MTN Nigeria is leading the delivery of a bold new digital world- Ikpoki

Micheal Ikpoki, the Chief Executive Officer of MTN Nigeria in an exclusive interview with Rita Ohai speaks on the reforms required to drive economic growth and the new expansion phase for his  organization. 

It’s been one year since your transition from being the Chief Executive Officer at MTN Ghana which has one of the strongest economies in the sub-Saharan region to becoming the Chief Executive Officer at MTN Nigeria, in this space of time what differences have you observed in the dynamics of our economic policy reforms and what developmental lessons can we learn from our African counterparts?

I think as far as the dynamic of our economic policies are concerned, we are finally facing up to the reality of the fact that we need to diversify our economy.

What has happened with the oil price in the last few weeks challenges our competitiveness as a country and it throws up the issues of dynamism in today’s global market place. It also shows that whether you are a company, individual or country, you have to look for new revenue streams. There have been a lot of policy statements about how we need to promote our economy and we have made some progress in agriculture but clearly we need to focus a lot more and be more aggressive in that regard.

Another thing that is also significant from an economic point of view is the ‘economic structure’. When we did the Gross Domestic Product (GDP) rebasing, where we now see Nigeria as the largest economy in Africa, we noticed a significant mix of contributions – you now see services contributing 52 percent to the GDP (up from 26 percent).

It throws up a new dynamic in terms of the opportunities that are boundless in this country and we are really looking at how we, as a Telco, can play a more critical role in supporting growth in all those areas.

The nation’s foreign reserves have been depleted, funds in the Excess Crude Account have been fritted away [from $39 billion in 2008 to a current capacity of $3.1 billion] and the local currency is struggling against the dollar at a value of N168 to $1 due to bottoming oil prices. What, in your opinion as a national leader, are some of the primary channels via which government can derive alternative sources of revenue without raising tax margins or adversely clamping down on the private sector?

This is a very good question. I think it boils down to being clear about which are the growth sectors of the economy because at the end of the day government’s responsibility is to provide an enabling platform.

The first thing would be to, in my view, promote a lot more investments. You really cannot have taxes if you do not have investments. If the private sector, as the engine of growth, continues to invest in the economy, then the multiplier effect of that will then translate into jobs, wealth and more taxes to government as a natural consequence of that.

There have been a lot of discussions around incentives and I think incentives need to be caveated at the areas that will give the best returns for the country. The role of government in supporting the private sector is perhaps a lot more critical now than ever before and we need to be clear about making sure the right policies are put in place to make sure we can get more value.

It is important that we also put the context that we in the private sector are key stakeholders in the economy because its performance directly affects our businesses.

Look at our telecoms sector; we have achieved a lot in terms of milestones. We have almost 100 percent voice penetration with 120 million people, yet our broadband penetration is less than 10 percent but we are going into a new growth phase and if we are going to unlock the value in this economy we need to invest more but with the right policy support.

Recapping the first 13 years of operations as MTN Nigeria, what are some of the key achievements you have recorded as an organization?

In 2001 when MTN came into the Nigerian market, it became clear to us that we needed to build our own backbone. At the time, NITEL was expected to do that but that did not happen.

What has happened for me that has been quite significant is that we are have actually built three networks. We built our core voice network, the national transmission and backbone and we have a national power grid because we literally have to power our own infrastructure.

So technically, MTN runs like a country on its own…

Yes and for me that is quite significant because at the time we were coming in, this was quite new so the challenges of managing all of that while growing our subscriber base to where we are today is a great achievement.

Just to give you some context, in 2013, MTN spent N34 billion on diesel. N34 billion is equivalent to 5,200 base stations and as at the time, we had a little over 11,000 base stations. So the cost of diesel in one year is equivalent to a 50 percent cost of the network over a 13 year period.

As I speak to you we have only 17 percent of our sites connected to power. I think it is important that we understand the magnitude of what we have to deal with. For us in MTN, that is perhaps the biggest challenge for us today and all of us in Nigeria think that just getting the power sector reforms right would be a huge boost to this economy.

Your company, MTN Nigeria contributes about 5 percent of the nation’s GDP, as the leader of an organization with about 5000 employees in an emerging market where the lifespan of most businesses is 5 years, what strategies have you applied in driving your team to attain higher results such as the double-digit revenue growth of 21.5 percent – last valued at over N400 billion in Q2 of 2014 alone?

Our contribution to the GDP is very humbling and I would like to use this opportunity to thank all our customers – a network is nothing without its customers. The confidence we have in all the customers that remain on the MTN network is something that we are grateful for and take extremely seriously.

Recently, we attended the event of the top 100 businesses in Abuja – MTN was number 6 after the oil and gas production companies and the Minister of Trade and Industry made a very strong statement about the fact that these companies are creating jobs, wealth, supporting the next round of businesses to grow and contributing to the growth of the economy. At MTN is something that we take very seriously.

If you look at the issues around job creation, even though we probably are close to 5000 as a workforce, the ecosystem that supports us, like the retailers, are close to 1 million because they enable us sell our products and services. We have companies that are our equipment suppliers like Ericson, Huawei, Alcatel, Lucent and others that have spawn off local strong businesses as sub-contractors.

For us, it is a reawakening to the fact that what we do at MTN is very critical to the economy. Another thing that we think is even more important is what we call the digital economy. The fact is that today, the ICT sector is calculated to be doing about 9 percent to the GDP – this is an output measure. But if you think about it, the new digital economy is using technology to support growth. For example, look at what is happening in e-commerce today with the likes of Jumia. You are able to buy products and services at the touch of a button with convenience and ease.

We provide the basic infrastructure for that whole digital economy. The underlying power of ICT is so critical to the future of our economy because it is what is going to support efficiency, productivity and innovation. That is the kind of picture we see and that is why we say our vision is to lead the delivery of a bold new world.

The Nigerian Stock Market has had a positive run this year and there has been a growing call for Telco’s like MTN to enlist on the stock exchange in a bid stem capital flight and encourage the  active participation of indigenous consumers in the company’s wealth creation process. What are your views about this?

We have had some fairly good discussions with the Nigerian Stock Exchange. I understand the need to deepen the capital market but I think there could be different ways by which you can achieve that.

Today, one of the key issues is that we have foreign portfolio investors contributing at least 55 to 60 percent of investments in the market and I think we could do a lot more work in that area but I suffice to say that we are having some discussions with the stock market. Those views have been conveyed to us and we will let you know as things progress.

With the constant call for the value-maximization of gas for electricity generation especially since national hydro and solar projects which were designed to provide alternative sources of energy are slow in reaching their completion stages, what structural modifications do you expect the government to make so as to plug this financial sinkhole and reduce your organizational cost of production?

My understandings of the issues in the electricity sector are three-fold. One is about the pricing of gas, the second is about the robust transmission so that they can evacuate power and third is the issue of collections.

At the end of the day, what is important for me, is that we have reliable and cost effective power. 60 percent of our outages are power related because 83 percent of our sites are not even connected and of course, the supply is epileptic. The sheer logistics of having to manage diesel delivery – getting it at the right quality, cost and time – is a significant support for us to be able to deliver good service.