Digital Economy: VDT Communications has everything it takes to be frontrunners — Biodun Omoniyi, GMD

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Biodun Omoniyi, GMD of VDT Communications, in this exclusive interview with Mathew Ibiyemi, speaks on Nigeria’s promising future in the growth of the digital economy, issues affecting the growth of ISPs in Nigeria and VDT’s contribution to the realization of Nigeria’s National Broadband plan. Excerpts:

VDT is well known for its activity in broadband, can you tell us how prepared you are for the expected new wave of telecom revolution in Nigeria broadband?

The issue of the e-sim, for example, is that they are little things that their time have come. There is much advancement just like the digital revolution. Ten years ago, no one knew of the e-sim. It has been brought to us by the power of the micro-processor which is also powers the digital ecosystem. The power of the ecosystem is advancing and it is getting smaller by day. We can see that phones have a processing power that many computers did not have about ten years ago, which is why advancements like the e-sim can come up, so that stored in the memory of the phone, it can process rather than having a separate slot. I saw something like this about seven years ago at a conference which is why I said its time has come. It is something we anticipated therefore it is not a new wave. If not, how will we be able to do IOT which I consider a bigger wave compare to the e-sim. E-sim has to come because it helps with efficiency of distribution but the bigger waves are 5G, AI, IOT and others.

In view of this revolution, what role will VDT be playing in the realization of Nigeria’s national broadband plan?

When you talk about VDT, we have a new addition and that is the retail services, it may not be that new but it is relatively new when you compare it to what we’ve been providing to customers previously. We are better known as an enterprise solution company, we will continue to operate in that market which we are well known, and we are a leading organization providing service to enterprises. In retail, however, we are like a toddler just developing. And that is what I know affects the public more, how we will be defined in the future. The broadband revolution is more focused on our activity in retail services. What will our role be? We have taken the first step which is our inheritance, that is, giving quality services. Providing quality service means that we will be broad and give what customers really want.

How do we import this from the enterprise to the consumers?

We are going to give a more qualitative service, give our attention to customer service to bear in that space as well. We have everything that it takes to be successful and be a leader here.

Talking about digital economy which is what everybody is concerned about presently, what are the services that VDT is putting in place to help government realize its dream of a fully digitalized economy?

When talking about digital economy, the Honourable Minister of Communication and Digital Economy has done very well but before now, we used to have a separate Ministry of Communication. Digital economy has to do with the processing. The telecom industry used to be looked at as more of a media providing connectivity means for people to talk to each other and that is where VDT actually plays. VDT is playing at the connectivity level of the economy now and in the future, to make sure that people have better connectivity and that the connectivity is more qualitative so that transactions can be done in a better and lubricious way.

You mentioned giving quality services to your consumers earlier, as at last year I did a report on the quality of internet service in the country and when I had a discussion with some ISPs, many of them stated that their problem was erecting telecom infrastructures and that affects the delivery of quality service to their consumers also. How has VDT been able to maintain the status quo of providing quality telecom services to their consumers despite the high cost of erecting telecom infrastructure?

We play more in the ISP market and majority of the players are affected by the operations of the bigger players, the MNOs and also there is no adequate protection from the regulator in trying to protect the smaller players. In trying to install infrastructures by themselves with their size then they will be faced with double challenges. Amongst the ISPs, VDT will be mid-sized because we are not as small as that, we’re going towards the top of ISPs. The fashion even with MNO that started due to the total lack of infrastructure had to build by themselves so as to satisfy their consumers but presently there are companies that specialize in building these infrastructures. What VDT is doing now is that originally we have built some infrastructures but due to the fact we have to provide services to the masses, we need a lot more base stations and point presence because people are many, the expanse of land where they occupy is much, therefore, we are partnering with collocation companies so that we can share infrastructure with those specialist. There are challenges, one of which will be cost, having your asset so that your eventual cost at the end of the day if you are a smaller player can reduce. In accounting parlance, you are massing capex and you are dispensing it using opex and as our currency is falling, capex continues to rise in value. It makes a lot of sense when you want to build those things by yourself when you are a smaller player but the way things are now and the challenges in the environment gives no one any chance if you really want to reach out to the masses than to go to those collocation companies who actually are specialized in this, who will charge you more. This brings another challenge because the price of your service will be more expensive than it would have been. This is why you see a lot of ISP companies dying out because they could not build their asset base and whatever is there now is opex, they need to actually be shelling out money and they’ve not built customers’ base. Things are therefore more difficult for the smaller players.

These issues are there, so how have we been able to navigate it?

So far, in our incursion into the retail business, we have already built some scales on the enterprise side so being able to navigate deep or coming into the retail, of course the margin will not be that much when you start until you are able to tick that scale, therefore, you need to have some staying hours in terms of resources in order to get there. The time might vary but you need to have enough to be able to pay those infrastructure companies before you break even. For example, the time for planting for a farmer is a time for fasting and a time to have little and you need to know how to manage in this period to scale this time and this is usually the motivation for all businesses. We do business plans and try to know that time but some smaller players do not have the waiting power and the plan might not be there, not knowing that it does not happen overnight. The business plan gives an idea of your capital which is usually the waiting capital so as to be able to scale when the plenty will come.

For the small ISPS, what regulatory intervention do you think NCC can do to ease their burden a bit?

I don’t have a straight or direct answer but just an idea. First of all, I must commend the NCC. It has to be a cautious effort and the NCC is aware that many of the small ISPs are dying out. When they take the first license, many of them are not able to renew and those who renew are often unable to pay the AOL. They harbour this data and they see the rate of debt. The fact that we want to keep this group must be conscious. Why would they keep them? They do that because other economies do it, these small players are also employers of labour and they participate in labour. Even in the U.S which is the headquarter of capitalism in the world, there are smaller players and they’re protected. The government targets them to give incentives and protects them against the bigger ones. The NCC recognizes the existence of these challenges against the smaller players which is why it would take a cautious effort to protect them. If we leave it to the free market, then the little players will never survive and they’ll die at a faster rate than we’ve seen in the past.

VDT is known to have its consumers at the center of its decisions, what are the prospects consumers should be expecting in the year 2021?

VDT is not alone at having its consumers as its center of operation, all businesses do that. The value of the business is to create value and serve customers. There is no gainsaying that what VDT is doing is what it should be doing. The laser focus on what the customers want is also by all the systems that we have built. We are an ISO certified company, ISO 9001, ISO 20001. The latter is about IT service management which is for customers while the former is quality management system which is also for customers.

We hope to expand our retail service in years to come and to make sure that more places are covered so that the customers can feel our effect. Right now, they’ve not felt our effect.

What are the challenges hindering the effectiveness of Bitflux?

We are promoters of Bitflux and the promoters are largely indigenous, just Nigerians, there is no foreign money pumping in, and this has not been happening in Nigeria for awhile now due to instabilities in our polity and the pandemic. Bitflux is not an ISP but a wholesaler that governs more ISPs so you’ll need far more capital. When you need capital, one thing that comes to your mind as an indigenous operator is how to generate foreign exchange because the equipment we are talking about will manufacture nothing so you’ll need to import them. When Bitflux had its license, dollars was 165 and then it rose to 360, and while we were trying to adjust to that reality, it went up again to 450/500 as a result of instability in polity and economy. It will definitely affect a start-up that is trying hurdle capital together within Nigeria. One major challenge will be inadequate capital to roll out its services and instability in the polity. However, I must commend the shareholders of Bitflux for their tenacity this year which is a difficult year. There may have to be a diversification of capital base and investors’ base so that we can see a more vibrant organization.