MUYIWA ABDULRAZAQ 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 put in 15 years weathering the storm in the Nigerian market. Ogungboye, who also turned 50 years old recently, 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. We started out as a satellite communication company providing the traditional VSAT, specifically to the financial sector.
However, over time, we have evolved into providing communications services using other technologies such as through Fibre, Radio and 4GLTE. This evolution started about six years ago, meaning, we’ve moved from one technology to four different technologies in a space of 6 years. That’s a remarkable achievement. But like you have asked, you don’t hear much from us in the media simply because when we started, our service was a mono product, with a specific market focus. We studied the market and knew exactly where our focus will be at the initial stage. We knew we did not need any marketing to succeed then, word of mouth was just enough. Now with many products, we know we need lots of marketing to do. In preparation for this, we did some media publication two years ago, though not as extensively as may be expected. This was due to our high level of capex expenditure resulting to lower marketing budget. Our marketing activities is now channelled towards advertising other products we have developed. This year is a year that we intended to do a lot of marketing, until Covide-19 started. The pandemic has really affected our marketing activities. Our consolation is that, most high and medium size organizations know who we are already.
With the kind of national infrastructure, we have built, it simply implies we are more structured to provide nationwide communication solutions (of any kind) for various businesses, in all sectors and of any size; government and any government para-starters at all levels; we also have the capacity/competence and infrastructure to provide connection to some Africa countries from Nigeria.
Another reason you may not have been hearing much of us in the media is because we are not a mobile communication company, so we don’t market using Retail Marketing strategy. We do lots of Direct Marketing instead. However, now that our services cover the entire country using all technologies, we know we must engage in more marketing activities henceforth.
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. Yes, the pandemic did come with its own unexpected challenges especially during the lockdown. We had a dive in our revenue since we provide services to most enterprise that also shut down their business operations. We had significant revenue drop during these period. We got lots of service suspension requests, till May when business activities started picking up again.
Incidentally during this period, we actualized some of our hidden strengths which we never realize we had, such as Collocation Service. We got mammoth requests from organisations wanting to collocate their servers in our data centre. We closed some deals on this product offering both in our Data Center in Lagos and some of our POPs. We also saw a surge in delivering Sheared Internet Access in certain regions which we never envisaged before the pandemic.
Secondly, we also received requests on network security and vulnerability test. Though it was part of our focus for this year, we didn’t really put so much emphasis on it. So, we had to quickly assemble a team to focus on this product line.
Similarly, our cloud service also witnessed some patronage. In fact, cloud service has now become a big boom during this pandemic period. Most businesses, either small or large, want to be connected to the Internet and the cloud, for various applications. Our partnership agreement with PCCW Inc made us to develop products around this solution, because we have rights to host all their cloud services in Nigeria. We are beginning to see demand for this service as well. So, I will say the pandemic has come with a lot of pain, but it made us to innovative (one of our core values) which is translating to some benefits.
On the human capital side, we’ve been toying around work from home initiative for the past five years but have not been able to get it correctly. Modalities of how it will be implemented. How to monitor staff performance, productivity and staff collaboration were all confusing to us. We couldn’t get satisfactory answers until the whole country was forced to do it due to Covid-19. Right now, majority of our people work from home and to my surprise, the staff are more diligent, and we are even getting better results than before. Proactiveness has also increased. So, I’ll say that the pandemic came with some blessings that nobody ever expected. It also gave staff more flexibility on how they carry out their duties and we have seen an increase in staff moral towards the organisation as well as increase in innovations and paying attention to details. The common mistakes we used to observe have disappeared. It’s quite surprising to see all these positive sides during the period. Maybe it is because they work from the comfort of their homes and they don’t face the heavy traffic issues everyday again.
We also hope that by the end of the year, our profit will increase despite drop in revenue. Although, I can’t predict what our profit level will be but it’s not going to be as bad as we thought when the pandemic started due to new products, new markets and increased staff performance we are witnessing.
The ISP market, where eStream operates, has remained challenging over the years. What are rescue measures you would like to recommend to help operators in the space to weather the storm?
One major recuse measure is what the Lagos State government is currently doing. I mean the Broadband Infrastructure Initiative. The state government is laying fibre optic infrastructure all over the state which is a very big step and development that will assist ISPs. The project is visible all over the state. 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 installed, well managed and well operated. What that will do are as follows:
All ISP operational expense will reduce drastically.
There will be Internet Access in underserved areas.
MNOs will be able to cover all gaps on their network.
There will be uniformity in price since all ISP will be connected to the same Lagos backbone internet infrastructure.
