percent of Dangote Flour. The company has lately said it would raise its shareholding to 70 percent.

Rand Merchant Bank, in its 2012 report: Where to Invest in Africa, observed that Nigeria, “has the most favourable macroeconomic backdrop for sumption spending  growth.”

Nigeria’s population and pent up demand for goods and services makes investment case. From mobile phones (Nigeria’s is the largest), unbanked population (36 percent of SSA’s unbanked population are Nigerians) The latest move by Shanduka Group Ltd whittled down Nigerian ownership of MTN Nigeria to about 18 percent. MTN Nigeria, with over 45.6 million subscribers and an estimated market share of 48 percent, is the largest subsidiary of the MTN Group, Africa’s largest mobile network operator, and contributes about 30 percent of MTN group’s earnings. Shanduka Group stake makes it the third largest shareholder in MTN Nigeria. “Nigeria is the most populous country on the continent and is an important market from a consumer perspective,” said Shanduka Chief Executive Phuti Mahanyele.

The investment firm declined to say exactly how much it owns of the Nigerian unit, purchased from three private investors including private equity company African Capital Alliance. Benuzorreports analysis of the investment, however, shows Shanduka Group stake amounts to about 3.1 percent of MTN Nigeria, with the MTN Group valued at $36 billion and the Nigerian business alone valued at $10.8 billion. The investment leaves the South African telecommunication company (MTN Group) with 78.8 percent ownership of MTN Nigeria, the second-largest shareholders are a group of Nigerian shareholders at 18 percent, while Shanduka Group has a 3.1 percent stake.

MTN Group in a 2007 private placement, sold a total of 43,024,602 “MTN Nigeria linked units” or shares at $24.56 per unit, intended to raise the Nigerian ownership of MTN Nigeria to 21.4 percent. It was learnt that Standard Chartered alerted Shanduka Group to the opportunity and also helped finance the purchase through debt and equity. But the deal according to the newspaper report, raises questions about corporate governance and a potential conflict of interest. The concerns stem from Ramaphosa being the chairman of the MTN Group, of which MTN International is a subsidiary. The $335m deal was Shanduka’s largest-ever investment outside of South Africa, its CEO Phuti Mahanyele said. She insisted that the deal was above board and that Ramaphosa was not directly involved in negotiating the deal.

“It was not an exclusive deal, but was put out into the open market,” Ms Mahanyele said. “The shareholding in MTN Nigeria is held by MTN International and (Ramaphosa) sits on the board of the (holding) group and was not involved (in the negotiations). “ A telecoms industry executive, who asked not be named, said it was difficult to imagine that Ramaphosa would not have been aware there were investors in MTN Nigeria who wanted to sell their stake. A corporate governance expert, who also asked not to be named, agreed that the deal raised questions. “Shanduka should not be anywhere near MTN, end of story,” the second source said. “Ramaphosa should be aware of the conflict of interest.” MTN Group has refused to comment on the deal. The stake was purchased from three private investors.

German software maker enters Nigeria’s N960bn market

Ben Uzor Jr

Software AG, a German software maker with revenues of €1 billion, weekend declared its entry into Nigeria’s N960 billion software market. The company said it is raising its stakes in the West Africa market with Nigeria becoming a strategic hub to serve other countries in the region. The €25.2 billion company said it was engaged in a strategic partnership with Northern Spark, an Information Technology (IT) company in the country to deliver best-in-class software solutions that improve business productivity and efficiency. Speaking at a seminar entitled: ‘Achieving Business Excellence with AG’s Enterprise software’, Barry De Waal, vice president, Africa region of the company, said its entry into the Nigerian software market represents a unique opportunity for Software AG to deepen its presence in Africa.

He said Software AG was committed to expanding the scope of Nigeria’s software market, further adding, “We have made a conscious decision that has been approved by the board to grow the market, deepen our presence and drive the business forward.” Waal said the firm’s strategy to catch up with competition was simply to develop local support and capacity. “This is very critical for us going forward. It is one of the things Software AG and Northern Spark agreed on from the beginning. Our goal is to take over the whole of West Africa and we are starting with Nigeria which is the largest market here.” Speaking in the same vein, Bob Anderson, general manager, Northern Spark, said both firms were very keen on building and driving local content development in Nigeria through technology transfer.

“This is the reason why Software AG chose us. We pride ourselves with contributing to local content development. We like to have technology transferred back to us and supported right from the Original Equipment manufacturer (OEM). Northern Spark has become Software AG in West Africa with the footprint here in Nigeria. We want to bring in the technology to further grow the economy”. The software company said it intend to play a fundamental role in Central Bank of Nigeria’s (CBN) ‘Cashless Nigeria Project’. He added that Nigeria’s conscious migration to a cashless environment will throw up significant challenges for banks due the high volumes of online transactions. Software AG, according to Waal offers enabling technologies that can scale from a low range to a high transaction volume range.

“We are not confined to finance. Let’s look at the oil and gas industry, specifically pipeline management. There is huge amount of data coming out. Businesses can go into big data and extract information very rapidly and efficiently. The telecoms industry, what is the state of the network across the country? With the amount of data coming through, you need high speed availability to figure what is going on and make better decision that can improve the business. It is just as applicable to finance as it is to telecoms and oil and gas industry”, Anderson added. In his paper presentation at the seminar, Chris Ogbechie of the Lagos Business School (LBS) urged Nigerian businesses to adopt good corporate governance structures. He said good corporate governance currently influences foreign investment decisions.

