People want their children to learn on the Internet but do not allow masts anywhere close to them —Wole Abu, PAT boss

Mr. Wole Abu is the Chief Executive Officer of Pan African Towers Limited (PAT), an indigenous infrastructure company in the African telecoms market. In this interview by Bode Adewumi, he speaks on the telecoms industry, the reforms, challenges and prospects.

Pan African Towers (PAT) belongs to the infrastructure segment of the African telecoms market. What’s your general assessment of the market?

The infrastructure segment of the African telecoms market has actually seen a lot of growth since the entrance of major players in the global level into Africa around 2012. From then, infrastructure and tower deals have grown year on year. Also, it is beginning to see cloud and fibre deployment at an increasing rate in Africa. So, infrastructure for telecommunications is growing and this is being driven by demand. In terms of adequacy, of course, there is still a demand-supply gap. Infrastructure is still not adequate. We still have a huge gap in that space. In Nigeria, filling the gap will demand an estimated investment worth $136 billion, according to the Ministry of Communications and Digital Economy, and the Nigerian Communications Commission (NCC).

Over the years, and even before the coming of Pan African Towers, deploying infrastructure has been faced with some bottlenecks, what are those challenges that you have identified since coming into the industry?

Truly, many challenges are bedeviling the sector. There are the social problems: theft, vandalism, community issues and so on. And also, there are the business environment issues: multiple taxation, unfavourable or harsh government policies, FOREX scarcity and lack of long-term capital for investment in infrastructure in local currency. All these are the issues. Then of course, you also look at failure in power supply. Availability of power is important since telecoms infrastructure which is distributed across the country all rely on energy. So, we have to now invest additionally in providing energy for our customers. This actually drives up the cost and it makes us susceptible to all the shocks in the energy market and that, sometimes, makes our business difficult.

Focusing on the power challenge as you have just mentioned, how much of the cost of operation do you expend on providing power to run telecoms infrastructure?

Let me say that power is both a challenge and an opportunity. It is a challenge in the sense that we are currently relying on a grid that is epileptic and non-available in certain areas; and on diesel generators which make us susceptible to volatility of diesel supply and of course, all the issues around constant maintenance of generators, noise pollution, environmental pollution and everything that is associated with running the generator for 24 hours. It is a challenge. In terms of capital expenditure (CAPEX), we are talking about putting in probably 50 per cent of your CAPEX into power equipment, which you would otherwise have saved. On the other hand, even in operating expenditure (OPEX), you will also see that you are spending a lot of money, say another 50 per cent on your OPEX. The cost is a significant part of our operations, both CAPEX and OPEX, which is the challenging part.

However, the opportunity is that with the rise in and reliability on renewable energy, you can provide that power service at a lower rate than using diesel generators. The opportunity there is to save cost and reduce replacement, but it is still a CAPEX that ordinarily, we would not have incurred if the country’s power system is in good state.

In the face of the current accelerated migration to the online space, people working from home, businesses digitising operations and all that, experts have observed there will be increasing pressure on available telecoms infrastructure. What can quickly be done to avoid service breakdown in this situation?

The mobile network operators (MNOs), who are the people that deliver the last-mile service to customers, are experts and they always know how to handle the situation.  Remember, we just serve them and they are the ones that serve the customers. The MNOs are global experts and they know how to plan demand and uptime very easily. They have tools for all that. So, the uptake in data traffic, for example, is not unanticipated. You know that people are going to use more data. It has been rising for a long time. What has just happened is a shift in usage. For instance,  people working more from home means that residential areas during the day will see more data traffic than they would have normally seen. Those people ideally would have been in the office. So, that capacity is there, it is just that it is in a different place. An example is that if you shut down the markets in some areas, what you are going to see is that because the businesses are not working there, the traffic will reduce there. But the people are still doing something: they are working from home. The tendency is that you now see the traffic go up in areas where people live.

Where the challenge is, is for us that we provide the infrastructure. Infrastructure cannot be shifted over the internet. Infrastructure is hard and you must dig something. If it is fibre, you must put the physical duct, put the cable inside and terminate it somewhere. It is not something you can do overnight. It is not software-driven. If you are going to build a tower, the process is the same thing. You have to secure a location, construct the mast and get the work done.

So, for us, where I think the change is and what should be done, based on your question, is to deal with what is slowing us down to deploy infrastructure more speedily. It boils down to government’s permit, attitude of landlords, and attitude of estate agents. I will give you an example, everybody wants better service but if you want to put a mast in an estate, you will have people who will insist that they do not want the mast in their backyard because of their uninformed positions that telecommunications is linked to disease.  You have people who want their children to learn on the Internet but they do not allow the mast anywhere close to them. How then will they have access to the Internet?

Number two factor is the communities who resist you and put unnecessary demand on tower projects or fibre. When you begin to build your tower or lay your fibre, they place unreasonable demands on you to come and pay some money. You are an investor. You are just making an investment and then, they just want you to come and invest in some other things. They want you to come and build a palace, give away scholarships and all of that. What we encounter sometimes is that people do not understand that by bringing that investment there, you have actually helped the community.

