The recently appointed Chief Executive Officer of Pan African Towers (PAT), Mr. Azeez Amida, draws attention to policy and other critical challenges facing the African telecom market, while hinting that additional 5,000 towers in the next three years, coupled with fibre rollout, will enhance 5G deployment across Nigeria. Emma Okonji presents the excerpts:
Beyond what may be generally known to the public already, tell us more about the operations of Pan-African Towers?
We provide tower infrastructure to Mobile Network Operators (MNOs) and Internet Service Providers (ISPs) for now but our focus is shifting towards providing digital infrastructure services to our customers. We are an enabler rather than a reactive business to what the customers want. The way the industry works now is that the mobile network operators would request for tower infrastructure to be provided at a particular location, and then we go there and build the sites for them after ensuring that due diligence has been done. That means you are just reacting and sticking to what the operators say. However, Pan African Towers is changing that. We are evolving into a digital infrastructure provider. We are saying how do we enable people who want to use infrastructure to have that access by leading the MNOs where they want to go. So, that is what we want to drive our focus to, because in this game, we have a lot of big players that are already in the market, with a lot of money behind them. So, technically as an indigenous infrastructure provider, the only edge we can play around with, is the edge of leading the game. We want to change the approach to the telecoms infrastructure market.
Coming on board to lead the operations of Pan-African Towers, what is the special agenda you are bringing with you to further drive the company?
Well, first of all, our focus is on growth. I believe in growing our business. I have always been an advocate for growth. Growth has always been assumed to be a natural phenomenon, but you cannot just grow without being deliberate about it. At pan African Towers, we are deliberate about our growth. And as you are aware, we have raised a lot of money in the last couple of months, and then we are going to be doing a lot of work to push that growth agenda as much as we can. Growth is an important element of our business. We will be looking at the speed of execution of our projects as well as their quality. That is the first thing. The second thing is to diversify our services. We are going to be doing a lot of branding in the coming months to reposition ourselves in the market; to let you know that we are now fully in for business. I want to go for the long haul and we plan to build a multinational from home here in Nigeria. That is the goal. We want to focus on that. Build a multinational telecom infrastructure company and grow at a very fast speed to deliver value to our shareholders.
For instance, we are planning to hit between 3000 and 5000 towers in the coming three to five years. We know this is going to require a lot of work but there is already a demand for growth. We believe we are in the right position to tap into that. With the advent of 5G technology, there is going to be high demand for towers. I saw a report once that says six times the current number of towers are needed for 5G deployment. Those are base stations. There is still going to be a need for fibre connectivity because 5G requires a lot of boosting such that the connection can be close together and the way they work becomes very efficient. To do that, there are going to be a lot of inbuilt solutions; a lot of outdoor dial systems and power for its deployment. We are ready to get into that space and provide premium services to our customers.
What is your assessment of the Nigerian telecom infrastructure market vis-à-vis challenges such as multiple taxation and theft?
When it comes to financing infrastructure, I will say multiple taxation and fees poses a huge threat to the growth of the Nigerian telecom market. There should be a uniform tax system, and the same should apply to fees. Taxes are essential to providing funding for infrastructure, it is important for the growth of any society. But taxing and levying businesses multiple times inhibits growth. This is where regulation is needed to streamline the tax system and other fees for tower companies. Theft is a huge threat to the growth of the telecoms market because there is already an infrastructure deficit capped at $136 billion and we need an additional 40,000 towers to be able to close that gap. Stealing and vandalising telecom equipment is very detrimental to the growth of the telecom industry in Nigeria. The Nigerian Communications Commission (NCC) recently reported that there were 33,000 cases of vandalism and outright theft between June 2017 and August 2018 which resulted in a 35 per cent rate of vandalism and theft of telecom infrastructure in a year. Another report published in the media stated that as a result of the incessant vandalism and theft of telecom equipment, broadband subscriptions had dropped by 9.8 million subscribers between December 2020 and October 2021. Theft is a huge challenge affecting the growth of the Nigerian telecom industry. Despite these challenges, I will say the growth of the market has been rapid, even though a lot of this growth came through acquisitions and not organic growth strategies.
You briefly mentioned 5G earlier. Can you put some light on this in terms of its infrastructure demand and how Pan African Towers fits into the equation?
5G is a broad concept. For me, I think we should stick to the passive end of it, which is what we can do. The passive end of it is introducing a lot more towers to support its deployment. You know in the days of 2G, we had very tall towers like 70 metres or more. When 3G came, the height came down because the better the frequency, the closer you need to get to the ground until you get to the fibre line and that is the way to think about it. 2G was up in the air, 3G became shorter, 4G followed the same trend and now 5G is coming further down. The reason for that is that you are reducing the line of sight. In 2G, there is a line of sight to ensure that a tower is tall enough to see the next one. Now, you are connecting sites through shorter waves. So, it is a bit easier to get them to speak to each other. The connection becomes faster and the potential to build a smart city becomes a lot broader. Yes, 5G is something we are looking into and we do not just want to wait for the time it kicks off, we want to start looking at scenarios where we can say we are leading the industry in that area. 5G changes everything, and as a digital infrastructure provider, we are seriously looking into that space.
