- Policies should trigger surge of investors in ICT
- If not, can the banks start investing in us?
MUYIWA OGUNGBOYE is the founder and managing director of eStream Networks Limited, an indigenous telecoms company operating in the Internet Service Provider (ISP) space. Starting with just one-technology to render access services, eStream, which now combines multiple technologies from satellite to fibre to LTE, has now putting in 15 years weathering the storm in the Nigerian market. Ogungboye, who also just turned 50 years, fielded questions with business a.m.’s OMOBAYO AZEEZ, at his Victoria Island, Lagos office, from where he coordinates eStream’s operations across the country. Excerpts:
Apart from stakeholders in your industry, the public would like to know more about Muyiwa Ogungboye and the operations of eStream Networks. This is because unlike other players, you hardly flood the media with messages about you.
My name is Muyiwa Abdul-Razaq Ogungboye, managing director and founder of eStream Networks. eStream was founded 15 years ago by myself and a senior friend of mine. We started out as a satellite communication company providing the traditional V-SAT, specifically to the financial sector. But over time, we have evolved into providing communications services through fibre, radio and 4GLTE. This evolution happened about five years ago and that’s what has been going on now. So, in a nutshell, we’ve moved from one technology to about four different technologies in a space of 15 years. So, we’ve grown. But like you have asked, you don’t hear much from us in the media simply because, when our service was just one mono product, we knew our market focus, we could just go there and talk to them. Now with many products, we did some media publication, but we didn’t do it, perhaps as extensively as required, maybe because of investment, maybe because we’ve spent a lot of money on infrastructure and we don’t have so much money to spend again on marketing. That could be one of the cases. But this year is a year that we intended to do a lot of marketing, until this COVID-19 started. The pandemic has really truncated our marketing activities. But in a nutshell, there is hardly any bank you will go to or any microfinance bank, insurance company, or schools that you will not hear our name. We’ve been around and we will keep on moving ahead.
In terms of our coverage areas, the services we provide now cover almost the entire country. Satellite covers the entire country. That’s given. But when we moved into fibre and radio, we had to have a whole lot of partnership. So we have all the Mobile Network Operators (MNOs) working with us to spread the coverage throughout the country. We also have Bitflux working with us for us to continue to provide 4G LTE specifically in Lagos State and as they move out of Lagos State, we go along with them as well. So, our services cover the entire country; and our services cut across all the various levels of organisation. We are not structured to be selling to individuals. We don’t do mobile phone. However, we don’t know what tomorrow will have for us regarding mobile services, but as of now, our mobility business is a bit limited.
We are more structured for big businesses, government and small enterprises. And that is why you may not have been hearing much of our noise in the media. When you make marketing noise, you are actually talking to the individual consumers and the general public. But when you don’t make noise but there is a particular sector that identifies with you and knows who you are and what you do, that means you are doing niche marketing. So, you would not see our billboards the same way you see those of MTN. We and our competitors would not make noise like MTN, Airtel, Globacom would because our market focus is different. So, that is another reason the media cannot always hear as much as that. But we know where to go. Instead of us to just be making the noise, we would rather talk directly to the head of ICT of a particular organisation. That’s how we’ve been moving on, but like I said, our services cover the entire country as well as all technologies. It then means that hardly can we say no to any communication brief or problem we see because, everywhere in Nigeria, we have a solution. We have a solution for every enterprise whether big or small, local or multinational.
Dealing with the impacts of the coronavirus pandemic on businesses has been a general concern. What has it been like for eStream?
The pandemic has made us realise some of our hidden potentials which we never thought of all this while. Yes, the pandemic did come with its own problems because when the pandemic lockdown started, there was a dive in our revenue. Like I said, we provide services for enterprise and when the enterprises shut down, our business too goes down. We had a lot of revenue losses in March and up till April. But by May, things have started picking up a little bit here and there. At the height of the lockdown, we got a lot of suspension because enterprises and so many organisations were not operating. So, it affected us severely. We then noticed, however, that there are some hidden strengths that we had but we never realized. A typical example is our collocation service. We noticed that during this pandemic period, we got mammoth requests from organisations wanting to collocate their servers in our data centre. And during this period also, we have quite a number of customers coming to locate their servers and equipment in our premises both in Lagos and wherever we have a point of presence (PoP). So, we saw a surge in those areas which we never envisaged before the pandemic.
