You’ve always been a strong advocate for the huge potential of the Nigeria telecoms market. Have events in the recent past vindicated your stand?
There are at least four pieces of evidence to show that the market is very deep. One is the Soludo solution, which has become the almighty formula.

When the Soludo solution came up, many people felt it was not going to be possible, or that less than half a dozen banks will be able to comply. Banks were in a frenzy, and they all announced merger plans. But within three months, the other banks came up to say they were not going to merge. Most of the banks doing IPO now are not planning to merge. Some are planning to demerge.

I’m reliably informed that two thirds of the banks are concretely working towards, and are near raising US$200 million of fresh investments. Multiply by 70 or 80 banks, that’s how big the market is. The average banker is stunned, that the market can absorb that much.

The other evidence is with respect to the telecoms industry itself. We’re four years into the GSM revolution and at every dealer outlet, you have queues: queues of people buying recharge cards, queues of people buying lines at operators’ points. Four years into the GSM revolution! I was with the chairman of one PTO in December and he said they had a promotion, where they offered low priced mobile handset on their CDMA network, which sold out in two weeks! In two weeks, they ran out of stock.

The Federal Government did a study and came up with the result that 70 per cent of Nigerians are living on $1 a day. Now they’ve revised it. Two weeks ago, they said it’s 54 per cent living on a dollar a day. The reality on ground is that the country is actually richer. There’s far much more affordability than generally assumed.

We just did a large study to determine the demand for telecoms services in the hinterland of Nigeria and we found that anywhere there is power, there’s a strong demand for telecoms, and there’s a strong affordability of telecoms services. As we speak people are paying N300 a minute to make a call on Thuraya phone, and there are queues. Why, because there’s no GSM network. However, where there’s no power, nobody is interested in telecoms. And you now say Nigerians are poor. Give them power and see whether they won’t ask for phones. The market is very big. Let me give you another example. International minutes into Nigeria used to be grossly under estimated. In fact the official figure was 112 million minutes annually. A fresh study done by the World Bank, in which we participated, found out that the international minutes coming into Nigeria, as at December last year was 3.5 billion every year. When people say there’s no depth in the country, it’s not true.

Remember how the PTOs initially dimensioned their investments. It was all premised on the fact that even NITEL had only 30,000 mobile phones. So who’s going to bring in two million handsets? But there’s a latent demand, which was not captured because there was no service.

Nigeria imports the highest number of generators in the world. In Africa, we have the largest installed base of VSAT terminals. We have the highest number of ISPs, highest number of PTOs, and to all intent and purpose, I was told that some of the biggest retail chains in the United Kingdom have the bulk of their sales coming into Nigeria. There’s a particular shop that has 60 per cent of its sales coming into Nigeria. When you say people are poor, and they are buying 60 per cent of the stock of a retail outlet in the UK and bringing it into this country, are they selling it to expatriates?

We’ve seen also from our studies that every other place in Africa people spend two-three per cent of their income on communication services. If you earn N10,000 you’ll spend N200-N300 on telecoms every month. In Nigeria, the figure is between N1,200 and N1,500 for somebody earning N10,000. In other words, between 12 and 15 per cent of the income is spent on telephones. There is strong demand, and I still believe it is still grossly underestimated.

That leads us straight to the second question. Does it mean that the 10 million new subscribers target set by the Nigerian Communications Commission for this year is achievable?
It’s very feasible and it will be achievable, if there is increased capacity by the networks to take them on. There has not been enough investment in transmission services. I’ll give you an example. The cost of setting up a satellite, with direct coverage of Nigeria, which will crash the dish from 2.4, 1.8, 1.2 metres, to just barely one foot, depending on the satellite, is less than the current cost of a GSM license.

SAT3, connecting South Africa to Nigeria by submarine cable was built with just US$80 million. That is what people in Nigeria can organise. There hasn’t been much investment in the services that will enable increased take up of consumer service. I’ll give you an example.

