- Vmobile aims for a bigger share with $2bn expansion -
Interview Willem Swart, Managing Director and CEO With more than 3 million subscribers, a joint investment plan being prepared with Vodacom and Virgin and a major expansion of its network under way, these are exciting times for Vmobile
We know that you came to Vmobile from Vodacom of South Africa in 2004, but could you tell us a little about your background and how that has prepared you for the role as Chief Executive Officer of Vmobile Nigeria?
I started off as a Chartered Accountant in South Africa; afterwards I joined Telkom South Africa and from there I moved to Vodacom. I was one of the few people that started Vodacom South Africa. So I spent probably 11 years in Vodacom two years at Vodacom International in South Africa and then I ended up being the Managing Director of Vodacom Congo. Apart from the normal telecoms experience, the needed experience of Vodacom telecoms, I picked up over the years an understanding of how things really worked in Africa. Much of this I garnered in the Congo, which was really an interesting experience. Vodacom then sent me here to Nigeria and when their bid for shares in Vmobile failed, I decided to stay in Nigeria to continue as the Chief Executive Officer of Vmobile.
On assumption of your role as CEO, what sort of goals and objectives did you set for yourself?
Obviously, in telecommunications whatever you do, the major priority is to give the people optimum satisfaction, but with the aspirations that the company must excel, you have to restructure the whole process in that company. The same applies here in Vmobile Nigeria. When I took over, we had to recruit management staff because there was no adequate Nigerian management in place, but today, we have recruited about 280 Nigerians into the management cadre. So as we were trying to make the company and the network grow, we also had to put in place those basic things that were missing. Today, we have done that. Most of the systems have been upgraded to world-class level; we have all the management staff also in place, so we are ready to grow.
At the same time, within 12 months, we were able to double the size of the network and increase the subscriber base from 1.1 million to 3 million subscribers. Also in the last few months, with a lot of supply and funding agreements, we have been able to increase our network substantially.
We had been doing that before
now, but not in the same manner as we are now. Hundreds of base stations
are being built by several of our contractors all over the country.
All of that will be completed in the next 12 months and will be launched
upon completion. It is expected that at that time, we will be able to
compete with the market leader, which is MTN.
This expansion project that you are talking about has been titled Project R.O.S.E or Rolling Out Services Everywhere. What are the numbers for this project? What sort of partners are you working with for this project and how much money is being invested?
The project itself is expected to span the period of 24 months from the 1st of July 2005. The objective itself is to invest $2 billion and to roll out a total of 3000 base stations. The network capacity of all the projects, including the switching transmission would be put at the capacity of 14 million subscribers.
One of the strengths of the company as you mentioned is its partnerships with leading international telecoms partners such as Siemens, Motorola, Ericsson, British Telecomms etc. What roles do these partners actually play in the business of Vmobile Nigeria?
Actually, our major supplier is Ericsson. They provide the core equipment of the company. They are our major base stations suppliers. Of course, we also partner with Motorola and Hua Wei of China. We decided to go for a 3-supplier strategy to be able to meet our demands. In Nigeria, there are excess skills, but not the right skills for telecommunications; not the experience and the specific technical skills required, so we are going through an extended and comprehensive training program at all levels in the company. With these suppliers themselves, people go to train in the United States, Ireland and some other European nations. We also have a lot of in-house training on the job. We plan to continue in this training with our suppliers for the next three years, as no company trains its people forever, but the major programs would continue to further make Nigerians capable of handling and managing what is required to make the company great.
My aim actually is to put a scheme in place; a management in place which would be able to surpass any operator in the country. I know that no other operators' management is close to what Vmobile Nigeria has today. In our company we are different because we cater more for our people. So our remuneration is the highest of all the operators in the country. Also, the whole culture of the company is that Nigerians own the company, or at least that is the way we see it here. This will go to assist the operation of the company. As we go into the future, there will be consistency in management and skills.
In the last four years, Vmobile has built a reputation for the latest product and service innovations. This year alone, it has launched two new products VOFFICE and VACTIVE. What type of services do these products offer Vmobile subscribers?
These are normal telecomm products as used all over the world, but are given different names. Behind it is the need to increase quality service. We installed GPRS technology in our services in the last 6 months. We are planning to launch products based on this technology in Lagos sometime in August in commercial quantity. The packages allow you to use the Internet. Although customers know that they already have some web facilities, the GPRS gives them a higher speed. All of that will now be available for our subscribers. Right now, it is almost in its completion stage and ready for use by people, but the GPRS is still being worked on.
And what are the plans to expand these products and services outside Lagos? What timeframe are you looking at for this nationwide expansion?
Probably in the same month we would launch it throughout Nigeria. We are just making sure that in a city like Lagos, which carries most of the GSM subscribers in Nigeria, we should be able to offer a qualitative difference in service. That is why we are trying to make sure that we put in the best foundations here before we finally roll out nationwide.
