Spectranet is one of the foremost internet service providers (ISP) in Nigeria and was the first to introduce 4G LTE internet service in the country. As a result, the company controls about 50% market share and still has a lot of growth potentials. Unfortunately, Spectranet is currently faced with many problems which are now threatening its market share. Will the company be able to overcome said challenges and maintain its leadership position in the internet services sector, or will it soon be overtaken by the many competitors vying for fairer shares of the market? These issues will be discussed. But first, let’s get to know more about Spectranet.
The emergence of Spectranet
Spectranet Limited came to Nigeria in 2009 after being awarded an operational license by the Nigerian Communications Commission (NCC). The company’s emergence in the ISP market space was defined by one clear objective- to ensure widespread internet connectivity across Nigeria. To a large extent, it can be said that this objective has been considerably actualised, as the company currently has a widespread customer base. Spectranet is present across many Nigerian cities, including the major ones such as Lagos, Abuja, Port Harcourt, and Ibadan, etc.
As an internet service provider, Spectranet basically offers internet boxes (i.e., Wifi and Mifi modems/routers), as well as different data packages. Examples of its Mifi and Wifi products include Spectranet Portable Mifi (₦35, 000), Spectranet Outdoor Modem (₦70,000), Spectranet Indoor Wifi (₦35,000), and Pebble MIFI 2017. Others are Spectranet’s Wifi router starter pack (₦16, 000), TOZ Indoor CPE (₦25, 000) and Freedom Mifi 2017 (₦16,000).
Spectranet also offers a wide variety of data plans to go with their modems. The company offers different monthly plans that cater to different Nigerians according to their purchasing powers; examples of which include Unified Value 40GB (₦12,500), Unified Value 55GB (₦20,000), Unified Value 200GB (at ₦70,000) and the Unlimited Gold Plan (at ₦18,000), etc.
A look at the competition
According to the NCC, there are more than a hundred licensed internet service providers in Nigeria, all of which are competing with one another for their own shares of the market. Spectranet has roughly about 50% market share with nearly 200,000 subscribers out of a total of about 400,000 active subscribers. Meanwhile, asides competing with one another, the ISPs also compete with Mobile Network Operators such as MTN, 9mobile, and Glo, etc. All of which altogether control about 95 million users.
Spectranet’s challenges – regulatory, operational and infrastructural
Spectranet has over the years struggled with many challenges ranging from regulatory, infrastructural and operational. This has severally prompted the company’s management to join other stakeholders in the sector to decry what they perceive as unfavourable regulatory policies, especially the government’s unfavourable data pricing policy. Last year, the company’s former Chief Executive Officer, David Venn, called on regulators to ensure sanity in the sector and most importantly, make provision for a data floor. According to him, there is a lot of prevailing anti-competitive behaviour in the market which is affecting the sector. In his words, “since the botched data floor policy of Nigerian Communications Commission, it has become difficult for ISPs and Telcos delivering internet service to operate profitably. We are seeking the review of that policy by the authorities to enable operators to deliver quality service and continue to be in business.”
Speaking further, Mr. Venn stated that “another biggest challenge we are facing today is the cost of tower rentals which has continued to increase over the years. It is funny, that international capacity cost has reduced by 50 percent while tower rental cost is increasing unabated. Imagine a situation where the cost of tower rental in three times our salary cost.”
The company also faces other infrastructural challenges, including epileptic power supply and occasional vandalisation of their facilities.
Just like most Nigerian companies have had their former staff members say very unpleasant things about them, Spectranet has also been badmouthed by its ex-staff. According to a former Spectranet employee who spoke to us on condition of anonymity, the company’s not-too-pleasant working conditions may be another major problem contributing to its challenges. According to the anonymous source, the company has a reputation of not paying its staff well, especially at lower levels. This leaves them unmotivated; a situation that is inevitably reflected in the quality of service delivered to customers.