On a personal level, the main benefit I want to see from this Lagos state broadband project is price uniformity. Differentiators within ISPs will then be services that each operator can provide. I expect an arrangement in which ISP A, B and C will be connected to the same infrastructure at the same cost. This will automatically bring price uniformity across board. That alone will eliminate a big problem among all ISPs. Price war will automatically stop, and our product will not be viewed as buyer’s market anymore. Although, this will take some time to happen because we must allow Lagos State government to first set up the infrastructure, run it, test it and manage it well. Personally, I believe in the project, it is a welcome development which I’m 100% sure will also solve a lot of issues in our industry. When Lagos State gets it right, I don’t see any reason why any other state shouldn’t emulate this initiative.
On the issue of what will happen to companies that have purchased such licence to operate in a particular state, my response is collaboration with the state government. In fact, this is the right time to discuss with the state governors. For instance, imagine a company that got such a license which is valid for 10 years. For some reason, the company could not get the required funding and say 5 years has gone without any significant capex investment. When will the company reap her benefit? But if the state government says I have the tax payers’ money to lay this infrastructure for you, but you have to make it open for other ISP to use it while allowing the licensee to manage it for a certain years. I see a win-win situation for all parties. Yes, they have purchased the license at a fee, but I believe there could be a balance they can strike between the licensee and the state government. For me, I would suggest, ISPs with such license should approach the governments with a business case and reach some sorts of agreement.
Another rescue measure is our Industry Funding Approach. I think a new oil has been found – ICT. Telecoms has now been fully integrated with Information System. It is now left for the government to bring up more policies that will improve the industry. Yes, the Telcoms sector is a deregulated market, but there is room for policy improvement targeted towards attracting major investors. Take for instance, in the oil and gas sector, there are policies that gives investors and our banks comfort, so the banks will always support that sector. How many investors do we have in ICT in Nigeria? How many banks will support ICT? Our government needs to develop policies that would trigger a surge of investors while ensuring that their investment is secure. This 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 environment be made conducive for existing commercial banks to find a way to start investing in us? But that can only happen when they are sure that there are polices that will protect their investment and guarantee return on investment. So, we need some level of attention and support from the government. The Nigerian Communications Commission (NCC) is making good efforts at bringing some level of sanity that will promote professionalism. But because the sector is deregulated, some people see our services as an all-comers affair, which in my own opinion is detrimental to the quality and industry reputation and we can’t operate like that. Therefore, I strongly believe we need some form of protection from the government, especially the indigenous companies. If indigenous companies are not protected, our dear country will continue to experience massive brain drain and capital flight which is not good for any nation. I must say that we have tremendous talent here in Africa, particularly in Nigeria, but these pool of talent needs the right conducive and enabling environment to unleash the ideas in their brains which can only come via the right investment vehicle. I strongly believe that the pandemic has laid the foundation to build a new future and this future is for nations and organisations that innovate.
Yes! Things are not going to be as usual again. There are going to be a whole lot of applications and transactions happening in the cloud moving forward. That is a major change. For us as an organisation, we are evolving into being a solutions provider. Access delivery are going to be like a phone, everybody will have it, we don’t see it as just a profitable venture anymore, but a way of life. Solutions that can ride on access layer will be the way forward. I see that happening already because almost everyone is getting used to working from home. I don’t think enterprises or organisations are going back to the way they used to work. Working from home is the new normal and everyone is getting used to it. Physical presence in the office will now be skeletal.
In addition, I foresee every business activity depend largely on our industry. I see ICT now truly becoming the major player in moving the economy of our nation forward. Covid-19 is here to stay, so as a nation, we must find a way to run the entire country and the only way is to embrace ICT, I don’t see how any other sector or country can progress. There is just no other 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.
However, as things change, one risk that is certain to grow is fraud. That is a most likely major issue that will happen alongside new ways of doing business worldwide. As more applications and transactions are moving into the cloud, security and data protection will be the major concern. eStream is already investing in Security and Vulnerability Testing as a service going forward. We have positioned the company to ensure that we can give our customers the needed protection and security solutions from attacks.
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 because 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 will inevitably realise that multiple taxation isn’t sustainable. Currently we pay about 30 different taxes, how can we survive with that? We don’t even generate enough revenue to keep paying all these taxes. We need to find a way to come to the point whereby we pay one uniform tax that covers everything. I don’t know the name the government will call it. But it needs to happen. It can then be skewed towards the state government or the local government, but all these multiple taxations 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 tax the cloud? It is just like when you say you want to tax the rain. I do not see how that is possible.
The governments need 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 need 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? It is, only a matter of time, and that time is very near. In the next couple of years, I believe the multiple taxation issue would have gotten its needed attention from government. You don’t know how happy I am with what the Lagos State government is doing. This is what we have been clamouring for. Lay the whole infrastructure, charge us one single fee and charge us one single tax. Every telco company will be equal. Government would make more money because there will be more innovation in ICT, meaning more enterprise will 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. Covid-19 will force the government to ease away some taxes.
What are telecoms operators saying regarding the support fund the FG is giving to some sectors to cushion the pandemic effect?
