Telcos lean on Blackberry to drives data revenue

·         Generate N6bn monthly

Ben Uzor Jr

There is a clear transition from voice to data usage in Nigeria’s technology space, with the four biggest telecommunications networks generating an estimated N6 billion monthly from Blackberry Internet Services (BIS), Benuzorreports has learnt. With the steady decline in voice revenues, operators are beginning to pay keen attention to data services as the next revenue generating stream. There are three million connected smartphones on all four GSM networks, out of which two million are Blackberry devices, according to research firm, Informa Telecoms & Media. With an average monthly BIS spend of N3, 000, operators generate about N6 billion from BIS. A senior executive at MTN who pleaded anonymity told Benuzorreports, that BIS for quite sometime contributes significantly to data revenues.

The telecom company in a report, weekend said data services has continued to gain momentum, although growth in 2G data users was impacted by network congestion. Kamba Daniels, chief executive officer, Himmlisch Limited told Benuzorreports in an interview that the introduction of cheaper service plans with attendant expansion of subscription base has pared down revenue. "Blackberry in so many ways is a pioneer in the smartphone market.  "RIM tapped into the aspirational bent of the Nigerian society; so it has remained a status-denominator amongst the teeming population especially among the youth. There are millions of Nigerians in diaspora; many of whom caught on to the fad early when it held sway in the West, so they impressed it on their relatives to get BBs to maintain easy, cost-effective communication. The Blackberry success story cannot be divorced from the social and entrepreneurial spirit of the Nigerian who need to stay connected to family far and wide and with the various enterprise solutions that RIM offers like push email, twitter, BBM and Facebook to keep abreast of their businesses".

The federal government has restated its commitment to provide ubiquitous and affordable broadband services in the country. It has already opened its door to the global investment community through the adoption of an open access model strategically designed to strengthen investment in the area of deploying in-land fibre networks needed to move available bandwidth capacity around the length and breadth of the country. In view of this, Nigeria’s internet access model characterised by slow and exasperating access to cyberspace even with the growing number of undersea cable systems on the country’s coastline, would soon become a thing of the past.

Omobola Johnson, Minister of Communication Technology, had promised to facilitate the development of Information Communications Technology (ICT) infrastructure in the country to increase the number of internet users in Nigeria to 70 million by 2015. Besides, Lanre Ajayi, president of the Association of Telecommunications Companies of Nigeria (ATCON) told Benuzorreports that telcos revenue from data services is increasing significantly. “Today, there are a lot of people carrying their internet dongles. There are lots of Nigerians carry blackberries and smartphones with internet connections. We have over 45 million internet users. I don’t know why we are still stuck on mobile access when the fixed line access should have been the primary source of connecting to the internet.

“We need to stimulate demand by getting our schools, hospitals and homes connected to the internet. We need to get government services online. "We need to move our businesses online", he added. However, Nigeria’s envisaged migration to a data (internet) service dominated market is happening at a rather slow pace with telecoms operators’ still generating significant revenue from voice services. Mobile telephone subscribers in the country spent N593 billion on calls between January and June, 2012. This is based on the widely acceptable Average Revenue Per User (ARPUs) figure of N1, 000 per month for the telecoms industry amid a growing subscriber base.

With the active GSM and CDMA lines surpassing the 94 million mark in January to well over 101 million in June, subscribers must have spent at least N593 billion on making calls in the first half of the year. Industry analysts told Business Day at the weekend that this statistics clearly shows that there still exist tremendous opportunities in the voice segment of Nigeria’s highly competitive market, and perhaps explains why much has not been done in the area of data service. It was gathered that with an ARPU of N1, 000 subscriber base of 96,150,836, telecoms subscribers parted away with N96.15bn for phone calls; while in February, when there were 96,616,580 active telephone lines in the country, an estimated N96.61 billion was spent by telecom subscribers. In March, 2012, the spending of telecoms subscribers on phone calls was estimated at N99.14 billion; bringing the total telecoms consumer expenditure on phone calls in first quarter of 2012, spanning January, February and March at N291.2 billion.

Commenting on the increasing reliance of Nigerians on telecoms services, Deolu Ogunbanjo, president of the National Association of Telecoms Subscribers (NATCOMS), said “The increasing spend of telecoms subscribers on their various network is a reflection o the importance of the service to our daily activities.”He challenged the telecoms operators to improve the quality of service on their networks while asking the federal government to also help address the challenges being faced the operators in expanding their network for improved services.

Starcomms reaches agreement on $210 million CAPCOM investment

Ben Uzor Jr

Starcomms Plc, has said it has reached an agreement with CAPCOM Limited to provide it with a capital investment of cash and assets independently valued at $210 million. This new development comes week after minority shareholders of the telecoms operator filed a perpetual injunction to prevent Starcomms Plc from progressing with any merger, or business combination or transaction that alters shares held by them. Industry analysts told BusinessDay, yesterday that decision would give the CDMA segment a new lease of life as the much expected business combination of Starcomms Plc, Multilinks and MTS will finally come to fruition.