You talked about your vision to boast between 3,000 to 5,000 towers in the medium time. What level are you currently and where are they located apart from Nigeria?
Currently, we run 1,000 sites and we mostly are focusing on Nigeria now. And as you may be aware, there is a merger that just got concluded between SWAP Plc and Pan African Towers. That is to ensure that the Nigerian PAT focuses a lot on the Nigerian assets. There are a lot of growth opportunities in Nigeria and we want to take care of that first. As soon as that is there, we can then start focusing on other areas where there are opportunities to deliver good value to our shareholders. It is not just about building towers; it is more about having the right return to your shareholders at the end of the day.
Telecom operators have always complained about the issue of electricity in powering base stations and this contributes to an increase in downtime. Are there new innovative ways your company is adopting to overcome the challenge?
Yes, that is very correct, but we have a specific model called the ESCO model and it is a scenario where we use a lot of green energy to generate power. We have done a lot of testing around it and we are now confident that we can roll it out fully. Now we are looking at going green on all our sites. Our current target is to have up to a 50 per cent reduction in our carbon usage by the end of this year or towards the middle of next year. That is one of the key priorities that we have. We had our first gas site go live about a week ago. The aim is to ensure that we are not burning fossil fuels like every other operator in the market. We want to bring all our sites to green energy and that is one of our key focuses. Apart from power, theft is another challenge towercos face while running their sites. I think theft is always one of those problems you have to deal with. It is like you cannot run away from it, but you can minimise it. So, we are weighing our options in terms of security to ensure that we raise the safety standard of the sites. From ensuring that the security on site is held accountable, to making sure that the people responsible for the operations are also held accountable. From there, going hard on any form of theft will go a long way to fostering growth in the telecom business in Nigeria. In one of the communications to the team, I was very clear that we have zero tolerance for theft. So, all cases of theft are being taken seriously.
Having overseen tower operations in other African countries, what have you observed as disparity between those countries and Nigeria?
Well, I will say there is very little difference, except that perhaps some of them have more electricity than others. The real thing is that all of them have similar problems. For instance, you still need to have proper regulations in all the countries. Things may even be harder in other African countries. However, there is a lot of correlation. They all face downtime here and there and some agencies are there to freeze the sites overnight and all of that. It is a lot of work in all the sites. But at the same time, all you can do is to ensure that you provide an environment where your sites can continue to run so that you will not end up providing horrible services to your customers. To do that, we are equipping our engineers more to be able to get to sites on time to tend to all the issues at hand. So, the same issues will always be applicable to towercos no matter which market you are in. In western countries like the US or UK, the challenges here may not be practically applicable there, but in Africa, I think the issues are always the same.
Which policy areas would you say the government should intensify efforts to further propel development in the market?
To start with, the passage of the Critical National Infrastructure (CNI) bill is still a paramount one. I think it is still important that you have it in place to protect telecom infrastructures in the country. Vandals, thieves and other social situations could render a site not viable for business and as such you may be required to relocate your sites. Relocating a site takes a lot of time and other resources. We cannot continue to have cases where perhaps because of social issues like community protests, vandalism and theft prevents you from having, access to your sites. We need to as much as possible operate in an environment where government’s laws and policies are adhered to and people could feel that telecoms infrastructures are very important for their survival. The CNI will reduce the rate of vandalism and theft. Therefore, the passage of the pending CNI bill is extremely important for the growth of the telecom market in Nigeria.
Secondly, in this kind of industry where you have very large and very small companies, it is important that regulations focus on not discouraging the growth of the small companies but providing equal opportunities for growth. I like healthy competitions. I adore competition but it is important that it is regulated so we do not really witch-hunt each other. I particularly believe these two policies are critical to improving the sector. I will not call the second concern a policy but a call to regulation on the way business is done in the industry so equal opportunities are available for both big and small companies.
What should we expect from Pan African Towers in the medium term. What and which other countries are you looking at for your expansion plans?
Well, I do not limit growth to demographics. I limit growth to returns and numbers. What I can tell you is that in three years, we will have Pan-African Towers at a minimum of 3000 to 5000 towers. Where we are, does not really mean anything if we are producing the same returns. We could be in US, South Africa or we could be anywhere. All we can ensure is that there are going to be profitable towers that will return proper amount of value to our shareholders. One of the benefits of doing business with us, is that we have access to the local capital market. We can always raise funds. We have the support of our stakeholders and we can provide a lot of local contents pricing Towers to operators. I believe we are one of the very few companies in Nigeria giving full naira contracts. Almost every other company produce contents that are in dollars which basically introduces an foreign exchange rate to the operators. But for us, we want to do local contents for our customers and give them naira contracts. Coupled with that, we are now having a very strong refurbishment plan across our sites to make sure that we can provide top-notch services and still give them prices that cannot be matched anywhere else.