Nigeria is reputed to be a difficult place to do business, especially if your business is the type that requires constant power supply. It’s even more cumbersome if other businesses depend on your business to thrive. When your business is an enabler of other businesses, you are encumbered with more pressure and responsibility.
You must grind out success for others to succeed. That’s the dilemma of Leo Stan Ekeh over three decades ago when he returned from the United Kingdom to birth an information communications technology (ICT) start-up. And he chose the complex computer ecosystem, then thought to be out of the ken of knowledge for Africa and Africans.
Against odds, he has made a success of it, etching his name on the boulder of history.
Today, February 22, as he marks his 65th birthday, it’s apposite to peek into the life odyssey of the man who easily typifies the true Nigerian spirit of courage and productivity even in the face of crippling headwinds. Needless to say that no comet heralded his birth but his life has been a herald of hope for humanity and the nation. And if every victory has a scar, as it’s often said, then Leo Stan bears many scars, seen and unseen.
He has fought many battles chief of which is the battle against ignorance. The Imo State-born computer magnate is reputed to be behind the computerisation of many Nigerian secondary schools, higher institutions and corporates. He has spent more than half of his life working to change the orientation of Nigeria and Nigerians from analogue to digital.
This has seen him at the cutting edge of pioneering several tech-based initiatives, and growing a small computer type-setting office operating from a rather obscure office in Alausa, Lagos into a conglomerate with interests in ICT, property, banking, e-commerce, oil, among others.
Gifted with unrelenting entrepreneurial spunk, he has since grown his yesterday’s start-up from its initial one-office space in Lagos to a multinational with offices in Africa, Europe and Asia.
So, who’s Leo Stan? He’s the one his close associates call the pioneer-in-chief. He pioneered desktop publishing in Nigeria. It’s akin to setting the captives free. He changed the entire Nigerian publishing landscape from its slow and dodgy analogue routine to a smart, clean digital patch. Newspapers, advertising agencies and printing houses were the early birds to embrace what was then seen as the magic box, the computer.
At a time Nigerian media houses felt very comfortable with their typewriters and compugraphic machines, it took Leo Stan to disrupt the system. He pushed aside their burly compugraphic machines and placed in their hands the then rave of the moment, Apple computers.
He’s the one who for the first time introduced WiMAX (Worldwide Interoperability for Microwave Access) to Nigeria, planting the first hub in Yobe State in 2007, and exposing the state to a brave new world of opportunities and skill in cyberspace. He pioneered the deployment of digital dispensing pumps at Nigerian filling stations, a business born out of circumstance than anything else.
Before he partnered with then Elf oil (now Total Plc) to upscale fuel dispensing with digital dispensers, he had fallen victim to a notorious scam among petrol station attendants who cashed in on the unintelligent analogue fuel pumps to cheat on motorists. Leo Stan was fleeced at a filling station in Ikeja, Lagos. It was that incident that opened his eyes to the business opportunity unnoticed by many at the filling stations. He’s the archetypal street-smart opportunistic investor.
Again, who’s he? He’s the undisputed pioneer of e-Commerce in Nigeria when he launched BuyRightAfrica.com in 2012. Aside being the forerunner of all the e-commerce ventures in Nigeria, BuyRightAfrica, though suffered a temporary death, was later resurrected by his son, Prince Nnamdi Ekeh, first as Yudala and now Konga.
He’s the man who, having made a success of automating corporate Nigeria with exotic computer brands, decided to create his own brand, a Nigerian computer identity. He made good his ambition when he launched the Zinox range in 2001 during President Olusegun Obasanjo tenure. Zinox was not just an expression of patriotism and ambition, it was a carefully created brand and the first indigenous computer to earn both Intel and Microsoft certification.