For sometime, CDMA operators – also known as Private Telephone Operators (PTOs) have found it difficult to survive the stiff competition in the nation’s $3.9 billion telecoms market. Starcomms Plc, according to a statement made available to Benuzorreports, said: "CAPCOM has agreed to cause the contribution to Starcomms of certain CDMA assets over which it intends to acquire control in separate but related transactions. "CAPCOM will contribute to Starcomms assets including the spectrum licence of MTS and the CDMA mobile telecoms business of Multi-Links."

In addition to facilitating the CDMA consolidation, Benuzorreports gathered that CAPCOM will provide $98 million in cash to finance the post-acquisition integration of these assets, to meet on-going short-term losses in the business and to deliver the combined company’s new business plan. In return for its investment into Starcomms, it was learnt that CAPCOM will receive new Starcomms shares which will result in CAPCOM owning 90.5 percent of Starcomms restructured issued share capital.

"In consideration of their proposed sales of certain assets to CAPCOM, both Helios Towers Mauritius Holdings Limited and Asset Management Corporation of Nigeria (AMCON) will own stakes in Starcomms (together representing less than 12 percent of CAPCOM equity following CAPCOM's investment) derived from CAPCOM's shareholding on completion", the statement said. Industry analysts said that the proposed transaction  will create a leading CDMA operator in Nigeria and represents a fundamental step as part of the consolidation move in the Nigerian telecoms industry.

With the benefit of the 20 MHz of contiguous 1900MHz spectrum to be held by the consolidated operations, the largest spectrum allocation for any mobile operator in Nigeria, Starcomms will be at the forefront of the shift away from current generation of services into a Long Term Evolution (“LTE”) technology platform. This, according to the industry analysts will provide CAPCOM with the capability of delivering new 4G and related data and other services that will offer customers substantially improved performance. "Monetizing the new broadband services and applications will provide Starcomms with crucial first mover advantage in the Nigerian market with its 4G / LTE network rollout" according to the statement.

The agreement is subject to Starcomms shareholders approving the proposed Scheme of Arrangement (the “Scheme”) pursuant to Section 539 of the Companies and Allied Matters Act, 2004 (CAMA) which will be effected to reorganise Starcomms’ share capital as well as the Private Placement of new shares to CAPCOM. The Transaction will also be subject to Court sanction and regulatory approvals, including approval from the Securities and Exchange Commission and The Nigerian Stock Exchange. As part of the overall transaction, Benuzorreports gathered that existing shareholders will be offered the opportunity to make additional investments in Starcomms via a 1:1 Rights Issue upon the same conditions at which CAPCOM is receiving its share allocation.

 "The Rights Issue will be launched subsequent to the closure of the Private Placement. Starcomms shareholders will have the opportunity to vote on the resolutions to be proposed at the Court Ordered Meeting and the subsequent AGM of the Company to be scheduled. The Company will announce the date for the shareholder meetings in due course." The Company’s Board of Directors believe that the proposed transaction represents the best option available to Starcomms to effect a strategic turnaround, improve the Company’s financial position and retain value for its stakeholders.

Starcomms’ Interim CEO, Olusola Oladokun commented: "The proposal from CAPCOM will enable Starcomms to reduce its high level of borrowings and improve its low liquidity position. Given the significant challenges the business has faced over the last two years, CAPCOM's investment will facilitate a strategic turnaround, improve the competitive position in the market and place the Company on a growth path for the future." Starcomms was advised on the Transaction by CanaccordGenuity Hawkpoint and Stanbic IBTC. The company said a further announcement will be made in due course. CAPCOM was founded by MBC, a trust of 20 years standing whose portfolio companies manage over $1.25 billion in the asset management and commercial banking sectors focused on emerging markets. CAPCOM has attracted a group of family offices and funds committed to investing in the Nigerian telecoms industry and participating in the development of the sector.

Flood, insecurity slows down MTN’s $1.3bn network optimisation project

Ben Uzor Jr

Efforts by MTN to put its network in prime position to deliver best-in-class services is been stalled by the spate of insecurity and the unprecedented flooding in many parts of Nigeria. The telecommunications company on Tuesday appealed to its over 40 million subscribers’ to bear with the poor quality of service rendered since the commencement of its $1.3 billion network modernisation exercise. The company said various activities related to network modernisation are progressing steadily. “We regret, however, that the pace of work has been considerably challenged by the spate of insecurity coupled with the unprecedented flooding being experienced in many parts of the country”, said Wale Goodluck MTN’s corporate services executive. The network optimisation and modernisation exercise, according to Goodluck will affect over 4,000 Base Transceiver Stations (BTS) out of over 10, 000 across the country.

