Telcos target fresh business opportunities in agric, power sectors

Major telecommunications companies in Nigeria, Africa’s largest economy by GDP, are planning to make an incursion into the agricultural and power sectors in search of fresh business opportunities, industry insiders have said. This is as the companies look to offset declining revenues from voice services driven essentially by regulatory and competitive pressures.

Mobile Network Operators (MNOs) have been working aggressively to build up alternative sources of revenue, as industry analysts say voice average revenue per user (ARPU) is expected to decline around $5 per month in the next five years, down from $6-$7 in April 2013 and $10 in 2008.

Data services are considered a critical driver of growth in Nigeria’s highly competitive telecoms sector, but as of mid-2013, the data internet market still remained relatively small, industry insiders say.

According to the World Cellular Information Service, which is operated by ITM, as at the end of 2012, around 10 percent of mobile subscribers in Nigeria used smartphones and tablets. Most of the major telecoms carriers in Lagos, Abuja, and Port Harcourt provide 3G (Third Generation) services, but network coverage is lacking in other parts of the country, and telecoms customers regularly complain about insufficient bandwidth capacity and low data speeds.

Mobile operators are, therefore, aware of the raft of business opportunities that the reforms in agriculture and power sectors would bring, with many of them already putting themselves in pole position to take advantage of it.

“In the agriculture sector, for instance, mobile operators are seeing increasing demand for wireless sensors and control networks to automate many farm tasks such as irrigation, grain drying, collection of information from rain gauges, soil moisture sensors, amongst others,” Kamar Abass, managing director, Ericsson Nigeria, told BusinessDay in Lagos recently, adding, “Many of the mobile operators in the country are making plans to tap these opportunities.”

The agricultural and power sectors have been accorded priority status by the Goodluck Jonathan administration, in light of their importance to the nation’s economic development. The Agricultural Transformation Action Plan (ATAP), a state-backed market-oriented reform effort, however, is in the early stages of implementation, but industry analysts are of the view that this move is expected to pave the way for the sector’s development in the future.

After the unbundling of the state-owned monopoly, Power Holding Company of Nigeria (PHCN), into 18 successor companies (six power generation companies, 11 distribution companies and a transmission company), the power sector reforms have begun in earnest.

The agricultural sector in the country has witnessed some level of transformation with the launch of an electronic wallet system which allows farmers to receive electronic vouchers for subsidised seeds and fertiliser directly onto their mobile phones. The system also enables them to pay for farming equipment from private sector agriculture dealers.

“In the power sector, mobile operators are keenly looking at providing smart metering solutions,” Abass said.

Industry insiders say smart metering completely solves the problems that result from power theft, inadequate planning, and measurement of units of distribution that are transmitted to consumers.

Local technology companies are also not being left out of the party as many are already taking advantage of immense business opportunities springing up in the agriculture and power sectors. James Agada, chief technology officer, Computer Warehouse Group plc (CWG), who made a presentation on the smart metering solution at the recent West Africa Power Industry Convention (WAPIC), said the solution was a unique proposition for Distribution Companies (DisCos), adding that it was suitable for the Nigerian environment where there is so much power theft as it serves as detector for any illegal connection.

“It is placed on top of poles and measures the level of power transmission from one location to another, the units that go out and come in, and this helps in proper planning for any environment,” he said.

He pointed out that metering and billing were the least-efficiently-executed tasks in the country’s power distribution sector, but added that they were the source of revenue for the DisCos. This, he said, had resulted to high aggregate technical and commercial losses estimated between 48-50 percent.

CitiServe, a member of Vigeo Group and a licensed Payment Terminal Service Provider (PTSP), has moved to extend its services to the power sector by creating door-to-door services for the payment of electricity bills, using its unique Orange Box Point of Sales (PoS) terminals. The technology company had played prominently in the cashless economy with the financial sector.

“Our role is to identify homes that need prepaid meters and to serve those with prepaid by enabling them to pay their electricity bills with the Orange Box PoS,” said Lola Ogunbambi, chief executive officer, CitiServe.

“Besides, the CitiServe Orange Box is configured to work with prepaid and conventional meters, since conventional meters will not be eradicated in the next two years because we have several of them in the country,” Ogunbambi said at a media parley in Lagos.

Giving vivid insight into some of the roles operators could play in the area of providing energy to underserved and un-served communities, the GSMA said mobile operators could leverage on their telecoms towers, which could act as the anchor load for energy systems, offering power for consumptive and productive use to surrounding communities via mini grid and energy hub models.

For instance, in Elmflhweni, South Africa, Vodacom has a live pilot whereby a base station, school, and water pump are powered using the infrastructure of a 14.4kW solar foil installation on the school’s rooftop. While still in a pilot phase, the model has dramatically reduced the ongoing operational costs for the mobile operator, while providing energy and water access to the community.

Ben Uzor Jr