It came bundled with inbuilt power surge protector, taking cognisance of Nigeria’s epileptic power supply prone to surges and brownouts. Plus, it has a naira sign cleverly engrafted as part of the Q-w-e-r-t-y keyboard. This gave Zinox a shoulder-high advantage over other exotic brands to the delight of President Obasanjo who had to issue a directive to ministries, departments and agencies (MDAs) to standardise their tech operations on Zinox and other indigenous brands most of which were swamped in the marketplace by foreign brands until Zinox burst into the stage. Today, the Zinox brand has not only made inroad into Nigerian offices, it has been deployed to host major international conferences and events including the 7th Ordinary Session of the Assembly of the Africa Union (AU) from July 2 to 5, 2006 in Banjul, The Gambia. The list is long.
Leo Stan is the patriot who made game-changing interventions during Nigeria’s 2007 and 2011 general elections. He leveraged on the strength and international partnerships of Zinox to salvage Nigeria’s voter registration exercise by delivering 11,500 DDC (Direct Data Capture) machines in 14 days for the 2007 polls. That marked an epochal introduction of technology into the nation’s electoral process and ended the duplicity that hallmarked the voter register in the past.
He repeated the same feat in 2011 when he delivered 80,000 fully integrated units of DDC machines within 35 days ahead of two foreign companies just in time for the conduct of the general elections of that year much to the relief of then INEC chairman, Professor Attahiru Jega.
Though a successful entrepreneur, but he’s quick to tell you he’s not mindful of the balance sheet, but is concerned more by the value he adds to humanity. He tells you he’s not driven by profit but by empathy for mankind and it shows in the manner he strives to wipe away tears from those who weep and give food to the hungry. A very silent philanthropist, he has built a collateral of integrity over the years which has earned him respect from global players in the ICT agora.
For his ceaseless efforts to help in building a better Nigeria not just by creating jobs but by creating the milieu and technology that make it possible for Nigerians, especially the youths, to claw their way into the complex computer technology marketplace where they have brought honour to the country, Leo Stan has been rewarded with a couple of national medals.
President Muhammadu Buhari in 2019 honoured him alongside Aliko Dangote and others with the National Productivity Order of Merit (NPOM) award. President Obasanjo also on October 1st 2001 named him ‘Icon of Hope,’ a symbolic emblem that speaks to his birthing of a new threshold of hope for the nation and her teeming youths.
All this in addition to the Order of the Federal Republic (OFR) national honour, Microsoft Global Adviser, dozens of national and international awards and several honorary doctorate degrees (Honoris Causa) from Nigerian universities.
On the occasion of his 65th birthday, let’s toast to an entrepreneur, patriot, statesman, nationalist and passionate believer in the Nigeria project. Happy birthday to a man whose values are propped up on the ramparts of integrity, fairness, justice and love for all without discrimination.
MTN Nigeria Records N1.3trn Revenue, 76.5m Subscribers
Today, MTN Nigeria Communications Plc (MTN Nigeria) announced its audited results for the financial year ended 31 December 2020, reporting service revenue increase by 14.7 per cent to N1.3 trillion.
It reported strong operational execution and resilience in its business by connecting 12.2 million new customers, bringing total subscriptions to 76.5 million.
Outgoing chief executive officer, MTN Nigeria, Ferdi Moolman speaking on the financial results said, 2020 was a challenging year for all. The unprecedented disruption that the COVID-19 pandemic caused the businesses and people we serve, challenged us in new and demanding ways.
The impact continues to evolve. Adoption of our data and digital services accelerated as lockdowns and gathering restrictions were imposed, and work-from-home became the norm for many.
He said active data users increased by 7.4 million to 32.6 million, supported by growth in gross connections and the expansion of our 4G network. Our mobile money (MoMo) business also continued to accelerate with a 269.2% increase in the number of registered agents to over 395,000 and 4.7 million active subscribers from approximately 553,000 in 2019.
Service revenue grew by 14.7%, in line with our medium-term targets, driven mainly by voice and data revenue. Voice revenue growth was 5.9%, and although this was subdued in Q2 due to COVID-19 induced restrictions, we saw a pickup in momentum into H2. Data revenue rose by 51.2%, with increased data usage and traffic.
“To accommodate this and enhance service quality, we focused on capacity upgrades and 4G population coverage, while expanding our investments in rural connectivity. Our 4G network now covers 60.1% of the population, up from 43.8% in 2019.
