ViRural’s “upside-down” MVNO will fill the rural gaps in Africa, starting with Nigeria
Everyone knows that there’s more voice and data business at the edge of the current coverage areas but no-one yet has either got the business model or the regulatory relationships right. ViRural is setting out to build 20,000 base stations in Nigeria to address just this need. Russell Southwood spoke to ViRural Group’s CEO Paul Talley about how they will do it.
Talley comes from a finance background and spotted the rural communications opportunity whilst working in Africa:”I was working helping Governments raise capital to build infrastructure. I was struck by the lack of connectivity outside urban areas. I thought this looks like an interesting opportunity: telecoms to serve rural areas.”
Unlike various previous attempts using low cost base stations (like the now-defunct Altobridge), ViRural has simply bought together existing components and software:”There really isn’t a technological advantage here. We’re simply taking existing components and putting them together.”
The niche it’s looking to fill is uncovered rural communities with 2000 or more people where there is also no electricity and its first target market is Nigeria. In to these communities – with the co-operation of the State Government and the local Chief - it will put on the ground a 40 foot shipping container with solar panels and either a satellite or microwave dish:”We want to do 20,000 sites in Nigeria.”
The container has on top of it a V-Node mast that is 15 metres high and has integrated with solar panels for power, a battery backup system for 72 hours of operation. Subject to terrain, this provides a 10 kms voice coverage area and a 3 kms data coverage area. In addition, there is also a Wi-Fi hotspot and a power charging point for mobile phones.
According to Talley, all this costs about half of the cost of a traditional, full-scale base station. It calculates that 30% of the 2,000 communities will become subscribers:”We’re talking ARPUs of US$3 from areas where there’s currently nothing.”
One end of the container houses all the equipment and a place for the on-site security guard who will also be responsible for selling scratch cards:”Our hope is that we can find an NGO who will put a computer access facility or a health clinic in the rest of the container, something useful to the community.”
So how’s the business model going to work?:”In Nigeria, our business model is a wholesale network model, an “upside-down MVNO”. All infrastructure and no subscribers. We want to build the infrastructure and strike revenue-sharing deals with the operators”.
It is in the process of striking a deal with one of the big 5 mobile operators in Nigeria but is looking forward to the day when it can service others. Currently active infrastructure sharing is not licensed in Nigeria as the regulator has been keen on promoting the growth of tower sharing.
But the next level of this kind of shared infrastructure growth could be in providing active infrastructure in rural areas to operators:”As soon as the services ban is lifted, we can open up the network to other operators.”
From the operator perspective, it offers the opportunity of additional customers and coverage without the CAPEX and disproportionate marginal costs of OPEX in these kinds of markets. Most operators in Nigeria feel that they have reached the edges of their addressable markets and that extending further offers diminishing returns:”Network operators have their hands full at the moment just covering their existing markets.”
ViRural plans to start roll-out to demonstrate how the model works in the not-too-distant future…so watch this space.
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