Founded in 1969 in Darmstadt, Germany, Software AG is the global leader in Business Process Excellence. The software company’s more than 40 years of innovation include the invention of the first high-performance transactional database, Adabas; the first business process analysis platform, ARIS; the first B2B (Business-to-Business) server and SOA-based integration platform, webMethods; and pioneering big data technology with Terracotta’s BigMemory. The firm has pledged to offer customers a variety of end-to-end solutions that deliver low total cost of ownership and high ease of use. It has more than 5,500 employees serving enterprise and public institution customers across 70 countries.

Merger deal puts Starcomms ahead of peers in broadband provisioning

Ben Uzor Jr

The recent merger in the Code Division Multiple Access (CDMA) landscape has placed Starcomms Plc ahead of its counterparts in the telecommunications industry specifically in the area of broadband provisioning. Starcomms Plc said it reached an agreement with CAPCOM Limited for investment of cash and assets worth $210 million in return for a 90.5 percent stake, handing over control of the company. For quite some time, CDMA networks have struggled to survive the stiff competition in a GSM dominated market. The merger deal however has given Starcomms Plc a new lease of life, and places it in good stead to compete favourably with the bigger networks such as MTN, Globacom and Airtel.

As part of the merger deal, Starcomms Plc will get assets including a license operated by MTS First Communications Limited and the mobile business of Multi-Links Telecommunications Limited, giving it the biggest frequency spectrum allocation for any mobile network operator in the country. This ultimately makes Starcomms Plc the first telecoms operator with the capability of offering faster 4G/LTE services, according to the statement. Starcomms Plc’s ability to provide 4G/ LTE (Long Term Evolution) puts it a vantage position considering that most telecoms operators already see that existing wireless technologies (3G, WiMAX) would not be a definitive solution to Nigeria’s internet access problem.

Industry analysts told Business Day that many mobile operators are looking to LTE as a new revenue generator because it offers them the ability provide innovative offering well beyond voice and data services. “There is a huge opportunity in providing broadband from greater funding and the combination of spectrum licenses of Starcomms and Multi-links. Broadband is required to be competitive in the telecommunications industry”, said Gbenga Adebayo, president of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) in an interview with Bloomberg recent.

“The combination of spectrum allocation of the companies making up Starcomms will count as a competitive advantage,” Akintola Salam, a telecommunications analyst at Lagos-based Financial Derivatives Company said in an e-mailed response to questions from Bloomberg. Inadequate investments impaired CDMA growth while GSM networks run by Johannesburg-based MTN, Abu Dhabi-based Emirates Telecommunications Corporation, known as Etisalat, Mumbai-based Bharti Airtel Limited and Nigeria’s second national carrier, Globacom Limited prospered. MTN Nigeria, with more than 45 million customers, has a 42 percent share of the country’s phone subscribers, according to September data on the website of the Nigerian Communications Commission (NCC). On the other hand, Globacom is second biggest with 19.8 million subscribers, while Airtel is third with 18 million.

“Starcomms and their new backers will be hoping that they leapfrog the GSM guys by investing heavily in LTE 4G,” Bunmi Asaolu, an industry analyst at Lagos-based FBN Capital Ltd., said in an e-mailed response to questions.

Avaya expands presence in W/Africa, opens office in Nigeria

 Ben Uzor Jr

               

As part of its continued regional expansion plans, Avaya, a global leader of business communications and services, weekend announced the inauguration of its office in Nigeria. This office, according to Avaya will support local customers, cater to the needs of its nearby partners, and effectively manage business in Lagos and surrounding areas. The company’s plans for the African market is to provide the state of the art next-generation business collaboration and communications solutions, providing unified communications, real-time video collaboration, contact centers, networking solutions and related services to firms of all sizes throughout the continent. Avaya disclosed that it had signed a five-year multi-million dollar deal with Airtel to manage its contact centres across 16 countries across Africa.

Hatem Hariri, managing director, Africa for Avaya, in an interview said the firm sees tremendous opportunities in investing in local talent and partners to assist in not only identifying new business opportunities but expanding its regional customer base. Nigeria is a critical market for Avaya, according to Hariri. “It harbours thousands of businesses and organisations and has one of the largest populations in Africa with close to 162 million people. The capital Lagos alone has a population of 7 million, which also houses over 100 international business and organizations. The Nigerian office will be the fourth office placed in Africa, following Kenya, Egypt and South Africa. Its major functions will be to offer customer service, as well as marketing and sales and the opportunity to service the West African market.”

He said the objective of this expansion initiative is to bring Avaya closer to local African customers and channel partners. “Africa remains a key market for Avaya, and expanding our presence to one of the most populated cities in the continent reinforces our local support to customers as well as partners. It will also give Avaya an opportunity to expand and provide solutions to the West African market. Nigeria remains a strong driver and an example of the wider regional Information Technology (IT) market. Avaya is committed to supporting the countries growth by enabling organisations in all sectors benefits with our world-class collaboration solutions”. He said the company’s next generation unified communication services can enable businesses improve employee productivity, customer service and reduce costs by integrating multiple forms of communications, including telephony, e-mail, instant messaging and video.

With the growing number of Small and Medium Enterprises (SMEs) across Nigeria, Hariri said Avaya can address the communications challenges facing SMEs with its award winning Avaya IP (Internet Protocol) office. By expanding its presence to one of the major cities in Africa, he said, “Avaya upholds their commitment to local customers and stakeholders in the IT market. Avaya’s is also able to continue its commitment to bring The Power of We™ to every Avaya customer, helping businesses to drive faster collaboration, smarter decisions and better business results.”