World Report

Bruce Ayonote
Managing Director and CEO of Suburban Telecom

‘We make sure to cater to the needs of the market’

Looking at you professional background, could tell the readers of The Independent how it prepared you for your current role as Managing Director of Suburban Telecoms?

I studied Political Science and Public Administration at the University of Maiduguri in the northeast of Nigeria. When I finished my university education, I started doing business because I had entrepreneurial spirit. I wanted to develop my own business based on my need and desire to be independent. I did a number of things: I did training, I did contracting and eventually I developed a telecommunication business after supplying services to Mtel.

Back then, there was a monopoly in the telecommunication industry, and the only reasonable telecommunication business you could do was providing services to NITEL or Mtel. Having done that for a period of time, we developed a relationship with equipment manufacturers like Motorola, Siemens and so on and we got to understand about telecoms networks and the NITEL organization; I decided to expand that study and so as a part of this I took courses at London Business School, one in "Market Driving Strategies" and one in "Mergers and Acquisitions."

Looking at Suburban Telecoms, it was incorporated in 1999 and in just 6 years the company has experienced a phenomenal growth. Could you tell us what have been the keys to the success of the company in this time?

It has been sheer hard work, honesty and diligence and all those things that people tend to ignore. For instance, the partners of the business have been very transparent to each other, which has helped us to keep costs low and be honest with each other. It has ousted the number of middlemen who are dishonest and who have made the cost of business increase globally. For instance if the procurement system is not very transparent you can see yourself buying something worth one dollar for five dollars. So the people's business ethics play a big role in the course of the business. That has helped us a lot in what we do.

We also appreciate global development; we constantly look at how technology, strategies and markets have developed by trying to adapt quickly and link them. We try to provide high quality of services and make sure to cater to the needs of the market. Following the trends globally has helped us to have an advantage over other companies in our industry. What we have realized is that people in all parts of the world want good service and there is a point where the trends may differ, but people want the same thing. The challenge of delivering those services might be cost infrastructure and knowledge to provide those services. People tend to desire similar things on a global scale. As the world becomes a global village, people devise another means of communication. They would like to move with the global trends.

Today the business of Suburban has adopted a group structure consisting of 3 major subsidiaries which represent the group's expansion from its core business of capacity provision into the creation of a one stop shop for advanced telecom services. What is the vision behind the group structure, and what services does this diversified structure offer?

There are actually five subsidiaries now. They provide diversified telecommunication services ranging from network capacity supply to ISP to Coded network services like Switching and Rotting. In terms of human resources, we have highly specialized engineers with skills for network building support consultancy. We have international businesses that concentrate on operations outside Nigeria. We just completed the acquisition of a UK company and that will make us go deeper into Europe to make our reach more global.

What type of aspirations do you have for the continued diversification of the products and services offered by Suburban?

These are the major, functional areas of a telecommunication environment and we believe by being involved in a lot of them, it helps us to focus and measure where the growth is occurring at any particular period in time. The reason is that there are some times when the market growth is in voice, and there are some times when you have to use data and video. So basically setting up a wide approach in the market helps us measure growth potential and when it is clear that a particular area has peaked, we can either sell the business or reduce our activities in that area and focus on the areas of growth. So it is both strategic and tactical.

By far the most exciting project of the company now is the national infrastructure backbone in which Suburban is constructing and deploying a nationwide fibre optic network. Could you give the readers of The Independent an introduction to the National Backbone Project?

The Fibre Optic project is based on the desire to defend our existing transmission market, which we have developed over the last four years. We are supporting companies like Mtel, MTN and V-mobile, providing their cellular back up services, and linking their base stations and switch sites. We have developed about 40 satellite earth stations around the country. We see the need for a move from transitional technology to a much more sustainable technology in terms of capacity costs. So based on that the need to build a national fibre optic network is paramount in our business development and sustainability. We are developing two strategies to achieve this, one being the Build strategy in which we will build the national fibre optic network, covering the entire country and concentrating on the most lucrative routes, from scratch. The second strategic option is to use and improve upon the infrastructure and framework that currently exists throughout the country and this is what made us go into the NITEL bidding. Our strategy here is based on achieving a foothold in the carrier market and basically improving the current infrastructure and network to take a more dominant position in the market. Obviously, there are pros and cons for both options, the build strategy involves a number of costs to construct a network from scratch, but the acquisition of NITEL is a strategy that is also not without its concerns and issues over the current condition of the existing infrastructure.