“The task that we are undertaking is tantamount to building a new network .We are seeking to replicate what we achieved over a six year period in nine months”. Goodluck explained that considerable progress has been recorded with regard to the ongoing network improvement plans. “Several swap-outs have reached very advanced stages of completion,” he disclosed. “The entire network modernization process is a very logistic-intensive one and the problem of insecurity has seriously affected the pace of work in some parts of the country.” In at least 13 states, Goodluck further added, flooding has created additional logistic impediments such that the pace of the ongoing network modernisation efforts has slowed down. Goodluck acknowledged that MTN’s customers have been experiencing some disruption over the last few weeks. “We sincerely express our thanks to our customers for their patience,” he said.

He pledged that that as much as possible, MTN would stick to its original plan of carrying out the network procedures only at night, in order to minimize disruptions to services. He also assured that MTN is doing everything possible, including doubling its work teams, to finalize the project as quickly as possible. Several communities, Goodluck said, have been very supportive of the current network modernization efforts. “We sincerely appreciate the enthusiastic support which our engineering teams continue to receive from different communities in many parts of the country.” Such support he said was often a much-needed tonic in the face of the enormous logistic-challenges the project regularly encounters. MTN’s current network modernization and swap-out exercise which began in July 2012 is expected to cover the entire country and was originally expected to span a period of nine months. Its objectives are to considerably enhance capacity on the MTN Network and improve service quality.

Under the project, which is being implemented by a combined team of MTN engineers and technical partners that include Ericsson, Huawei and ZTE, key network components are being swapped with the latest upgrades in the industry. In addition, current power systems are being replaced with hybrid power systems which are more environment-friendly. “It’s a massive investment we are making,” said Goodluck, “to boost not only the quality of telephone services, but also to enhance the back-end information and communication technology support which we provide for banking and financial services, the oil industry and several other industries across Nigeria.” He expressed MTN’s appreciation to all of the company’s stakeholders “especially our customers and we pledge to do all we can, despite the mitigating circumstances, to finalize the network modernization project as quickly as possible.”

Telecoms revenue nose dives on account of flood, insecurity

Ben Uzor Jr

India's Bharti Airtel has declared that operators in Nigeria's N3.9 trillion telecommunications industry is losing considerable revenues following the spate of insecurity and the recent floods that affected many parts of the country. In 2010, Pyramid Research said that telecoms companies - MTN, Globacom, Airtel, Etisalat and CDMAs earned N1.3 trillion ($8.6 billion) in revenue from billing Nigerians for using their services. The research firm predicted that revenues would hit N1.7 trillion ($11 billion) by 2013. But with the rising incidence of attacks on telecoms installations and the recent floods, industry analysts told Benuzorreports that mobile network operators might not attain this target next year.

The current situation and  its attendant impact on quality of service levels, according to Airtel has led to heightened operational burden and spiraling cost as many networks struggle to resuscitate affected facilities, "Operators are losing significant revenues across the country due the bombing of telecoms equipments. It is impacting on quality of services. "But more importantly, it is affecting our revenue because of the investment demands required to revive these facilities", Osondu Nwokoro, director, regulatory affairs, Airtel Nigeria, said at a media briefing in Lagos. "53 of our telecoms sites were directly affected during the bomb attacks in the northern east part of Nigeria.

"But 193 sites were impacted in all as huge outages were sustained. The way the network architecture is designed, we have some telecoms masts that are hubs and control other base stations. So, if a hub is destroyed then other masts that depend on the hub will be affected. However, Airtel has managed to resuscitate 112 out of the 193 sites but at great costs. "The rising rate of bomb attacks, according to Nwokoro has stalled network restoration and rollout as field operations personnel refuse to work in areas prone to violence. Speaking in the same vein, Airtel's chief technical officer, Awadhesh Kumar Kalia said, "24hr preventive maintenance is no more possible on account of insecurity, curfews, harassment of field personnel by armed groups and law enforcement agencies."

Kalia said the floods affected 41 telecoms sites in all. "Submerged fibre locations include: Lokoja-Dangana; Lokoja-Okene; Asaba-Ugheli; Ugheli-Patani; Patani-Elele". This, the Airtel CTO added has contributed significantly to poor quality of service rendered by telecoms operators nationwide. In view of this, telcos, according to Kalia have been compelled by circumstance to share infrastructure and equipment. Nwokoro however called for expanded collaboration between government and the industry to tackle the national security problem specifically as it affects the industry. "There is also need for a national alert declaration in the face of unfolding emergency brought on by flooding. This would make the restorations of telecoms facilities an important focus area for the National Emergency Management Agency (NEMA). It is also aimed at protecting telecoms infrastructure by averting further loss of capabilities and services which are indeed critical for disaster mitigation", the Airtel director explained.

