Nigeria’s telecom market potentials great, says Spectranet’s CEO
David Venn is a strong and respected International Chief Executive with substantial experience gained leading telecommunications companies in both developed and emerging markets. He led numerous turnarounds and fundraising, including an Initial Public Offering, at Vodafone, Zain and others. He is highly experienced with broadband, mobile, fixed, cable TV and international operator businesses. His competencies include the ability to develop and execute innovative strategic plans, build empowered management teams, implement major cultural change programs and manage stakeholder relationships. He has led very successful and value adding companies in Africa, Asia, Middle East, Europe and the USA. He became the CEO of Spectranet in October, 2014. In an interview with journalists from selected media houses in Nigeria recently, Venn spoke on his company and the industry in which it operates. MARKETING EDGE’s DANIEL ITEGHE was there. Below are excerpts:
You have three awards celebrating your company as the best broadband brand in Nigeria. What can you say about this?
Yes, we have come a long way, no doubt because a year and half ago, most people did not hear of Spectranet, and I think that our team here has done a good job; but also we have rolled out a couple of networks as well, so when you talk about awards, we got one from MARKETING EDGE and also the most recent one, from the Nigeria Telecoms awards (before the interview). To us, it is great; it is like an endorsement that we are doing the right thing and that the people are happy with us. We certainly got a lot of customers now than we have had and a lot of people are now using our network and it is growing tremendously every day. We are quite pleased with this because it is a recognition that we are on the right track and also a recognition from our industry, our sector, as the Ministry of Communication was there, the NCC was there, there were a lot of dignitaries there, it wasn’t just a small function, it is a good recognition and I think, our staff are very pleased to be recognized in that manner.
When you look at the journey that we have been on, despite the ups and down of the economy, people still want broadband and I think broadband internet access is now becoming very much a utility that every home would like to have, and those that can do so, are getting it and that was not the case, a year or two years ago. Now, everybody tries at least to have a phone, so I think internet is becoming a must-have facility even in our homes now. So I think we are within the right space and hopefully we are doing the right things and giving our customers better services and value for their money.
What is the fresh things you are doing in the customer service area to ensure that your customers are sustained?
I think it is fair to say that there is this old marketing training that we get, and that is managing peoples’ expectations, and if you can set the peoples’ expectations to be low, and then you over achieve, people are happy and if you set expectation high and you achieve it, they are not happy because they feel that you could achieve more. So in a world like this, people will always have to expect more out of Spectranet now.
As you know, we are not a small player that not many people have heard of anymore, we are now much more in the mainstream and in fact we have been recognized as the broadband company of the year 2016, we are very proud of that, that is great for us but people expect more from us as well because we have raised the expectation level. But what we are doing, the impression that I have in Nigeria is that the first thing that the people want is the network that works, that delivers what they want, they want good broadband internet, secondly they want good pricing, that is value for money as well, those are the two very important things. However, looking after your customers also counts, the relationship the customers have with us as the service provider.
At Spectranet, that comes in a lot of areas through our customer service department – our various services and tariffs, our shops, our channel partners, and all such touch points. They all are important in terms of how a customer feels about his or her relationship with us. But, generally speaking, what they (customers) come after is a network that works and that gives value for their money. Spectranet has done a lot in that regard. We have done a lot of work on the network and we are always upgrading the network. Even recently, we built the big one while we have upgraded a lot of our based stations; we put new ones in place to cater for more capacity in the future as we grow. We have put such base stations in places where we feel there will be growth, because we track this all the time. We have tuned our network and we have to keep tuning it. This is because we have noticed that a lot more people are watching streaming videos and that was not the case two years ago in Nigeria. If you got a video on your phone or someone sent you a video via Facebook the normal thing, two years ago, was that you would delete it, because you weren’t using data bundle. That has changed dramatically; it is a lot more of videos now and we have modeled this on our network in terms of the traffic as videos, it is increasing rapidly.
Netflix has helped as well but by far the biggest consumers of data is the YouTube; a lot of people in Nigeria watch a lot on YouTube whether it is just videos that people pose, or it is mainly entertainment and as you know YouTube today is more of an entertainment channel, it is more like watching Multichoice or DSTV, you watch YouTube and you can pick and chose whatever you want to see whether it is comedies, music videos, latest music clips or whatever. What that means is that there is a lot of video traffic, so we have tuned out network; we did that a while back to make sure our network runs the best videos, and give you the best experience without any hitches or delays.