Secondly, we also received a whole lot of requests coming in on security. Security was part of our focus for this year but we didn’t really put so much emphasis on it. However, we started getting more requests from people to have their networks secured. We keep on seeing all that and we keep on attending to them. The money might not be bulky but at least, it is keeping us afloat. So, if we have 1,000 customers asking for security and we are installing one thing or the other for them, and it’s a managed service; as a recurring fee every month, if you multiply that at the end of the month over one year, you can imagine the kind of money we will be talking about.
Similarly, our cloud service also witnessed a surge in patronage. In fact, cloud service has become a big boom during this pandemic period. Almost everybody wants to be connected to the Internet and they want to be connected to the cloud. In connecting to the cloud, the only way is that every organisation must have internet access. But where are you connecting to in the cloud is the question. So, we saw a lot of requests as people kept asking for various cloud services. We’ve been able to come up with some. We had a powerful agreement with a company called PCCW. We are one of their Nigerian partners that are hosting all their cloud services. We are beginning to see a surge in demand coming up in that area as well. So, I will say the pandemic has come with a lot of pain, but we also saw some level of benefits as well.
With the lockdown and social distancing, it is believed that human capital management is assuming a new status with ICT coming in between. As an IT company, how far has this reflected on your operations?
On the human capital side, we had been preaching or playing around work from home for the past three or four years but we’ve not been able to get it correctly in the country. We couldn’t come up with any modalities of how it would be done because of monitoring. How do you monitor the employees that they are doing the office job and stuff like that? So, we’ve been toying with it and we couldn’t get any answer to it until everybody was forced to do it. So, this pandemic has forced us to see how people can work from home. Right now, majority of people can work from home and to my surprise, the staff are more diligent and we are even getting more results than before. Proactiveness has increased. We hardly have downtime again. So, I’ll say that the pandemic came with some blessings that nobody ever expected. It also gave staff more flexibility to work and amidst that, the love for the organisation increased and this has reflected in their dedication to their job; a lot of innovations from their side, and paying attention to details, which we didn’t see before. The common mistakes we used to see before have disappeared. People could actually be diligent. So, to me, it’s quite surprising to see all these positive sides of the staff during the period. Maybe that is because they work from home and they are a bit relaxed. There is no traffic problem. But honestly, productivity has actually increased. We noticed all that during this pandemic period. We are also hoping that by the end of the year, though revenue may drop, I don’t think we are going to end up at a loss. We are surely going to close the year at a profit. How much? I don’t know, but it is not going to be as bad as we thought when the pandemic started because we have been able to see some new things happening along the line that we didn’t really expect. So, the pandemic has its own blessings.
The ISP market, where eStream operates, has remained challenging over the years. What are the rescue measures you would like to recommend to help operators in the space to weather the storm?
Well, let me start from Lagos State. I believe we can all see that the Lagos State government is already moving ahead. Against all odds, the state government is laying fibre optic infrastructure all over the state. That is a very big step and development to help the ISPs. Again the state has set the pace for every other state to follow. Lagos is a pacesetter as far as I am concerned. We hope the fibre being laid is well done and we also hope that it is going to be well managed and well operated. What that will do is that all of us will tap into that infrastructure. That would reduce our operational cost tremendously because it then means that there is a common backbone for everybody to tap into. The main benefit I want to see from the project is price uniformity so that there won’t be any price advantage again. What will now be left are services that you can provide on your solution.