Only recently, MTN said efforts to put its network in prime position to deliver best-in-class telecommunications services is been stalled by the spate of insecurity and the unprecedented flooding in many parts of the country. MTN appealed to its 45 million telecoms subscribers’ to bear with the poor quality of service rendered on its network since the commencement of its $1.3 billion modernisation and optimisation exercise. "We regret, however, that the pace of work has been considerably challenged by the spate of insecurity coupled with the unprecedented flooding being experienced in many parts of the country”, said Wale Goodluck MTN’s corporate services executive.

NCC directs telcos to provide instant call bills

Ben Uzor Jr

In a move to curb subscriber complaints over billing irregularities, the Nigerian Communications Commission (NCC) on Wednesday mandated all telecommunications operators to provide instant SMS service to all phone users at the end of every call, and to provide full details of the cost of each call, and available balances to the subscriber. This service, according to the commission is free to all subscribers with the commencement date for all the operators fixed for November 1, 2012. A  statement signed by Reuben Mouka, head, media and public relation, NCC, declared that "any operator which fails to commence the service to its subscribers  will be liable to fine in the sum of N5,000,000 (Five Million) as sanction and a further sum of N500,000  (Five Hundred Thousand Naira) per day as long as the contravention persists."

The Commission has in a direction issued since August 2012, mandated “that from 1st of November, 2012, all mobile operators shall send, free of charge, a message or an alert to both postpaid and prepaid subscribers after every call, SMS, or system generated charge or tariff, with a proviso that a subscriber can opt out if he or she so wishes”, the statement said. The Direction, according to statement,  mandates the "subscribers to send messages containing six critical information including: Exact duration of the Call Minutes and Seconds, Total Cost for each Call or SMS; Customer Accounts Balance after the last call for prepaid and SMS; Customer Account Balance after a charge or tariff and the reason for the charge or tariff; Cumulative call charges up to the last call within the charging period for postpaid customers; Cost of services and Credit balance upon request by customer for data service."

The Direction issued to the operators is in line with the provisions of Section 53(1) of the Nigerian Communications Act, 2003. This direction is a response to one of the major concerns of the subscribers as it relates to the actual amounts deducted from their credit balances by the service providers for each call or SMS sent.  With this direction, according to Mouka, subscribers are empowered to promptly discover any anomaly in their bills. This, he went further will be able to prove if they are billed for calls that they did not make.

Nigeria easy target for cyber criminals

Ben Uzor Jr

Nigeria is becoming a huge attraction for cyber criminals, Symantec Corporation said. The steady growth of the economy, and increased bandwidth capacity emanating from the increasing number of submarine cable systems is exposing the country to malicious cyber attacks, Gordon Love, Symantec's regional director for Africa said at a press conference in Lagos. Critical information from the banking, oil and gas, telecommunications industry are currently been migrated online and therefore exposure to sophisticated cyber attacks and threats is inevitable, Love said. 

The $7 billion cyber security company called on the government, banks, oil and gas companies, mobile operators to develop a holistic and robust cyber security strategy to curb the spate of cyber attacks. "Nigeria is a target for the cyber criminals globally. The booming economy, increase in bandwidth and the proliferation of mobile devices are some of the reasons why Nigeria is a such a huge attraction for cyber criminals. In fact, Nigeria has become one of the largest users of smartphones in Africa. Over 20 million malicious threats and attacks were released into the cyberspace in the last twelve months. 

"The threats are here. The problem is that Nigeria does not really appreciate the magnitude of cybercrime and how it can derail an economy." Symantec has ranked Nigeria 59th on its latest Internet security report. Besides, Nigeria ranked 66th position at the same period in 2011. The security report is one of the most comprehensive sources of internet data in the world. Sheldon Hand, Symantec's territory manager for Indian Oceans, West, East and Central Africa (IWECA) reiterated Love's position on the state of cyber security in Nigeria. "Nigeria has become even more vulnerable to attacks.

The country's gradual transition from a cash to an electronic based economy will also expose Nigeria to complex cyber threats, Hand said. Government must be prepared for increased cyber attacks as the country goes 'cashless' and also moves to deepen broadband penetration. Symantec, said Nigeria is going through a revolution in broadband Internet access. As the speed and efficiency of broadband access improves, attacks and threats increase. 

Most developed nations have the larger risk of cyber threats and they also have a quick recovery plan in place, according to industry analysts. In Nigeria however, there is no plans on ground to combat such threats. For us as a nation, the alarming trend calls for a critical approach considering the fact that Nigeria is a developing country adopting new technologies without really assessing the  risks associated with using them.