On pricing, too, which is important as well in terms of value for money, we make sure that the packages that we give are really good value for money, especially in this environment and in the current economic dispensation; we are trying quite hard to make sure that we adjust the packages both the new join-in packages and the renewal packagesso that they all look attractive and also fits to peoples’ budget.
What does tuning up mean to the customers?
We are trying to stay ahead of the trend because in Nigeria, the people’s use of the internet is changing dramatically from what it was. For instance, there is much more video streaming now and there is a lot of things that we have to do in the network to make sure that the streaming works seamlessly unlike what obtains on some other networks. We are trying to make sure that we deliver it in big blocks and there is a lot of technical things behind that. What we are doing, really, is closely monitoring what is happening with our customers and how they are using our network and the internet and what sort of things they are using it for and we are trying to adjust and invest in technologies so that we can be ahead of the game. We are trying to predict what is happening and as you can see more video is definitely going to be in use, more live, real time communication.
As you are aware, WhatsApp is now very popular, most of us use WhatsApp but it is only recently that people started to use it to make phone calls. Again, a year ago, you wouldn’t make a phone call on WhatsApp, you would do Skype if you wanted to use the internet, so many people now are using WhatsApp for phone and video calls, even my wife who is based in England calls me on WhatsApp and I know of Skype as well; you can easily get these Apps on your phone, even though many people do Skpye on their computer. On WhatsApp, people are not only making phone calls now, they are making video calls which wasn’t the case only a year ago.
What I see is that things happen very quickly in Nigeria because people pick up things very quickly and pick up new trends and new ways of working and particularly in telecoms, and I have said that many times before, people here are going to have a data bundle on their phones, most people access internet through their phones at the moment and in a very short period of time, all calls are going to be on Apps, like WhatsApp, Skype, and some sort of Over the Top Services. What this means is that people are not going to pay for phone calls again because you don’t pay for WhatsApp, you don’t pay for Skype when you call somebody else on Skype; and I tell you that the voice quality is great, as long as you get a good data connection. It is even better than a phone call because some of the time when I call my friends or people here on GSM, it is a bit muffled, it is not crystal clear, but when I am making an international call, I get a much better quality if I use one of these OTT or VOIPs services whether it is WhatsApp or Skype, or any other ones.
My prediction, a while ago here in Nigeria, is that in the next couple of years, no one is going to be paying for voice and this is already coming true. It is already happening.
Do you have plans to ensure that your consumers are able to access platforms like WhatsApp and the rest of them?
We are looking ahead to what people will be using by next year and in the future and we are making sure that we are there and we are providing the right services and we have the right platforms to do that as well. We are already talking to Netflix, we are talking to Apple TV and all these other people because that is what is going to be used here and it is already being used, I use Netflix here in my office and I watch TV on it. I watch YouTube a lot, too. This is the way to go. So we are trying to stay ahead but it is constantly moving, five years from now, ten years from now, you can’t predict what you will be doing or how we are going to be communicating because something different is going to happen, you can’t possibly predict it in this industry because it changes so much, so quickly.
Your brand is positioned as a family brand but we see it more in the business circle than the family, what can you say about this?
I think Spectranet has got a unique positioning in Nigeria and what we have done is to say that we are here; first of all, we only do data, we don’t do voice at all, we don’t offer voice telephone calls, so we are not a mobile phone network, we only provide data, internet access and good affordable data.
Then, our target markets (and basically all our services are targeted at these people), are families and Small and Medium-sized Enterprises (SMEs). We don’t really go for corporates at all; so we don’t go to big companies, we don’t have any reason for knocking on the doors of big companies and trying to sell them telecommunications services because that is what the other big companies do. What we have found out is that there is definitely a huge market which is not very well addressed which is families that want broadband in their homes for the whole family to share and then the Small and Medium-sized Enterprises (SMEs), and these are huge. There are about 17 million SMEs in Nigeria. We discovered that there is a big overlap between families; I mean professional, working class families and SMEs. Quite often, they are doing business as well as having a professional career. That is where we have pitched, and everything we do, whether it is the services that we offer or the partnership that we are trying to do is designed to fit into that market.
You seem to understand Nigerian market very well, what aids you on that?