You see, I won’t blame our government but their advisers. Once you operate in the Telecoms Industry, as far as the government is concerned, you are either MTN; Airtel; Glo or 9Mobile and the government sees the kind of advertisements these companies are doing. So, when we, the Tier 3 ISP’s meet government and tell them we are not an MNO, that our services are different the government doesn’t really understand. The government believe we are making so much money, they don’t know that Telecoms has different segments.
In oil and gas for instance, they understand that there is upstream and there is downstream. Similarly, in the banking sector, they know there is merchant bank, commercial bank and microfinance bank. Some people are educating them to know the different segments of these institutions and how they contribute to the wider economy. Who is advising our government that telecoms sectors also have different segments and different players? When we take our case to the government that we need investment, support or palliative, and shortly after that, they see an MNO’s spending huge money on promotion and advertisement, the government officials will say we don’t need any support.
We need constant communication and dialogue with the government and to advise them appropriately, that we also have different segments with different players in our industry. Our customers and revenues are not the same. The government must be advised on what kind of attention, support or palliatives each segment requires. And that’s where ATCON comes in by engaging the Honourable Minister of Communication and Digital economy. Here, 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 for us. One key area he has really championed, is to ensure that telecoms infrastructures, even though they are mostly privately owned, are treated as critical national infrastructure. We commend him for this but I will say there are still a lot more he can do for us.
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%. The initial target of 30% was achieved and surpassed at the stipulated time. But we surpassed it with the private sector initiative and private sector investment. If our government can also partake actively in our industry, I see no reason why we should not surpass that 70% target.
Most Telco’s do not have the financial muscle to lay thousands of kilometres of fibre infrastructure or thousands base transceiver stations, but when the government comes in and lay fibre everywhere (like what Lagos State Government is currently doing), put base stations in place with another company managing it, why shouldn’t we achieve the 70% 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 the private sector’s little money, we achieved 30%. It took us two decades to get to 35% 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% goal. It is doable, so we just need to continue being 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 and shades of persons with different proposition. So, the government should dialogue with organizations and individuals like us that are reputable. At least, this is my 15th year of running eStream profitable and professionally. My humble advice is that government should seek advice and dialogue with indigenous stakeholders that have been existing and investing in this industry for years. This is my country, this is my land, some of us have decided to stay here and salvage it together. We are going nowhere; we are ready to stake whatever it takes to build this country, even with very high interest rate from our banks, we will moving on. We are ready to work and partner with the government, but they should also listen to us so that we can form a very strong bond, like we see in other countries. They are listening to the financial sector as well as oil and gas. Why shouldn’t they listen to us, the driver of all these sectors? If you remove ICT from the financial sector, or oil and gas they 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 embracing ICT. So, why won’t they respect us! I know we have our own internal problems which our associations are addressing but we can move faster if our big brother is ready to help.
eStream Networks Limited is 15-years old this year and you, the founder, is also celebrating your 50th birthday. What do you have to say at this point of your journey?
I am very happy, 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 telecoms technologies and we have strong agreements with all the big MNOs and some international players. So, we have grown, and I will say all thanks goes to Almighty Allah for sustaining us this long.
I consider myself a very lucky chap because if you look at the Nigerian Telecoms sector generally, especially the ISP industry, I think I’m the youngest indigenous CEO. I might be older than some other MD’s that are foreign, but when it comes to indigenous ISPs, I am the youngest of them all and by the Almighty’s grace I’ve been able to weather the storm for 15 solid years. It has not been an easy journey at all. I recall when we started with 3 staffs and myself competing with big players that had strong presences and financial muscle but with the help of God, some true friends and dedicated and committed staffs, the support we got was overwhelming. With our current vision, I know we have a lot of challenges to overcome, but I have no worries that the Almighty will do it again for us. Current challenges are far easier than early days challenges, so In-shaa Allah, no shaking.
I would like to use this medium to appreciate the Almighty God, a very big thanks to all the staff of the company, both existing and those that have exited. They’ve all played their part in growing this great organization. More appreciation to all our customers, all our partners, the NCC, the Minister of Communications and Digital Economy – Alhaji Pantami, the federal government, family and friends for everything that they have done for eStream and for my humble self.
What should the market be expected as the new phase of development for eStream? ( I think this question should be restructured)
Just as I said earlier, we are gradually transforming into a solution provider with an eye on Cloud and IOT Services. We are also coming up with a whole lot of security solutions that will be affordable for homes, individuals and enterprises. Entertainment sector is another area we are looking at.
So, generally, we are looking towards services that are solution-based and not typical access-based. 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. We are already in the market selling these solutions on a small scale, but very soon, you will begin to hear more about our new solutions and services. These are all part of our plan for this year and we are making deliberate efforts towards it, although the pandemic slowed us down a little bit, we are gaining momentum towards achieving our objectives and vision.