EBITDA rose by 9.7%, supported by service revenue growth. However, the EBITDA margin declined by 2.5pp to 50.9%. This was mainly due to increased operating expenses, arising from the rollout of new sites and the impact of Naira depreciation, affecting in particular the costs of our lease contracts. Despite the increase in costs, we recorded an improvement in our bottom-line earnings, with profit before tax (PBT) and profit after tax (PAT) increasing by 2.6% and 0.9% respectively.
“In line with our dividend policy, the board has proposed a final dividend of N5.90 kobo per share to be paid out of distributable net income. This brings the total dividend for the year to N9.40 kobo per share, representing an increase of 18.7%.
“I thank the Board, Management, and staff of MTN Nigeria for the support given to me and the opportunity to serve in Nigeria as I complete my tenure as CEO of MTN Nigeria and assume a new role as MTN Group Chief Risk Officer. Effective 1 March 2021, Karl Toriola will take over as the CEO. I wish Karl and his new team the very best.”
Moolman said,“Our thoughts and prayers are with those who have lost loved ones due to the pandemic; the toll on lives and livelihoods globally has been profound. To date, Nigeria has recorded 155,417 confirmed COVID-19 cases and 1,905 related deaths, according to the Nigeria Centre for Disease Control (NCDC). MTN Nigeria has also been directly impacted by the pandemic, with 62 employees diagnosed with COVID-19 and 46 recoveries. Sadly, one of our employees succumbed to the virus.
Our employees adapted quickly to working remotely to ensure that our customers remained connected. I am incredibly proud that we were able to meet the challenges faced in 2020, by pulling together, working closely with the government and our regulators, and understanding our customers’ evolving needs.
“As we navigated the fallout of the pandemic, adapting our processes and structures to the new realities, we acted swiftly to support the national response in a holistic way. This was encapsulated in our Y’ello Hope initiatives through which we provided support to our broad base of stakeholders to the value of approximately N25 billion.
“We provided free-to-access services (including SMS and data) to the most vulnerable, supported the acquisition of essential medical supplies (tests and personal protective equipment), and joined the Coalition Against COVID-19 (CACOVID) that drove multiple initiatives, including building isolation centres across the country.
“We also paid our taxes early in support of government’s ongoing efforts. In January 2021, MTN Group partnered with the African Union contributing US$25 million to their COVID-19 vaccination programme. MTN Nigeria is pleased to play its part in this initiative, through which Nigeria will receive 1.4 million vaccine doses for the benefit of health workers.
“In addition, we committed marketing resources to our #WearItForMe campaign to help create awareness around wearing masks, and our REVV support programme for Micro, Small and Medium Enterprises (MSME) helped them navigate the new digital reality.
We made considerable progress in growing the base for our business, connecting 12.2 million new subscribers to access communication services. The growth in our subscriber base provided support for voice revenue, which accounted for 67.1% of service revenue and rose by 5.9%, with an acceleration in growth to 8.9% YoY in H2. This was enabled by our expanded customer acquisition touchpoints, rural telephony initiatives and revamped acquisition offers. The suspension of new SIM registration in mid-December did not have a significant impact on voice revenue as we saw an increased level of activity from the existing base.
Data revenue maintained the positive momentum from Q2, prompted by the COVID-19 lockdowns, rising by 51.2%. The performance in data was led by a combination of increased subscribers, usage (MB per user) and ultimately traffic, supported by increased network capacity and 4G penetration. Data traffic rose by 126.5% and average usage by 64.0%. We added approximately 8.2 million new smartphones to the network, bringing smartphone penetration to 45.9% of our base, up from 41.9% in 2019.
Fintech revenue rose by 27.3%, boosted by MTN Xtratime, our airtime lending service. We expanded our MoMo agent network with the addition of over 280,000 registered agents during the year. This was achieved as we continued to convert our traditional airtime agents in line with our one distribution model. Our fintech subscribers increased by more than eight times to 4.7 million, driving higher transaction volumes of over 51.5 million during the year and core fintech revenue growth of 28.0%.