Personally, I have worked in many markets. I have worked in Ghana, Zambia, Bangladesh, Pakistan, Australia, America, Hong Kong, Indonesia, and what I have learnt in all is that in telecommunications it doesn’t matter how good you are at marketing or engineering, you really have to understand the market and that means, you have to understand what people actually want and how they want to use it and how they want to buy it and basically, how it fit to their lives, and if you don’t understand that, you got no chance of putting together production services that suits them. For instance, for someone like me, I hadn’t been to Nigeria before, you rely a lot on your team to bring you insight but you also have to do a lot of research, pay for research to get real understating of how people do things, what the trends are, people don’t know what the trends are, you have to ask from some people and get their views and then find out what is happening and you have your own view of the trend and what is happening and how people are using it, once you have that understanding, then you are part of that community as a company and you can develop things, you know it is going to work.
With the benefit of your experience and exposure, how does Nigeria’s market compare with others?
Very different. When I was in Zambia people told me that Zambia was Africa for beginners and when I got to Ghana, Ghana was a lot more dynamic, more business, more industry, more commerce, firms and all of that. So when I told people that I was moving to Nigeria, they said that Nigeria is Africa for men. It is so dynamic here, it is so fast moving, it is such a big market as well and a wealthy market, there is a lot of money in the market at all levels, it is so big and people told me when I was new here that if you get it right in Nigeria, you can be great, you can be so big. In some other places, it doesn’t matter how well you do, the market is so small; but in Nigeria, it is very dynamic, people, education here is way higher than I have seen in some other markets that I have been in, people know what they want and they are very entrepreneurial. Like I said earlier, people that are doing businesses here are also having their professional careers as well. In other countries where I was, I didn’t see that at all; there is a very strong work ethic here and I mean people look out for alternatives, for service providers like us, so they know what they want and they are quite clear and that is also some attributes that we have leant as well. People are quite loyal in Nigeria; if you provide them service, they will stick with you and it is only when you stop providing them good service that is when they will start looking for alternatives. In some other markets, it is price, price, price. But Nigeria, the opposite is the case because people here want top brands. Also, in this market, the volume of trade and commerce is huge compared to all the other countries that I have worked in.
What is the capacity that you have on ground, in terms of technical and man power to sustain the brand in trying to meet up with the 17m SMEs and families?
With the modern telecommunications business, you don’t need hundreds of thousands of people, I used to run fixed line businesses, I had a telecom company in Ghana, Voda phone took it over and we had thousands of employees, I know NITEL here could have up to hundred thousand employees, a modern telecommunication company doesn’t need that many employees. Rather, you need the technology and you need customer service people and you need people that can go around and build networks. So we got about approximately 500 staff and spread between here in Lagos, Abuja, Ibadan and Port Harcourt. However, we are taking some more employees, we are not reducing them, and we are keeping pace with the growth, on the network side.
The story I have heard often in Nigeria is somebody comes along and gets a license and offers you a great new service, it is good, it is better it has good quality, so customers join it and after about six months or a year, it gets congested, customers start looking around for alternatives, another one comes along which is better because he has got no customers, but at least it got the network, so they move to that and at the end of the day that company ends up not investing or they have spent the money they have and it fizzles out and there is a graveyard of telecommunications companies here that are no longer operating.
We are determined that we are not one of those; we are not going to be one of those, we are going to keep investing so you don’t put the network in for 180 million people from day one, you put the network in for the growth in the market, I think that we have already started in Lagos, and we are expanding that from there, we are continuously putting in more towers and base stations in existing markets. We are doing 150 now in Lagos and Abuja. As we take in more customers, we put more networks in to handle the capacity, we have virtually infinite capacity of the international, though what we sell is internet and so all of that goes internationally, it is done on submarine cables. We connect to Main One, to Glo One, to Wax and one other. With those fibre optic cables, we have got infinite capacity.
Could you say something on your investment profile?
The key thing is that we are investing, and I have laid emphasis on the type of investment – human capacity, and technology.
It is observed that you are doing promotions and you have this double data. Why are you doing double data?
We do the double data stuff every so often. You would have noticed now that even the GSM operators are advertising double data. We started it. They (GSM companies) were not ready to talk about data six months ago; most of the mobile operators then were still talking about eleven kobo per second across all networks; that was their main message. Now they have started to realize that data is important.
Now the double data that we did last month (July) is for every one of our customers that renews their account in July gets double the data so most of our customers (about 80%) are on the same package which is 20 Gig per month; probably about 80 percent of our customers take 20 gig per month. All those customers are going to get 40 Gigs for the same price.
Apart from promos, are there any other ways which you give back to the society that is through CSR?