The third challenge to quick deployment is the government angle. We can work quickly and fast but you have government offices that do not work at the same pace. Even when our customers, for example, really want tower facilities in a particular place, and you manage to go round the landlord issues and the community issues, you still have the government  issue to deal with because without government’s permits, you run the risk of sanctions but some of these permits do not come at the right time.

Recently, Federal Government’s agents, particularly the Nigerian Communications Commission (NCC) and the Ministry of Communications and Digital Economy, have been seen to be thorough in ensuring that state governors soft pedal on the issue of Right of Way charges (RoWs). How do you see this impacting on the growth of the sector?

It has been a very welcome development. I think six states or so have aligned with the charges recommended by the Federal Government. At least, prima facie, addressing the RoW charges brings down the cost. But as I told you, there is a plan. If you are going to run fibre from the landing point in Lagos to Abuja, you will probably pass through eight to ten states. Along that road, maybe it is just only one state that has reduced RoW charges to the N145 per linear metre stipulated by the FG. But you cannot fly to avoid other states that have not aligned with the price. You still have to deal with other people that have not done it. That is one thing about the fibre infrastructure. Fibre is a point to point connection.

However, there are other charges; the RoW is just one charge. If you really look at what goes into it, there are many other hidden charges that are not spoken about. It came up at the last meeting and we need to consider that. When you say the charges is N145,  then it should be N145. Do not add this and that charges again.

The NCC introduced infrastructure sharing as a policy to help in broadening deployment of telecoms infrastructure, what opportunity has this created for operators such as the Pan African Towers?

Infrastructure sharing is a global trend and the NCC has done very well by bringing it here so that people can be served better. First, it is good for the environment and it is also good for the business because with it, one tower can now serve various operators. You don’t need four or five towers again. To build about four towers in Nigeria is money but with the policy, the FOREX we use to get tower equipment would be diligently utilised.

What the policy also means is that most of the services have significantly improved because of the efficiency around infrastructure sharing. It has also created an industry for some operators, which is widening the telecoms value chain.

Pan African Towers entered the Nigerian market in 2018, how has the journey been?

Well, the journey has been challenging and rewarding at the same time. We have tried to prove that Nigerian companies can also compete in the space and we have been able to win the confidence of the market. We have been able to put together a team that can deliver world class services in this area. The journey has really been interesting for us, we just celebrated two years of business operations in Africa and we have been able to make some strides in the industry despite the challenges we face.

There are also huge opportunities as we move and we have come this far because of our mission to provide broadband penetration and other telecoms services across Africa, especially to remote areas. There are people who do not have the network to make a phone call and so they do not have GSM phones. They have no access to quality education, healthcare services and other critical infrastructural services that foster their livelihoods. Imagine these people being completely cut off from the global world? This is why we do what we do. We need to build more towers in these remote areas so these people can access life-enhancing services and get connected to the global community. Technology makes the world better and erecting towers in these areas could be a life-changing moment for a whole community. So, the journey has been really interesting for us at Pan African Towers.

Within a space of two years, Pan African Towers has built over 1,000 towers and 300 towers in Nigeria and Ghana respectively. What other countries are you targeting next?

We have planned to go into about three other countries based on the opportunities that we have identified over the next couple of years.  Nigeria, as a large market, will be a key focus for us but there are many other areas that are underserved around us in West Africa and Africa as a whole that we have identified and are in the process of executing market entry and it will just be done in phases because it is capital intensive and we have to take a lot of environmental factors into consideration.

For indigenous companies like yours, what do you think the government can do to further strengthen you in the face of competition with foreign counterparts?

Well, it is expected that foreign companies will have an advantage because if you look at the kind of companies that come to Nigeria, they have access to long term funds. They have access to expertise. They probably are also coming in as a global partnership with companies they want to serve in Nigeria. So, when they buy a portfolio, Nigeria just happens to be one of the places they are coming to. That is welcomed frankly because most Nigerian companies do not have what it takes here to seize the whole opportunities in Nigeria. So, we would always need that. And if you look at our particular sector, the technology sector has no colour, it has no country; it just has to do with the resource.

Regardless, where the government should look at, first and foremost, is helping with the right policies for the Nigerian companies who want to do this to grow. For instance, we have got funds earmarked for certain sectors of the economy to cushion Coronavirus pandemic effects, government should earmark for infrastructure companies as well. The Central Bank of Nigeria (CBN) is intervening in almost everywhere but in a key sector like this, they expect us to go and be looking for Dollars. One of the risks that have happened here is that long term funding at dollar rate is a problem but the CBN, I think based on what they have been doing recently, is trying to drive the interest rate down in local currency. Hopefully, a lot of local long term lending will start happening and that is a good thing. But the other issue is around cohesion around government agencies, so that the issue of taxation, stoppage of works and co should be eliminated so that people can actually deploy this infrastructure quickly.

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