I expect an arrangement in which companies A, B and C Internet Service Providers (ISPs) will all be going into the same infrastructure at the same cost. So, there should be price uniformity across board. That alone will eliminate a whole of problems in our sector. A lot of ‘backstabbing’ (if I may use that word) among ourselves will also be removed. This is because within ourselves, we keep on quoting different prices. If I go to this company and quote N1 million as the average standard price, others would come quoting far below the standard price. At the end of the day, it becomes a buyer’s market because of price war. The buyer now has the privilege to say, ‘you know what, I’m going to pay you N100,000.” And guess what, some ISPs will agree to that price against several others that will say no. So, all these problems that we are having, I see it as disappearing. Though, it is going to take some time because we have to allow Lagos State government to first set up the infrastructure, run it, test it and manage it well. So, there is still quite some work to be done by the Lagos State government. But personally, as an MD of an ISP company, I believe the project is a welcome idea and I see a lot of problems being solved. I just hope that other states too will emulate and follow suit. Like I said, when Lagos State gets it right, I don’t see any reason why any other state shouldn’t emulate it.
There might be this challenge of some companies that have purchased the licence to operate in their own state. Well, when you get the license to be the de-facto infrastructure provider in say Kwara State for example, and you don’t have the financial muscle to lay the fibre infrastructure. The license is valid for 10 years. Five years down the line and you are still looking for whom to lend you the money. So, five years are gone out of your 10 year license. How much time do you have to lay the infrastructure and how do you want to reap the benefit of it. But if the state government says “you know what, it’s tax payers’ money. We would do it but every ISP would now have to start buying from us and we would charge you a uniformed price.” I see this as a win-win situation. Yes, they have purchased the license at a fee, but I believe there could be a balance they can strike between the people that have the license and the state government. The state governments have the ultimate power. It is their land and territory. The governor has the power. So, I would suggest that other ISPs that have those kinds of license should approach the governments and sit down to table their case and see how they can reach some sorts of agreement. Maybe they are going to have some treatment over other ISPs that do not have the license. Maybe they are going to get some tax relief so that they can recoup the license fee that they paid for. But I want to believe that there would always be a way to work around it. That is my own piece of advice for competing them.
People believe that the post-pandemic era is going to be a completely different terrain. What are the changes you can foresee particularly in the telecoms sector, ahead of such a time?
Yes! Things are not going to be as usual again. There are going to be a whole lot of transactions happening in the cloud, moving forward. That is a major change. Also, there are going to be a whole lot of applications happening in the cloud. That is also a very big change. For us as an organisation, we are moving away from access. We are moving into solutions. We are moving into applications and that is going to be the future. Access is going to be a norm. Access is going to be like a phone. Everybody has a phone or laptop. Access is not going to be a profitable venture. Solutions, applications that you can put on the cloud will now be the way forward. And that is going to differentiate us from others. So, the normal thing of rushing to work will stop. I see that going down already because now almost everyone is getting used to working from home. So, we are going to see new ways of working as it is already happening. I don’t think enterprises or organisations are going back to the way they used to work, that is, resuming 8:00 a.m. I don’t see that happening again. Working from home is the new normal and everyone is getting used to it. We are used to working on a skeletal basis in the office. Now, I only come to the office twice a week and yet, I get my job done. Also, I see a lot of transactions involving the ICT industry and every other sector. I see ICT now truly becoming a major player in moving the economy of the nation forward. This is because without ICT, I don’t see how any other sector or country can progress. There is no way. Even our President, Muhammadu Buhari, now does his meetings online. So, the whole world has come to accept ICT, whether you like it or not. My children now take school classes online.