One of the GSM operators, as I read in the papers recently, said the parameters by which it describes its subscribers’ strength, is peculiar to Nigeria, because people are going to call in three months. If you take the number of people on that network that have not made a call in six months, for instance, they are probably a significant fraction of the overall.

When somebody says he has two million subscribers he probably has three million. The parameter by which he is qualifying them is not the way it’s done in Europe or South Africa. It is because the demand is just huge. It’s achievable, its available, and I don’t see any reason why we wont have that number of new subscribers.

Where will the new subscribers come from, seeing that the cities, urban and semi-urban communities have telecoms services?
In the South you can say that but the bulk of the North hasn’t been covered: Northwest has not been covered; North-Central, there are a lot of dark spots, and the Northeast, it’s only the major cities that have been covered. In the South, what you have is presence. Most of the operators, especially in the South South and South West, only have a presence, and not total coverage. In most places, where they say they are alive, it’s just so that people can call into those communities. They have not really been aggressive in covering the country. Do you know there are some places where the people do not even know that there is a signal? In any of the town with fringe coverage, they are underestimated as well.

If the census figure were to be believed, 51 per cent of Nigerians are below the age of 20. The bulk of that hasn’t been covered. There’s relatively little penetration of the teenage population. The university community, yes, but not all. There’s no 100 subscription in the campuses.

Nigeria’s population is 130 million, or 180 million, depending on whom you are quoting. Officially it is 135 million, but I’ve heard figures of 180 million. Now there are 12 million subscribers. We still have a long way to go.

How do you think the companies will perform in signing up new subscribers, considering that one of them seems to enjoy the first mover advantage?
I don’t think there is a first mover advantage. Globacom has shown that the last mover too can have an advantage (laughs). All those business school terms are somewhat theoretical, because the second mover has changed businesses. There is a school of thought that talks about the second mover advantage, and also the last mover. I’ll give you an example.

Asian countries are far ahead of, particularly, Western Europe, in terms of developments in countries such as Hong Kong, Singapore, and Japan. They are first world countries. They are far ahead of countries like the UK in many areas of their development, in the use of technology, economic empowerment, entrepreneurial spirit, passion for education, and others. What is that? That’s last mover advantage.

If you say people are locked to a particular operator because it has the widest national coverage, as strong as that position is, it is also a very weak position. This is because any operator can provide coverage. It’s all about cash. If you provide coverage, you will also grow. Remember, the cost of a SIM card is now small. It’s actually cheaper changing operators than to claim your lost SIM. We did a study and discovered that the churn rate is about 28 per cent on the average. It means that one in four subscribers move on to other operators over a period of six months. I’ll give you an example.

In the call business centre, one operator came with lower prices, and it had very huge penetration. But as soon as that network raised its prices, the way people dropped one operator to use the services of another, was the way they dropped the SIM card and went back to the previous operator, or a different operator. And this was in a period of five months.

Were the SIMs thrown into the trash can? No. They were being given to relatives, and that is how it goes. It’s not possible to lock a subscriber to the network of an operator.

The myth of the poverty in the rural areas. What’s your take on it?
An operator looks at the number of lines it sells, not the location. People are interested in how much each line generates, and they use several parameters: one is the average revenue per user (ARPU) and there is a new term, AMPU, which is the average margin per user.

How much revenue a subscriber is giving me is the bottomline. You should not be surprised that the ARPU level in the rural areas is higher than the urban. Ask why.

The single line that works in the village is like a call centre line. Even if there is no umbrella or kiosk, the man that owns the phone is going to be under intense pressure to make it available to every body. Again, the cost of the call can be paid for by the urban dweller.

In other words, if your old parents in the village flash you, or call, you’ll ask them to drop the phone, because you’re staying in an urban centre and are more affluent. That line still generates money for the network, because the terminated call is being paid for. You can’t exclude the rural area from participating in the wealth of the nation.

