“Lean Operator Model” is the way forward according to Helios Towers’ CEO

Mergers, Acquisitions and Financial Results

As operators are looking at innovative, cost-effective and efficient ways of managing their businesses, Helios Towers Nigeria, HTN looks forward to closely working with operators to help reduce their site operating costs by 20-30%.

In a recent interaction with the media, the CEO of Helios Towers, Fazal Hussain spoke on a number of industry issues bothering on infrastructure especially the benefits of managed services to operators and subscribers.

Q: What is your assessment of the telecom services in Nigeria?

A: The market is growing as expected and the ARPU(Average revenue per user) will continuously decline. It will decline to a similar level like Pakistan and India where ARPU declined to about $2.5 two years ago. In Nigeria, from $25, it has declined to something close to $10 and we expect it to decline further.

If ARPU decline to about $1, it will become a big challenge for operators how to continue to make money. The cost of service provision in Nigeria is significantly high because of power challenges . There will be significant improvement in competition over customer and subscribers. But above all, operators have to move towards lean operator model. This will make them to be much more efficient in doing business.

Q: As a major player in the industry, what are the major challenges facing operators?

A: The major challenge for operators is being able to provide good quality coverage and efficient services because as the number of subscribers increases, the operators will need more towers.

Competition will force tariffs down so that people can spend quality time on telephone. I believe the quality of service in Nigeria is very poor compared to other markets and it has to improve to the level obtainable in other parts of the world.

Q: Apart from collocation, is there any other business Helios Towers is involved?

A: We are fully into managed services. We have over 1,500 towers and managing over 1,000 for our customers. We manage these towers ourselves and we offer 99.9 per cent for uptime to our customers.

Due to the professionalism we have exhibited in managing these towers, more operators are requesting that we manage theirs. It is very difficult to manage towers in Nigeria, especially with the present level of public power supply.

To maintain them with the logistics is quite difficult. We have a NOC (Network Operating Centre) where we have invested over 10 million dollars to monitor our towers nationwide. So, we started with co-location which we have perfected and now have expanded into managed services. Operators whether small or large are going to benefit from our services.

Q: Do you have a model that will help operators perform better?

A: Absolutely, if I were operators, I will adopt what I call the Lean Operator Model (LOM). It says, as an operator; focus on your services, sales and distribution and branding of your product.

You can outsource ICT, customer care and network. So, if I were an operator, I would not spend my fund on building and managing passive network infrastructure. We have attained 30 per cent OPEX reduction. We are more efficient and OPEX reduction is critical in managing your business. Some operators can achieve over 70 per cent OPEX reduction by taking up the Lean operator model.

Q: Do you have the capacity to manage all operators in your care and how do you achieve this?

First, we have 1,500 towers of our own and another 1,000 we are managing for customers bringing the total portfolio for now to 2,500. We have our footprint nationwide. We have about 10 in regional offices with more 200 engineers in the field assigned to manage and maintain them. We can quickly expand our capacity to accommodate any operator.

If you have 500 towers in Abuja and a customer gives you extra 200 in the same city to manage, it is not a big deal. We have the capacity to do the business. We have all it takes.

Q: You have outlined what it takes to do business, is there any hope for small operators?

A: Nigeria is a very attractive market. It is going to grow, even more than what it has today. All I'm saying is that model has to change the landscape of telecom business in Nigeria. In Nigeria, the cost of services to the subscriber is very high, compared to other market. The model will reduce the cost of doing. It has happened in other markets and can happen here.

Q: You have remained in the front runner in this business, how has competition been?

A: We are the pioneer of this business in Nigeria. We will continue to pioneer the business in Nigeria and Africa. In my own opinion, the only key to success is focus. We are very focused in the businesses. We focus on our own core business. We don't want to compete with our customers.

Q: Is there any future for managed services business in Nigeria?

A: Managed Services business will be very large in Nigeria. It is outsourcing. That is outsourcing customer care and other services that can be managed by professional companies. But I think the same idea and concept will move to other industry. It is the way forward to reduce operating cost and improving quality. I think, managed Services providers can to manage towers in Nigeria effectively. We have prepared for that and will remain the dominant player.

Q: How do you maintain neutrality among operators you render services to on the same tower?

A: We provide service level agreement to all our customers, we manage all sites, we do not get involved in their businesses. All we do is to provide service their needs and do not allow third party into the equipment of the operators. We are independent, not allowing a particular operator to influence us.

Our objective is to provide services that different operators can share and by sharing, you have to give your best from collocation to managed services.

We intend to move into backhaul and by that we plan to make services more competitive, less costly for our customers. We put up infrastructure and services for everybody to share. It will be simple plug and play. A situation where you come to our sites plug into your equipment and starts transmitting and generating revenue immediately.

Q: How do you manage challenges from local state and federal government?

A: It is very challenging. However, we have a very solid team in place that handles our relationship with the agencies and communities. We work with all the agencies of the government to explain to educate them on what we do. And we make sure that we get the requisite permits

Q: How do you manage challenges from area boys on vandalization of infrastructures?

A: We work with host communities, help in development projects through our corporate social responsibility activities, employment etc. So, we will like to continuously work with them and do our best to provide quality services.

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