Obviously, all the GSM companies here are looking forward to 3G technology. We are planning to start a test run of the facilities in the next few months, and as soon as our technicians signal its readiness for use we would roll out our services. Our effort in Nigeria is not only to provide GSM telephony, but help increase the infrastructure base of this huge market in the continent.
‘Our whole culture is that Nigerians own the company – that is the way we see it’
So you could say that much of your development strategy is customer-centric in its focus?
For sure and I think that it is why Nigeria is a success. Nigeria is a huge economy and I doubt if it is exhaustible by any investor. The informal aspects are huge, but once you role out telecommunication in these areas, there is a massive need and demand for the services. Due to the huge infrastructure that we are putting in place, people are beginning to see us as more successful than other providers in these areas of development and hopefully we will be able to capture a much greater chunk of the market in this way.
One of the biggest issues for Vmobile recently has been the search for a core investor in the company with both Virgin Mobile and Vodacom running in a two horse race to get a commanding stake. As CEO of Vmobile, what are your thoughts and comments on the whole issue?
As you know we have started the process of negotiating a possible bid, but the important thing is as of now, we do not have any time limit what so ever.
If an International company does not know how to position itself in the country as a market leader, since that is what you want to become, then they could have problems. This is the attraction that Vmobile will have for a potential investor here; we already have this head start. For this reason we have decided that we are going to be looking to attract one of the emerging international companies to invest in Vmobile. We could do everything that we want to do without them, but if you really want to be the market leader, you need to be working with the best international players in the global market and this is our thinking behind attracting a core investor. As such, we hope that the current process, within a few months, leads to an agreement by the consortium working on it.
Obviously in this sense, you would be looking for a Core Investor with both technical know-how and financial capacity?
Financing is not a real problem in Nigeria. Like I said we have partners that we have been able to involve throughout the totality of the investment process. We are able to compete with other subscribers in those areas. However, we want to attract world-class, Nigerian business customers and it is clear that they would support a company in the market that has a strong affiliation with one of the leading global international companies.
We really already have a lot of technical know-how and product technology, so in this sense we offer a new investor a much easier market entry, than if they were to start completely on their own. But International brands add value and as such the ability to launch one of our products through an international brand would definitely bring large competitive advantages.
Social responsibility has been a big part of the business of Vmobile since coming into Nigeria. The company is involved in a huge range of initiatives in health, education, security, culture and sports services for the people. Could you tell us more about these initiatives and other social responsibility packages that Vmobile is involved in?
To start with our sponsorship in music and sports, we do not see that as part of our corporate responsibility as such. We see that more as a branding exercise. What we are trying to do with all our marketing in sports sponsorship is to increase the development of sports in Nigeria. Sports and especially football is a powerful weapon in Nigeria. Whatever we do, we try to invest in something to develop the people to be able to participate more in the game so that we contribute towards the unity of the country.
We do the same on our supply side. We try to use Nigerian contractors to do most of the work for us. Where we do use international people, we still rely on local people to provide assistance for them. We believe we should do things that have direct impact on the lives of the people of Nigeria. Currently we have a program that is developing 120 bore hole water tanks for Nigerians, which is one of our major programs for the people of Nigeria.
We are also running a program on AIDS, called the National Action against Aids (NACA), where we run an AIDS awareness campaign through SMS. This is combined with a massive nationwide campaign on AIDS. We believe that type of campaign adds a lot of value to Vmobile and also gives a lot directly to the people. Also we are collaborating with government on the National Program on Immunization (NPI). We have been in this for the past six months. Of course we also make many other small donations to orphanages, schools, the less privileged and health institutions in areas such as the sickle cell epidemic and so on.
And what reaction do you receive from the Nigerian people in this respect?
It has always been positive; whatever you do for the people here in Nigeria they always appreciate it. In telecommunications in a country like Nigeria, as you roll out new and interesting products the people quickly accept them and go all out for them, even when they have never had much contact with telecommunications in the past. Among other benefits, Telecommunications helps to give life to the economic base of the area where it is launched. If you go into most Nigerian villages where GSM has touched, you would appreciate better how significantly it has touched on the lives of the people. For example the introduction of GSM has killed a lot of the transport requirements of the people; instead of driving or moving from place to place to communicate they are now immediately connected. On a micro level as you roll out coverage it makes a huge difference to the lives of the people.
A central theme of Nigeria's economic reform program is diversification of the economy to reduce dependence on the oil and gas sector. Nigeria as a nation has long been dependent upon oil to provide an economic income, however with the liberalisation of the telecommunications industry Nigeria has found a new national industry in which to have pride. How do you think the success in the Telecommunications sector could be translated into the other spheres of the economy?