Considering this, what is your time frame for the development of this project?

We have 18 months for the construction or renovation of this project but the launch date is in 6 months from now. The development will be undertaken in a three-phased approach that will see priority links connecting major cities, secondary population centres in between and extensions to include other cities. We would have a complete coverage of Nigeria in 18 months.

What types of international partners are you working with on this project?

We have suppliers for technology from China called Hua Wei, and then also we are working with ATC, a South African Cable manufacturing company, who are helping us in terms of technical consultancy and operational expertise. On the advice side we have the consulting arm of British Telecoms. We also have CISCO Systems helping us on the Metropolitan Network. These are some of the international players in the project.

Let us talk about NITEL. As you mentioned, in recent months, Suburban Telecom, was one of the groups of investing companies to be considered for the majority stake in the soon-to-be -privatised national carrier, NITEL and its GSM arm, M-Tel. What is the current situation on the NITEL bidding?

Our role is to go in with a mobile partner. We are concentrating on the fixed assets of NITEL, mostly the carrier base and presently the bid option looks more attractive at this point in time, but it is still only an option that we are considering. If we get NITEL there is an existing network and existing customers. However, buying something is always much more expensive than building it, so I guess what our business development guy is saying is: build, build and build! We are looking at the NITEL opportunity and I believe it is a very interesting one.

The other important project that is emerging in the company's portfolio is the emergence of Suburban as a force in the Wi-Fi business through the development of Abuja into a Wi-Fi centre for the country. Can you tell us about this project as well and what it is all about?

The FCT Minister, who is a visionary, basically developed this vision sometime early this year. Because we were trying to build a wireless network and he was trying to do the same thing, we went into a Public/Private Partnership (PPP) agreement where they provide the property and space, and we provided the equipment. Jointly we developed the concept called "City Access". This is to provide easy access and connectivity around the entire city. The backbone is built around the whole of Abuja right now. There are a number of hot spots that have been developed and in some parts customers are already calling in to receive seven-day service. The British High Commission and the American embassy also came for wider service on this new facility. Quite a number of individuals and corporate organizations have applauded the initiative and we are thinking it would be fair to increase the quality and make sure everyone has access at a very affordable price.

Are there plans to expand this Wi-Fi project to other cities outside Abuja?

Definitely! Abuja is simply the best place to start off such a project, as it is much easier to achieve your objectives and get the task done in a speedy time. With this project completed, we plan to move on to more difficult tasks throughout the country.

With POP's in the US, UK and Europe as well as host of international partners in South Africa, China and at home in Nigeria, a network of partnerships with world class organizations has driven the success of the company and helped to link Nigeria to the world. What do international partnerships bring to the business of Suburban Telecom and vice versa?

I think the relationship is very valuable because like I said earlier, the global trends have a huge influence on how you position, strategize and perceive business opportunities, and the intellectual capital that comes from these relationships cannot be underestimated because foreign exchange strengthens our ability to expand locally and globally. We have had US facilities and are also presently chasing some multilateral funding and the discussions are almost complete. It has been great and has covered up for some of the things that have not been available here on ground in Nigeria. In this sense the relationships with these international leaders helps bridge any gaps that we find due to the location of our operations and has therefore been very valuable to our vision.

Are there any plans to seek additional local and international partnerships in the future?

What I think is good for me now is that I have a number of relationships already and I am going to use my current ones to the benefit of both parties, before I search for new relationships. The issue is that relationships can also sometimes bring problems; if you have too many of them and you do not deliver, it becomes a problem. I think there is room in our business for more relationships, but only once one meets the expectations that are already part and parcel of the relationships we currently have.

One of the major visions of the company is to use its success in Nigeria to eventually expand to the West African region and then again into Africa at a continental level. Are there existing plans for Suburban Telecom to move into neighbouring countries in the region?

We know that Nigeria is the most complex country in the sub-region because of the population, cultures and languages. If one is able to make business work in Nigeria, I am very confident we are able to make it work in other parts of West Africa and then again in other regions of the continent. I always say: Take the same success model in Nigeria and replicate it in other countries, while obviously customising it to the peculiarities of that market and thereby appreciating each country's own unique qualities and differences.

Has there been any steps taken in this regard yet?