The uptake of our digital business continued to gain traction with the revamp of our products and services, improved customer journey and increase in active user base. As a result, digital revenue recorded growth of 107.2%, entrenching the pleasing structural turnaround in the business. In H1, we redefined how we account for the active user base to capture unique paid subscriptions, and we have seen this number grow by 75% to 2.8 million from 1.6 million in H1. This was driven mainly by subscriptions for ayoba, our instant messaging platform, which rose by 120.9% to 1.4 million.
Enterprise revenue increased by 1.5%, supported by growth in revenue from devices and fixed connectivity. The economic impact of the COVID-19 lockdown, particularly in Q2, led to a decline in the uptake of our products and services by the businesses we support. We are, however, encouraged by the recovery that occurred in H2 as restrictions eased and economic activity began to improve. We anticipate further uplift in enterprise revenue once the USSD pricing dispute is resolved and we recover outstanding fees from the banks. Our enterprise business includes revenue from mobile and fixed connectivity, cloud and ICT solutions, and devices. It cuts across voice, data and digital services for SMEs, the public sector and large enterprise customers.
Capital expenditure (capex) in the year was N298.6 billion, up 19.4%. Excluding right of use assets, capex was up 15.2% to N240.1 billion. We accelerated site rollout in H2 following a slowdown in H1 due to foreign exchange paucity and port congestion. As a result and in line with our guidance, we were able to increase our 4G population coverage to 60.1% with the delivery of 5,724 sites during the year, of which 74% are 4G sites.
We expanded the scope of our service agreement with IHS Holding Limited (IHS) and amended the currency conversion provision for tower services in view of the long-term benefits. This led to the movement of the reference rate for conversion to Naira, from the CBN’s official rate to the NAFEX rate. We reviewed the treatment of non-recoverable VAT on lease payments to account for it as an expense over the lease period. These, together with the effects of Naira depreciation, put upward pressure on lease rental costs in the period. In addition to these, the combined effect of the 2.5pp increase in value-added tax (VAT) and COVID-19-related costs led to a 27.2% increase in operating expenses with a knock-on effect on EBITDA margin.
EBITDA rose by 9.7% and the EBITDA margin was 50.9%. We delivered a healthy free cash flow of N387.1 billion, up 3.2%. Depreciation and amortisation rose by 11.7% because of exchange rate and VAT impacts, while net finance cost rose by 25.4% arising from higher borrowings and lower yields earned on our investments in government securities. As a result, we recorded a PBT growth of 2.6%. In H1, we issued a N100 billion commercial paper, which was oversubscribed, at a blended rate of 5.7% per annum. This allowed us to broaden our sources of funding and lower our overall cost of funding, which reduced by 3.3pp in 2020.
PAT and EPS each rose by 0.9%, reflecting an increase in taxation mainly due to lower investment allowance and exempt income.
COVID-19 and the impact on the business
The pandemic caused unprecedented disruption to businesses and impacted lives and livelihoods. Although the operating environment remains challenging, the easing of lockdown restrictions led to an improvement in economic activity and market conditions into H2. Our response to the pandemic and its impact can be categorised into four broad areas, namely social, commercial, network and supply chain as well as funding and liquidity considerations.
In terms of the social impact, we launched various initiatives to provide support for our people, customers and the various levels of government as part of our Y’ello Hope packages. We empowered our people to work remotely and implemented health measures and monitoring to ensure their safety and business continuity. We continue to provide welfare support to them through the MTN Global Staff Emergency Fund.
Our customers, particularly lower-income earners, benefitted from the free SMS initiative introduced in Q2. This provided customers with 300 free text messages for three months to ensure that they remained in touch with friends and family. Over 4.3 billion text messages were sent by more than 75% of our subscribers. We zero-rated access to a range of health and education sites, enabling our customers to access vital information at no cost to them. Fees for local money transfers via the MoMo Agent Network were waived for a month, during the lockdown, to support our customers.