ICT now has the major part to play. So, for me, I think a new oil has been found – ICT. It is now left for the government to bring up some policies that will make things better. Yes, the ICT is a deregulated market. But even as it is deregulated, we can still have some kind of regulations that will make people to be able to invest in it. Take for instance, in the oil and gas sector, there are so many investors. All the banks will always support oil and gas. How many investors do we have in ICT? How many banks will support ICT? The government should start to bring up some policies that would trigger a surge of investors in ICT; that would allow all the banks to start supporting us. I am an advocate of a telecoms bank. If that is not going to happen, can the existing commercial banks find a way to start investing in us? But they can only invest in us when they are sure that their money would always come back. The only way that will happen is that we need some papers from the government that will let investors know that we are real and their money would not disappear. So, we need some level of support from the government. We have been advocating for all these things. The Nigerian Communications Commission (NCC) is trying, but I think because the sector is deregulated, we are seeing some things as free for all – anybody can do it. But we cannot operate like that because we would not be able to attract the kind of needed investment that way. We still need some form of protection from the government. Some form of protection especially for indigenous companies. If indigenous companies are not protected, then, every of our investment, revenue, innovations and ideas will all go to foreign land and we would be left with nothing. And I must say that we have tremendous talent here in Africa, particularly in Nigeria. But this pool of talent needs investment for us to be able to unleash the ideas in our brains. That is where we believe the government should come in to support us. But I strongly believe that the way we’ve been running things since the pandemic is just like laying a foundation that we would have to build on in the future. The future is left for organisations that can innovate.
As things change, however, one risk is fraud. That is just another thing that will happen alongside our new ways of doing things. Now that more operations are going to be in the cloud, transactions are going to be in the cloud. Security would be a major venture going forward and eStream is already positioned in that part. We are already positioned to ensure that we are able to give our customers the needed protection and security solutions from attacks. So, those are the things that we think will happen going forward.
Discussion around multiple taxation and regulation often comes in as a concern against scaling up the telecoms sector. How could this be most effectively dealt with going forward?
Well, again, Kudos to the Lagos State government. They have already taken a giant step that taxation or no taxation, the state is moving forward and that is why they are laying fibre infrastructure everywhere in the state. It would come to a time when we would begin to realise that multiple taxation is not the way to go. Currently we pay about 30 taxes generally. Right now, operators cannot survive with that because we don’t even have the revenue to keep paying the governments all these taxes. It’s not been easy fulfilling such obligations. We have to find a way to come to a point whereby all we are going to have is one uniform tax that covers everything. I don’t know the name the government will call it. But that has to happen. It can then be skewed to just a state or just a local government, but all these multiple taxation would have to fizzle away. If multiple taxation refuses to fizzle away, we will continue to operate but when all businesses and solutions are now in the cloud, how do you want to tax the cloud? It is just like when you say you want to tax the rain. You definitely can’t do that.
The governments have to realise that this multiple taxation era is over. Businesses cannot continue like that again and the government cannot continue to make money like that again. Governments have to realise that they have to come to a situation where they will be in agreement with us, because we own the future. If they don’t agree with us, how do they want us to get IGR for them? IGR is going to be in the cloud. So, how do you now start taxing the cloud? I see it as a matter of time, but the time has come. In another one-year time, I believe the multiple taxation issue would have subsided. It would not be completely over, but a tremendous change would have happened, especially now that Lagos State has taken the lead. You don’t know how happy I am with what the Lagos State government is doing. This is what we are looking for. Lay the whole infrastructure. Charge us one single fee, and charge us one single tax. Everybody is equal. Government would make more money just as there would be loads of innovation; and loads of enterprises will also spring up. So, the government needs to realise that the best way for operators to continue to operate while the governments also earn their own IGR is to embrace partnership with enterprise. I believe that while multiple-taxation is still there, this pandemic will force the government to relax some taxes.
What are telecoms operators saying regarding the support fund the FG is giving to some sectors to cushion the pandemic effect?
