Eran Westman is the EVP Worldwide Sales, Ceragon. He has been with the company for 12 years and has done several cell zones in Europe, Middle East and Africa. He was in Nigeria and spoke to ken nwogbo on industry issues.

Declining ARPR in Nigeria
ARPU is going down everywhere, the perfect ARPU in the world is in India and India is our biggest market as a company. Largely 30 percent of our business is done in India, in a very competitive environment.
The two growth engines for Ceragon throughout the years have been more coverage, meaning the customer needs to cover new areas, new territories, then we need a lot of microwave. People require more capacity to deliver to their growing subscribers, mainly by the smartphone in the use of data, things like iphone or the 3G dongle that uses twice the number of data. These are forcing operators to put higher capacity radios such as IP radios, with which they can serve the customer better. As you can see all over the world, the networks are choked. When AT & T launched its iphone, its network collapsed because people were surfing, downloading, streaming without enough capacity on the network. You need to have the network to support the iphone. This is the reason, why I am optimistic because the first trend is not over, meaning we can cover more geographical areas for customers and on the other side, the people here have not caught up with smartphones but I am sure the time would come. People in Nigeria like phones and you can see that everybody has two or more phones. Soon, it will be those of smartphones because they are more affordable and the network would be able to support it. I am sure some of the operators are not offering smartphone services because their networks are not catered to support this. We believe this will come, penetration on the cellular here is high but there is still room for growth. Part of the growth is covering smaller towns and cities and for this to happen, you need more transmission and microwave is one of the main means of transmission in Nigeria. Again, in major cities, operators would like to serve their subscribers with higher capacities or higher data demanding vices. Smartphones and 3G dongles will force operators to upgrade their networks or upgrade their transmission networks to support these requirements. Let us not forget also some of the Wimax networks that are going to be launched here and those of the backhaul, full IP, native IP, POIP to support those kinds of Wimax networks with some nice deployment around the world and we think we can do it here as well.

Preparedness to Compete in the Nigerian Market 
Competition is great because if there is no competition, there is no market. We compete with competitors in every country where we are present and in those that we are very successful. One of the many advantages of Ceragon is that we control the complete design and intellectual properties of our products. Unlike some of our competitors who buy systems and use third party equipment to get the system running, we control the complete design, the complete know-how of the equipment; therefore, we are able to optimize it with the feature and with the cost. The products on the stable of Ceragon today come with very low cost and we are not ashamed to compete by dwelling aggressively on price and for the fact that we have very feature rich products, especially when operators here will look at the feature they need to support 3G requirements, for higher demand of data and definitely for Wimax arrival. Competition is here, it is very strong and well established; we have to be aggressive as we did in other countries of the world and come up with our product feature set and be aggressive on the commercial side.

Plans to make Nigeria the African hub?
I believe personally that Nigeria can be the hub in Africa, similar to what India is for Asia. The major part of our business in Asia goes to India, so the major part of our business in Africa should go to Nigeria, therefore we will also put in the right investment and the right focus because there are many countries in Africa and you can get lost. The main focus we are going to have in Africa is Nigeria. Ceragon’s strategy is for every focus country in which we decide to establish a subsidiary, in which we decide to work locally to create a full fledged subsidiary with full capability and that is fully self sufficient to support the requirements in that country. Two feet on the ground, no one foot in London, Cairo or New York. The same description we have in any country that we operate with local force, be it whatever country that we have our subsidiaries, those companies are capable to sell, to support and to implement. The company’s focus today is on turnkey project, majority of our business is turnkey projects for cellular operators, this is our bread  and butter and this is what we know how  to do best and that is what we are going to implement in Nigeria. We do not believe in two legs split between two locations. With relevant resources that we need to support carrying out business, short term, mid term and long term, this is what we would like to grow. We have some investments and hopefully sooner than later, this will grow to support activities in the country. We believe in the people, in the country; it is expensive, inefficient and very clumsy in a way to support activities in a country like Nigeria from outside. Of course, all the companies work together and we need experts on certain issues, we have to bring them from where they are but the core competence on running the business should be here because the people understand the mentality, the culture and how things are done in Nigeria so the best is to count on the people here.

Is Nigeria Nearing the Broadband Banquet?
I believe that the situation in Africa is general, it is not peculiar to Nigeria. People almost do not own access to broadband here. I live in New York and you can get access to broadband everywhere, either by DSL, by 4G, Wimax or by your cable modem provided by the cable provider. This is not the case here so people are thirsty; the people here do not like the internet less than other people, they just do not have the access. So I think it is a great thing that these capacity enable or broadband enable devices have been in the submarine like the Glo 1 coming in. This will give stable internet and increase speed and I think the people deserve more. More capacity gives more opportunity and the operator will have more to sell to their customers.