There are two key things: linking up the rural area to the rest of society and giving them power (electricity). When you solve those two problems, there’s no reason why you can’t have as much commercial activity. In our statistics, the difference between rural affordability and urban affordability is just five per cent. Whereas the urban dweller can spend about 12 per cent of his income on telecoms, the rural dweller spends about seven per cent. That is still higher than the two-three per cent other African countries talk about.

The question I ask is what is rural in Nigeria. Define rural for me. In Mexico rural is a village of 500 people. There is nobody I know who can authoritatively tell me that this is a rural area in Nigeria. If you define it by the population, let us see the number of villages that are so defined. We don’t even know how many we are.

If you define it by electric power, it may interest you to know that the headquarters of many local governments don’t have power. There are towns that done have power, and villages that have, because of our random development and nepotism of previous administrations.

There is a village in Osun State with less than 5,000 people that has a digital Exchange, and a cable into every hut. But there are big towns in Osun State with 600,000 people that don’t have a telephone Exchange. Except there is a new study to delineate between urban and rural areas, you can’t say with all certainty.

You are turning many assumptions we hold on their heads. Which of the competing technologies is best suited to taking service to unserved areas?
First of all, we need to cable Nigeria. People say cable takes longer, wireless is fast to deploy. But you can’t beat cable for quality. Those days cable was expensive. Fibre optics is now so cheap that you can run cable at long distances at almost the same cost as for setting up a wireless base station.

There is a need to invest in the country. There is a need to do hard work. Most people want to do hit and run business and that is why we are where we are. Again, you can’t blame people because policies change rapidly that investment security is not very high.

In terms of specific technologies, there are all sorts. There is a trend that favours wide band CDMA, because of its spectrum efficiency and the other trend moves towards Wi-Max, delivering IP over distances of 20 kilometres. There are not yet terminals or cards that use Wi-Max but by next year all that will be settled.

The technology to go to the rural area is not the problem, but that there is a price to be paid for market awareness. When you ask a rural man whether he would like to use the Internet he cannot say yes because he does not know what the Internet is. Put him on the Internet for five minutes, and a mail pops up from his long, lost son in the United States, you can be sure that computer will be overused.

And that was what happened in a place called Jabilanba in Adamawa State. The villagers were downloading movies from Warner Brothers to go and play at home. When they saw the usefulness of the Internet they stole the dish. People may be poor but not stupid. The fact that they can’t speak English does not mean they are not intelligent in their local language. There is a price to be paid to reach the rural area.

What’s your take on the unified licence environment slated for next year?
There will be a new round of investments. Much of it will be almost like the Soludo solution generated internally and a sprinkling of foreign investment. The NCC has taken a very innovative and pragmatic step. I think it is one of less then 10 regulatory agencies in the whole world that has gone ahead with unifying the licensing regime.

Companies that do pure voice are going to attempt to buy companies that do pure data. The cost of starting afresh will be too much. Companies that do mobile may be interested in companies that do fixed, and vice versa.

If any of the operators comes up with an IPO, it will be massively oversubscribed because they’ve done extremely well. The operators have made Nigerians proud because they have at least placed a positive talking point on the table for the international community. When you talk about how bad Nigeria is you talk of how well they are consuming communications services. You talk about the four mobile operators and their fixed line counterparts.

Next year there will be a strong growth. We are already seeing the signs of it. It will actually start from the middle of this year to mid 2006. After that period, the focus will be on the 2007 elections. That means slow down.

From next year, there’ll be a lot of passionate activities towards moving the industry to the next level. That next level includes a greater take up for all kinds of services. Secondly, a greater quality in the services delivered. Three, greater innovation at every level. Let me give you an example. We don’t have broadband cable in the home. Some of what the PTOs are doing, by way of Internet over their wireless boxes, is extremely innovative. Apart from the far East Asia, you wouldn’t find that in Western countries.

I can almost say that Nigeria has been strong in that direction. Of course, what you would now want is greater speed of the service, so that you can download video files. You’ve already bridged that digital divide. You can only talk about increasing the penetration and the quality, and additional innovations.