The question is a good one and I am happy you asked me. You see, I won’t blame the Nigerian government. I will blame their advisers. They see the ICT just as ICT. If you say you are in ICT, as far as the government is concerned, you are MTN. And the kind of advertisements MTN, Globacom are doing cost a whole lot of money. So, when we now go and meet the government and tell them that we are not Globacom; what Globacom is doing is different from what we are doing, the government doesn’t understand this. They see us all as the big operators. They see us as MTN. so, they believe we have so much money or we are making so much money. They don’t know that ICT has different segments, areas. However, in oil and gas, for instance, they understand that there is upstream and they know that there is downstream. Similarly in the banking sector, they know that there is merchant bank, there is commercial bank, and there is microfinance bank. Somebody is educating them (the government). Somebody is educating the government to know the different aspects of the financial sector as well as the oil and gas sector. Who is advising our government on telecoms sectors that the players are different. So, when we take our case to the government that we need investment, we need support; we need palliative, and shortly after that, they open up their TV and see Globacom, MTN spending huge money on promotion, the government people will say we don’t need any support.
So, we need that constant communication and that constant advice to the government that we are different from one another; there are different sectors of ICT. We are different players. Our revenues are not the same. Our customers are not the same. The government must be advised on the sections that need more investment, palliatives and support. So, there is a need for that advice to happen and that is where ATCON comes in, in conjunction with the honourable minister of communication and digital economy. I must say that the minister is doing a fantastic job. He has just spent one year in office but he has done a whole lot. One of the areas he has really championed is to ensure that telecoms infrastructures are treated as critical national infrastructure. We have to continue to be dialoguing with him so that he can take more of our cases to the government and it can be properly understood up there that every telecoms operator is not MTN or Globacom.
Nigeria has set out to achieve 70% broadband penetration by 2025. As this revolves around accessibility, availability and affordability, how much does the situation in the industry support such target and the possibility of achieving or even surpassing it?
The penetration has already surpassed 40 per cent. The initial target of 30 was achieved and surpassed at the stipulated time. But we surpassed it with the private sector initiative, private sector investment. Going back to Lagos State, if we can have more support from the government just like that, and the governments feel the need for them to partake actively in this venture, I see no reason why we should not surpass that 70 per cent target. This is because eStream, as an entity, may not have the financial muscle to lay more than one kilometer of fibre infrastructure. Maybe, I don’t have money to do more than 20 base transceiver stations. But when the government now comes in and decides to lay fibre everywhere, put base stations in place and another company will manage it, why then shouldn’t we achieve the 70 per cent broadband penetration target? Government is the biggest spender everywhere in the world. Government is the richest entity anywhere in the world. So, if the richest entity and biggest spender is now saying “I want to help you”; then, why shouldn’t we achieve and even surpass the target? With our own little money, we achieved 30 per cent. It took us almost two decades to get to 35 per cent. But when a big brother is now saying, “I want to partake in it and help you,” I see no reason why we should not achieve the 70 per cent goal. It is a doable thing, but we have to just continue to be in discussion with the governments so that they can understand our plight.
One more important thing is that the government should also find the right people to talk to because anything that is booming will always attract all sorts of Tom, Dick and Harry, entering it and saying all sorts of things. So, I would expect the government to dialogue with people like us that are reputable. At least, this is 15 years that we’ve been running eStream and we still exist. We are still moving on and investing. But when the government decides to leave local experts and is now talking to one Portfolio Manager because it is a friend to the government, then there is a problem. The government should seek the advice of stakeholders that have been existing, that have been investing and have been in this industry; those ones that have perspired and paid tax. Those are the people that the government should dialogue with because we are indigenous. We are ready to die here. We don’t have anywhere else to go. We love the country. Even without any support, we have been moving on. We are the people that the government should listen to and not one portfolio guy coming from after ‘Mongolia’. They should listen to us. We are ready to work with the government. We are ready to partner with the government but the government should also listen to us so that we can form a very strong bond. The government is listening to the financial sector. They are listening to the oil and gas. Why won’t they listen to us, the driver of all these sectors?. If you remove ICT from the financial sector, it will collapse. If you remove ICT from oil and gas, it will collapse. Even if you remove ICT from the government, it will also collapse. The IGR that Lagos State is getting today is a function of ICT. So, why won’t they respect us! Maybe that’s because we too also have our own internal problems regarding associations and other stuffs like that. Maybe we have that problem, but we can always solve this when we see a big brother that is ready to help.
eStream Networks Limited is 15-year old now and you, the founder, is also celebrating your 50th anniversary. What do you have to say at this point of the journey?