We have had discussions in Ghana with some partners there and we are looking at the right time to make that happen. We are looking at Liberia and we are ready to provide infrastructure there very soon in the near future. We also think there could be a lot of opportunities between South Africa and us, as the relationship between these two countries is growing by the day.

A central theme of Nigeria's economic reform program is diversification of the economy to reduce dependence on the oil and gas sector, but also to stimulate a broader economic base that creates a high number and variety of employment opportunities. Nigeria as a nation has long been dependent upon oil to provide an economic income, however with the advent of the telecommunications industry and its liberalization Nigeria has found a new national industry in which to have pride. How do you think the success in the Telecom Industry can be translated into other sectors of the economy?

I think it is very encouraging because one of the things the Telecom Sector has shown to Nigerian entrepreneurs is that success can be achieved here and that the market has the capacity and the appetite for development. It has also shown that you can make very reasonable returns if you invest at home. In the past there was not any physical evidence that this was the case and it almost looked liked it would only be the multinationals that could be successful. But with the Telecom Sector's growth, there is a new attitude among Nigerian entrepreneurs. I think the good side of the growth is that it has made us appreciate our market and economy more.

The growth has showed us that with proper accounting measures a huge amount is possible, because another value of the Telecoms market is its prepaid nature. Having a payment solution helps you measure and capture your cash flow in a very precise way and this helps the sustainability of the business. I guess in the past, people did not see where the problem came from; there might have been great demand but people were not paying because there was no proper collection system. Thus the telecom boom has also shown that collection and accountability in business is very important. In the past there was no power and each time people said: Well, power is the first thing we need to provide infrastructure. We did not understand what that meant.

We did not appreciate the fact that it is so imperative to build infrastructure and provide facilities even if the cost over a period of time could be quite significant. However I think that has shown up today in our developing economy because sometimes I have had to invest in over a thousand generators, most of which cost me N2b, which is $20 m in power costs every two years. With the investing of about $100m in generators over four years including the fixed costs minus diesel at current costs and you now see the value and importance of power in the country. I guess that has showed us all these things and many more. It has showed us value in our supply chain and even if you have the product you need to have means of getting it to people to sell it. The Banks have positioned themselves to do that and their ATM is beginning to go round the country, people can withdraw money during weekends and you do not have to move large sums of money about. This culture is just picking up and much of it is thanks to the growth and success of the Telecom industry.

Sadly, Nigeria is still perceived as a " risk market" by international investors, due to the prospect of conflict and corruption. We are working closely with NSE, on its international road-show initiative to work to change this image and to reach out to potential investosr in the large Diaspora. How is Suburban Telecoms, as a Nigerian success story, working to educate and attract international investors and members of the large Nigerian Diaspora back to Nigeria?

I agree there is risk in Nigeria, but there is risk everywhere. I guess the reason why so much has been said about the risk in Nigeria is because of the betraying nature of the corruption that has been highlighted to the west, because it is a crime that is based on trust. People tend to take advantage of your trust, which is something that is very naturally given and people do not take lightly to having their trust broken. I guess that is the difference. Everywhere in the world we have people who take advantage of others and if you know whom you are doing business with based on proper diligence that would form a reasonable basis to transact business with such fellows.

There are some who came to Nigeria and never wanted to go back. Even as we have some people who get the good side of things, there is bound to be a guy who would get the downside of it, it is a two-sided thing. I guess what we need to do is to maximize the business concerns that experience the upside of Nigeria, because that can be done by listening to what people say and getting more educated about the environment you are going into. We know that some Nigerians have decided to abuse the country with their negative acts and it has a negative impact on some people who did not share or believe in such acts.

I have been to a number of meetings myself where that stigma has played a role and it was only when I proved myself that we were able to scale that hurdle. The challenge for us is to report some of those things when we see them and tell the world the good things that are happening in Nigeria, not sending people out to misrepresent the country. I have always said that I am readily available for anyone who wants to have an independent view about the country. It is getting better by the day and the EFCC and its anti-corruption drive have made investment in Nigeria more attractive. It is a matter of time before people will find out that this place is not the place they should be running away from.

Finally, when the time comes for you to step down from your position as the CEO of the Suburban Group, what would you want your legacy to be?

I would like to have developed a company and brand that represent productivity, commercially and socially. I would like to develop people who have a vision and who have faith in their country and faith in what they are doing and in themselves.

Mr. Ayonote, thank you for your time.

Thank you.