Advertisement

Capability to Spread fibre across Nigeria
I guess that part of the way of reaching the people in this business is either through microwave or wireless solution because unlike other countries in the world that are doing fibre today, they all combine fibre to cable and to the business path, this will not be feasible here. It is a great opportunity for microwave as it can carry data and voice very smoothly and Ceragon is capable of giving you native TBN, native IP and a combination of both. I believe that broadband availability would be a big driver for microwave growth in Nigeria.
Comparing Regulation of the Nigerian Telecom industry with others
I believe there are lots of operators here, I am not an expert here but I guess some consolidation should take place. I have seen that the regulator enable other technologies like Wimax, which is very good for the people in Nigeria because unlike other countries, wireless is probably one of the means that can bring broadband to homes and offices. In that respect, I think the regulator is doing a very good job by allowing more technical solutions in the market. The number of cellular operators altogether is big and this has given them the opportunity to cover a big country like Nigeria. Moving forward is a challenge for them because the low ARPU and the competition is very aggressive. The coming of Bharti, a very successful operator will stiffen the competition because we have been leasing equipment to them for many years and I’m sure they will be very aggressive here, knowing them from other places and this might change the rule of the game here. I think there is still room for the growth of cellular as well as other technologies so I think the regulator is doing a good job and there is the potential to serve the good people of Nigeria; that is the most important thing.

Do you Foresee Mergers and acquisition?
We see that there are lots of mergers and acquisitions going on in the world today. Looking at the joining between Orange and Tmobile, you see Narrow head telephony at Dubai, Portugal Telecom, even in Brazil. You see a lot of consolidation and acquisitions happening, you see Bharti and Zain, the discussion between MTN and Reliance, which has not been concluded but you see a lot of those trends. I think it is migrating from several aspects to several sectors. Wherever money is, people are ready to migrate and they think they have the expertise and success to move from one region to another. Second is that, competition is getting tougher so people believe that with consolidation, they can compete more successfully in the market. The third is the point that, sometimes, there is no room for so many players in a given market and the natural way of the market is to consolidate because it is difficult to accommodate so many operators. I think the Nigerian market is still at the growing stage, maybe people have not reached the stage of looking at this but I foresee this happening in the future. Some of the CDMA operators are small scale and together, they can come together and serve as a lesser competitor to the big ones.

Ceragon’s Mission in Nigeria
Ceragon is one of the market leaders in terms of independent market providers for big companies. We have been in operation for more than 10 years and one of our focus areas of growth is Africa. We embarked on the journey more than eight months ago and it is quite obvious that Nigeria is the biggest market for almost every product in Africa. Telecommunications has been here for a good number of years, we definitely want to be part of the business here and we have got a lot of focus. We established a subsidiary here a few years ago and now we are making a face lift by hiring Mr. Bekele, a veteran in the microwave industry who has been in Nigeria and has got many years of experience in Harris Stratex, now Aviat. Ceragon is a complete portfolio of microwave starting from the access, the CVM on the IP even to the SDH and on the long haul backbone solution which is some unique solution. It can help operators save a lot of money on the capex because there is no need to install a wave guard and dehydrators. Also, on the apex because maintenance and user consumption are cheaper. Wimax is coming more and more into IP so there is need for people to strengthen their backbone capacity and reach in some other places they have not reached before. We see huge potential in the market with all the cellular operators- GSM, 3G and CDMA and with Wimax operators where fibre optic in the region is very limited; we believe we can serve them in a very good way. On top of this, there is an increase in internet usage mainly by the arrival of sub marine cables. We believe that the application of serving the enterprise by the operator is also a good application with which again, microwave can take a major share and we have the right solution that can serve customers either with IP or VVM or the combination of both to get access for their internet or other services they would like to do.

Ceragon’s Target    
We need to establish our name, we need to make sure that all the operators and some of the private organizations here are familiar with Ceragon’s products and its local support abilities. We target mainly cellular operators and the Wimax, so we are to target them and penetrate as many as we can to establish our presence here and to take it to the next level. I will say that at least for the second half of 2010, we need to focus on establishing our name, reputation and support and I am sure we can get some of the local operators to start using our equipment and we would like to take it from there to 2011.
   

Advertisement