We rolled out a number of interventions to support the thousands of small businesses that rely on us for connectivity. These included the relaxation of payment terms at the beginning of the crisis as well as designing and delivering the multi-faceted REVV programme. These initiatives were aimed at supporting MSMEs amid the economic disruptions resulting from the COVID-19 pandemic. Over 20,000 MSMEs registered for our masterclass sessions and we provided support for the 200 MSMEs (Y’ello 200) that emerged from the programme, helping them to adapt to a digital marketplace.
To support government’s efforts at combatting the pandemic, we donated N1 billion to CACOVID and delivered N250 million worth of personal protective equipment (PPE) to the Nigeria Centre for Disease Control (NCDC), through the MTN Nigeria Foundation. This is in addition to the logistical and communications support provided to the Nigerian Governors Forum, NCDC and State Governments. We made an early payment of our taxes ahead of established deadlines to support the Federal Inland Revenue Services’ (FIRS) revenue acceleration efforts.
From a commercial perspective, we saw encouraging trends in our traffic patterns as COVID-19 restrictions eased. Demand for voice services, which initially came under pressure in April 2020, has fully recovered and voice traffic reached new highs by Q4. Demand for data and digital services grew significantly as lockdowns were imposed and remained resilient at elevated levels due to shifts in consumer spending patterns. There was also an increased uptake of our fintech services with transaction volume in April 2020 rising by more than three times above the March 2020 level to 4.3 million, and the momentum has continued to increase.
In terms of network and supply chain, our immediate response when COVID-19 restrictions kicked in was to enhance network capacity to maintain service quality following an unprecedented surge in data traffic. We were only able to rollout a limited number of sites in Q2 due to the constraints on movement, paucity of foreign exchange and port congestion. However, we accelerated site rollouts in H2 as restrictions and logistical bottlenecks eased. As a result, we achieved a 60% 4G population coverage in 2020, which is in line with our target.
Our funding and liquidity remain well-managed, supported by strong cash flows and approved funding facilities. Our headroom to leverage is comfortably within banking covenants and is able to meet our operational, investment and financial requirements. The foreign currency exposure of our borrowings is within comfortable limits, with 94% of our debt in local currency, which positions our balance sheet well to withstand currency volatility. We plan to use the bond market to further diversify our funding sources and optimise funding costs, while mitigating exposure to market risks.
Update on new SIM registration directive
On 9 December 2020, the Nigerian Communications Commission (NCC) suspended the sale and activation of new SIMs, and on 15 December 2020 directed all operators to update SIM registration records with valid NINs with an initial deadline of 30 December 2020. While suspension of new subscriber acquisition continues, the deadline for NIN update has been extended to 6 April 2021 to accommodate logistical challenges.
We are collaborating with the NCC and National Identity Management Commission (NIMC) to ensure our subscriber records are updated, and we have made significant progress in this regard. To date, over 37.2 million subscribers have submitted their NINs, representing 48.7% of our subscriber base. We are working with NIMC to complete bulk verification of the NINs collected. This requires improved integration with the NIMC database, the development of which has reached an advanced stage.
To support the Federal Government’s effort to ensure that every Nigerian has a valid NIN, we have been granted a NIN enrolment licence and have commenced enrolment in 36 centres across the country. We are also working with NIMC and the Ministry of Communications and Digital Economy to expand our enrolment centres and provide an access point for as many Nigerian as possible. To this end, we have acquired over 15,000 enrolment devices, which are being configured for this purpose, and placed orders for additional ones.
The impact on service revenue of the new SIM activation suspension was minimal in Q4 2020, though, we anticipate that subscriber growth will be significantly impacted in Q1 2021 should it remain in place. In the near-term, we expect the service revenue impact of the suspension to be moderate as usage is primarily driven by active SIMs in our base.
The operating environment remains challenging and uncertain due to the effects of the pandemic. We remain focused on the safety and wellbeing of our staff, customers and broader stakeholders, as well as mitigating supply chain challenges, while safeguarding our financial and liquidity position. While we continue to manage the attendant risks and support our stakeholders, however, we are also well placed to unlock the opportunities that have risen in the areas of financial inclusion along with the rising demand for connectivity and digitalisation. We continue to refine our strategy to make our operating model future-fit to adapt to a dynamic world for sustainable growth.