Yes, we do CSR. Have you ever seen Touching Lives, the Airtel ad? I did that in Zambia; I was the first, it was called Zeltel then, but now it is Airtel because Airtel bought it over. I have always been quite good at CSR, and I think it is an important way to connect with the community. We have a number of projects that we sponsor, they are on our new website which hasn’t been launched yet but in the next couple of weeks we are going to launch our website and there is a CSR section. I can give you details of them but I will have to print it out because of the names – there is the old people’s home, there are nine hospitals up North, and there is a school as well that we are supporting, we have never talked about them before publicly, we just do it.
Operating in Nigerian market like you said is a dynamic one, what are those things you find fascinating in the Nigerian market and what are those things that are challenging to you?
On the challenging side, I think the network, and just doing business here is different from doing business somewhere else. In other places I can go out anywhere in the country, put a tower up, get the consent; there is a lot of process here which you have to go through to get the consent to do anything. So it does slow things down a little bit; but the interesting part, I think is that the level of brand consciousness here really surprises me. The people here like quality brands and like to be associated with quality, and the level of education is very high as well, I mean most people that I meet doing business here are much better educated than I am. It is very apparent that people here make very informed choices. On the other hand, however, I am amazed that people put up with the poor qualities of voice and mobile phone services here. I have been in other markets; people don’t put up with that and here, they seem to get away with that. I am aware that the NCC is pushing hard on the quality of services and measures. However, I am surprised by the big mobile operators that are offering poor quality services. But, then, they, too, have got lot of excuses in terms of power, generators, fuel, and all those sorts of issues. Generally speaking, the telecommunications here is pretty well structured and better regulated.
Internet in Rwanda and Nigeria differs; it is much better over there than in Nigeria, we can’t keep hearing everyday
Spectranet is expanding and people are still having poor internet services, what do you think could be the trouble; what do you think the regulators are not doing and what do you think could be done?
First of all, Rwanda is a much smaller country, so it is easier, and also the population there is centered in cities, so it is much easier to cover in terms of the network. One thing which this market has and which is fast holding it back is that it is dominated hugely by very big and powerful mobile phone companies, two in particular, which own almost everything. They have very strong brands which mean very strong distribution, they have lot of cash because they also do most of the phone business and the country is depending on them, to roll out their new data services. Now, the problem is that most of their revenue comes from voice, and for some time it has been a conflict on their part as to whether or not they really want data everywhere because at the moment the voice is dropping and that hurts their businesses.
My impression is that they GSM companies now see data as added revenue stream. What I see is that data will replace voice completely. But then, their data is failing because they are on 3G which is primarily for voice. Real data network is quite new in Nigeria because we have only been here for just a couple of years. Meanwhile, the dominant players are holding the spectrum, holding the frequencies yet they are really not keen to replace voice with data.
Now, like I said earlier, Spectranet doesn’t do voice at all but you can have voice with your Apps whether it is WhatsApp or Skype whatever you use on our network but we don’t offer voice; we only do data and I think that we are the only one in Nigeria that do only data, we do not do voice at all, so we have no problem with replacing voice with data, and you have no legacy issues that is holding us back.
In terms of broadband we’ve got these big guys, very big companies that are dominating the telecommunication space, you also got companies that aren’t actually using the spectrum that they have got, some of these companies are the graveyard ones, they have not gotten any customers but they are still sitting on the spectrum, they are still keeping the spectrum and nobody is asked to use it, so that was holding back access to frequencies.
What edge does Spectranet have over its competitors?
I think it is really down to positioning, I am sure we’ve got an advantage. At the moment we’ve got technology advantage which is 4G, a lot of people don’t have that at the moment; but more importantly I think there is a positioning strategy advantage. We are a small player that is growing fast. Like I stated earlier, we are focused on families and SMEs with good quality broadband that is affordable – broadband with Wi-Fi services in their homes and offices. We even did a mobile Wi-Fi service that you can put in your pocket.
So the edge that you ask for is in our positioning, we have gone for a niche and it is a very big niche which is families and SMEs, we are trying very hard to service them very well.
What is the difference between a 4G and 3G?
This is a good question because most people in this country, their only experience of the internet is on a mobile phone using 3G; they don’t use computers, most people use mobile phones and that is their only experience and it is on 3G and most people like about 98 percent of people in Nigeria that use the internet every week, use the mobile phone, most people have never used 4G, they haven’t tried 4G for whatever reason, and the biggest challenge that we have and some of our competitors of 4G as well is convincing people that they should try it; it is actually better value for money and also much faster than 3G, it works much better and faster.
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