I think telecommunications is the highest profile sector in terms of investment. For me however, this country has shown that the economy really is just like that in the D.R. of Congo. If you look at the statistics from the World Bank and the IMF about these countries, you think people are mad to go and invest millions of dollars there. But investment to these places has shown again and again what the real economy is; it is investment that opens the way for anybody producing in Nigeria to actually appreciate the economic potentials of the country. Look at the Telecommunications sector in Nigeria for example.
The real influence that Telecommunications will have on development within the shortest possible space of time is in the Agricultural sector. Nigeria is a very rich country with good rainfall and people that know how to grow foods in huge quantities, which can now be commercialised and developed in a much easier way because the Telecommunications sector is there to support such venture. Of course you need transport to convey products and so on. I think the present Nigerian Government is putting a massive program in place to develop the transport and infrastructural network in the country so that it will complement the fast growing telecommunications network.
Sadly Nigeria is still perceived as a risk market by many international investors due to the prospects of conflict and corruption. Mr. Swart, why should International Investors feel confident that Nigeria is no more a "risk market" than, say, Thailand or China?
I think if you look at Nigeria's history, you would appreciate better the potentials and the enormous benefits that investors tend to gain here. If you operate in Nigeria you would realize that the risk is much lower than is perceived from the outside. For sure there is corruption, but people are really troubled by this, and I think the present Government is changing the face of things in that regards. If you think about it, there is corruption everywhere in the world.
Nigerians, I must tell you, are extremely trustworthy people and very friendly. They are very different from the perception there is outside of them. You can do any business here successfully without having corruption influencing your business and in this sense I think all investment coming into the country would be safe.
You can look at businesses from the western world, which are now success stories in Nigeria. Companies such as Shell etc, from Europe and Asia have been operating here for many years and all the noise about risk and corruption has not really affected their business. If you have the right understanding of how things operate here, you would find that the international companies that come here have incredible business in Nigeria
With the renewed focus on economic development, the commercial partnership between Nigeria and the UK continues to prosper. Today we have companies such as British Telecom, British Gas and Actis showing more interest in the Nigerian market. Apart from the Virgin Mobile interest, is there any other UK companies that are playing a partnership role with Vmobile?
We have got some smaller partnerships with businesses from the UK, but obviously, there has not been a huge UK interest with respect to the merger. Really there has not been a huge UK interest across sectors from any major UK companies except for those ones you mentioned above. The opportunities are definitely there in Nigeria, but you find that the companies that are more aggressive to come to Nigeria for investment are South African companies. If we are looking for new suppliers or partners, we always go to South Africa and the UK to find the solution, but at the moment the South African companies are being more aggressive in their approach to this market. This is odd considering that the UK should understand Nigeria a bit better than South Africa, being former colonial masters of the country.
All the South African companies
that have come to Nigeria to do business have always had huge success
here. There is a huge opportunity here in Nigeria, so the perception
of this country as a risk market is really unfounded. Wherever you are
investing in the world you will always find some level of risk in a
business and in that sense Nigeria is not much different to anywhere
else in the world.
I am a huge supporter of the NEPAD initiative. I think the world should do a great deal to support a program like NEPAD, but at the same time there is a lot that Africans must do to actually make NEPAD work, before they get the world to believe in it. I believe that if you look at the detailed idea of NEPAD, it is about heightening the capacity for Africans to do things themselves. It is about planning for Africa, it is about developing the skills of the African people; the institutions that would assist Africa to grow; it is not just about Western countries coming to build schools and houses for them; it is about Africans building their own capacity to do these things; it is about doing the right thing at the right time.
I do not believe that the world is heading in this direction, with the increase in financial aid to Africa, through the Blair's Commission. You do need a lot of funding to put this type of development in place, but this funding should be applied to areas of need, by Africans themselves, so as the basic development requirements of the continent can be handled by Africans and not the Western World. I do not believe in donning out money, but I believe in enhancing capacity and giving people the capacity to do things themselves. That is more important than anything else and I believe this is the idea and vision behind NEPAD, it is time for the western world and initiatives such as the Blair's Commission for Africa to really begin to work within this vision.
What would you like your legacy to be? When the time comes that you step down from your position as CEO of Vmobile, what would you like to have achieved?
I would like to see this company grow from strength to strength. I would like to achieve and develop all the world-class elements of a successful international telecommunications company in Nigeria. I would like to add value to the company for shareholders, increase profit of course and aspire to be the largest GSM provider in the country. These are my priorities.
What is your final message to the readers of the Independent, the large Nigerian Diaspora in the UK and potential investors in the country looking at Nigeria?
I wish people out there in the world would come and visit Africa and really appreciate the people of Africa. They should come and see the society and not rely on the wrong perception they have about these people and this continent. The perception that is seen on CNN and in much of the international media is not a true picture of what is on ground here and this is a disappointing fact. What they have had here in Africa is bad governments and not bad people and it is time for the world to realise this and to embrace Africa for what it truly is.
Mr. Swart, thank you for your time.
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