In view of the new directive on SIM registration, our immediate priority is to protect our base by collaborating with NIMC to drive NIN enrolment and ensure that our customers’ records are updated with NINs.
We remain focused on our MoMo business given the important role it plays in driving financial inclusion in the country. We continue to engage with the CBN regarding obtaining a Payment Service Bank (PSB) licence, which would help to accelerate this ambition of broadening financial participation and inclusion. In the meantime, we will continue to expand the agent network through our one distribution model, broaden our service offerings and drive the overall contribution of our core fintech business to service revenue.
We will fast track 4G sites rollout to further increase population coverage, while continuing to expand rural coverage. Although the availability of foreign exchange remains a constraint, we strive to minimise its impact on the business. We will sustain our drive for cost management across the business and strengthen our operations and financial position to unlock efficiency and support margins.
Africa, Middle Est PC Shipment Rise 7.9% In Q4
The Middle East and Africa (MEA) personal computing devices (PCD) market, which is made up of desktops, notebooks, workstations, and tablets, recorded strong growth in the final quarter of 2020, according to the latest industry analysis conducted by International Data Corporation (IDC).
The global technology research and consulting firm’s newly updated Worldwide Quarterly PCD Tracker shows that shipments across the region were up 7.9% year on year to 6 million units, making Q4 2020 one of the best-performing quarters of the last few years.
Fouad Charakla, IDC’s senior research manager for client devices in the Middle East, Turkey, and Africa said, “Demand for personal computing devices remained strong across the MEA region, with end users still requiring these devices to work remotely or study from home.
“Turkey, which is by far the region’s largest single PCD market, experienced the biggest growth year on year, almost doubling in shipments. The market’s recovery from the slowdown in consumer demand seen in Q4 2019 was the primary driver of this growth in Turkey. A massive education deal totaling more than 150,000 tablets was also delivered into the country, which further accelerated the market’s growth.
“Each of the region’s other large markets, including Saudi Arabia, South Africa, and the UAE, all experienced year-on-year growth as well, with strong demand witnessed in both the commercial and consumer segments. On the flip side, sharp declines were recorded in Egypt and Kenya, primarily because these markets had witnessed massive education deals in Q4 2019 that were not repeated in Q4 2020.”
In the PC segment, Lenovo posted strong year-on-year growth, pushing it to the top of the MEA PC market for the first time ever. At the same time, HP experienced a sharp decline, coming in second. Dell remained almost flat year on year to remain in third place
Google Launches Second Google News Initiative In Africa, Middle East And Turkey
Google today announced the second Google News Initiative Innovation Challenge in Africa, the Middle East and Turkey with an open call for projects that increase reader engagement and explore new business models for media.
Innovation Challenges – How to apply – Google News InitiativeHelp journalism thrive in digital. Apply for funds from the Google News Initiative Innovation Challenge.
The first GNI Innovation Challenge saw 21 projects in 13 countries receive funding last year. Awardees were from Côte d’Ivoire, Ghana, Iraq, Israel, Jordan, Kenya, Lebanon, Morocco, Nigeria, Rwanda, South Africa, Turkey, and the UAE.
In South Africa, Daily Maverick developed a “relevancy engine” for small and medium publishers to help them aggregate better reader insights to increase relevancy and increase subscriptions. Ringier Africa Digital Publishing in Nigeria was awarded funding to increase personalisation across its platform using a blend of prediction, recommendation and local information pages to increase user engagement. Kenyan awardee Africa Uncensored is aggregating news from members of the public to produce at scale.
Applications open today and run until 12 April 2021. Established publishers, online-only players, news startups, publisher consortia and local industry associations are eligible to apply.
“The selected projects will be funded up to $150 000, and up to 70 percent of the total project cost,” says Ludovic Blecher, head of innovation, GNI. “Funding is not available for editorial projects, but should instead be focused on reader engagement and exploring new business models. Google does not take any equity or IP in any projects or submissions. We are looking forward to seeing new ideas, projects and big bets come out of the Middle East, Turkey and Africa, a region rich with talent, potential and opportunity!”
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