I am very happy and I will count myself a lucky guy. 15 years in this game is not a joke and we are still in existence. Like I said earlier, we now provide services on all the technologies and we have strong agreements with all the big MNOs. We also have strong agreements with some international players. So, we have grown and I will say all thanks go to Almighty God for sustaining us this long. I will also say a very big thanks to all the staff of the company, existing ones and those that have come and gone. They’ve all played their part in growing this organization. But again, like I said, I will consider myself a very lucky chap because if you look at the Nigerian ICT sector generally, especially the ISP industry, I think I’m the youngest indigenous. I might be older than some other people that are foreign, but when it comes to indigenous ISPs, I am the youngest of all. One way or the other, I’ve been able to weather the storm for 15 years. It has not been easy and there are still a whole lot of challenges ahead of me, but God has always been supportive and we are moving mountains. I just want to use this medium to appreciate the almighty God and to appreciate all our customers, all our partners, the NCC, the Minister of communications, Alhaji Pantami, and appreciate the federal government for everything that they have done for eStream and for me. I don’t know what else to say but I am very grateful.
What should be expected as the new phase of development for eStream?
Fantastic question! Just as I said earlier, we are gradually moving slowly out of access. Access has brought us to this point. We’ve been doing access for fifteen years. But the pandemic has opened our eyes to many other things that we’ve never thought of. We are gradually moving to solutions and applications. We are not going to be writing software because we are not a software company. But we want to push some applications in the cloud that are user-friendly. That is already on our shelf. They are applications that organisations would be able to use easily. We are coming up with a whole lot of security solutions that will be affordable for homes, individuals and enterprises. We are coming up with a lot of entertainment, especially in the gaming sector. So, we are looking towards services that are solution-based and not typical access-based. That is the future. That is our future and we believe it is going to be a big one. Our traditional access business would still be running but the solution services will gradually evolve out. It is already starting as we are already in the market selling solutions on a small scale, but very soon, you will begin to hear more about our various solutions and services and that is what we want to move into. It is part of our plan for this year and we are making frantic efforts to do that. Although the pandemic slowed us down a little bit, we are getting momentum now to move on with our objectives and vision.
Do you have plans to bring in more investors into eStream or probably go public?
Well, going public is not yet what we intend to do, because doing that has a lot of criteria and conditions that must be met. I think the first thing we are trying to do right now is to increase our investment and our capital base. We’ve been on that since last year. It is just that the pandemic slowed us down. I was in Abuja about two weeks ago to meet some people whom I’ve been discussing with. Our financial report has been distributed to some interested parties, but I personally told them to let us have a clear view of where this pandemic is going. At this moment as a businessman, one needs to be careful about collecting money from investors especially in this pandemic era that we are in. I think right now, the focus is more of safety – how to remain alive. I would rather advise anybody now that “let us be alive.” It is only when you are alive that you can think of innovation. I’ve lost five close friends in a space of four months. It is very disturbing. So, for those of us that are still alive up till today, I think the first thing for us should be to stay safe and alive, and not rush into embracing investors’ money without a clear picture of the pandemic direction. But yes, we want to improve our capital base so that we can be able to put in more infrastructure on what we intend to do. So, it’s on the table.
- “If indigenous companies are not protected, then, every of our investments, revenues, innovations and ideas will all go to foreign land and we would be left with nothing.”
- “The governments have to realise that this multiple taxation era is over. Businesses cannot continue like that again and the government cannot continue to make money like that again.”
- “This is what we are looking for. Lay the whole infrastructure. Charge us one single fee, and charge us one single tax. Everybody is equal. Government too would make more money.”
Frontpage January 14, 2018