It is also alleged that quite a number of the company’s staff always leave the company in pursuit of better opportunities elsewhere. This again affects the consistency of the quality of service delivered.
The Customers are not very happy
Quite a number of Spectranet’s customers are unsatisfied with the quality of service they receive from the company. A quick look at their social media platforms will confirm this. Most customers’ complaints centre on the constant letdowns they experienced – the poor nature of the network, and irresponsive customer service. These customers feel cheated by Spectranet whom they say parades itself as the best ISP in Nigeria while selling products and services that do not work. Some even go as far as calling the firm “fraudulent” for parading themselves as a 4G lite provider, even though their internet service can at best be classified as a 3G network.
A Twitter poll conducted by Nairametrics asked consumers to choose between Spectranet and Smile, or comment on their reservations against the two. Out of the total number of people that participated in the poll, 27% chose Spectranet as their favorite, while 26% chose Smile. The remaining 47% registered their dislike for both brands, including Towsyn Omowole who said that “they are both bad, to be honest. It depends on your location. We just manage them.”
In conclusion, Spectranet has a huge business potential in Nigeria. Its growth potentials are equally endless. Therefore, the company cannot afford to allow anything jeopardise its future in the Nigerian market. It is for this reason that we are recommending that the company do everything possible to sort out its challenges and keep its customers satisfied in order for it to sustain its market share and possibly improve on it with time.
COVID -19 saving Nigerians millions in wedding and burial costs
As long as the pandemic persists, the ‘new normal’ is for ceremonies to remain subdued.
It was a sunny Saturday in May and like it had been for the better part of 8 weeks, the new normal was in force in Nosa’s household. The lockdown induced COVID-19 meant that all the hustle and bustle of giving attention to side hustles on weekends had all evaporated. Now he spent more time with his kids watching TV and playing video games. Whilst he has had to endure multiple weekends of lost revenue, staying indoors meant that his personal finance was still intact. But things would change dramatically this weekend.
Nosa got a call that he had just lost his aged mother to a brief illness. He had been battling with a terminal illness for years, but things seemed to be under control so her death came as a surprise. Even as he grappled with the thought of losing his mother, Nosa knew that he had to start making preparations for the expenses that are bound to come with burials in an African setting.
Thanks to the pandemic, and rules that came with it, Nosa ended up spending much less than he would have for his mother’s burial with most of the funds going towards mortuary expenses, transport and the direct cost of the actual burial itself.
READ ALSO: Post COVID-19: The Challenges Ahead
“This COVID-19 is bad but it has saved me millions of naira that I would have spent in this burial,” he remarked.
“I wanted to give my mom a befitting burial but these are hard times and I may have borrowed money just to fund this. But with COVID-19 and social distancing in place I did not have to do any of this,” Nosa informs our reporter.
Nosa’s gains translate to massive losses for a whole chain of service providers in the event management industry. Similar occurrences over the last few months have resulted in the loss of revenue for such businesses.
Events in Nigeria often cost anywhere between half a million naira to over N100 million depending on the financial muscle of those spending. Burials, weddings, naming ceremonies and birthday parties, make a burgeoning industry that spans several sectors of the economy.
From mortuaries to casket makers, event planners, event Halls rentals, professional mourners, caterers, confectionaries, party rentals, photographers, video editors, tailors, newspapers , etc, its an entire value chain of businesses that provide one service or the other for this industry.
Each of these events cost millions of naira to organize hosting as many people as the budget can support. According to a CNN article quoting a report from TNS Global, Nigerians spend as much as $9,460 for a wedding ceremony. The report also indicates the party industry could be worth as high as $17 million based on statistics in 2017.
The math can be easily deducted. Assuming 50,000 ceremonies every weekend at an average cost of N1 million that is a N50 billion per weekend or N2.7 trillion ($6.75 billion) per annum. GDP data from the National Bureau of Statistics indicates sectors that support the ceremonies market in Nigeria, telecoms, transportation, Arts and Entertainment is worth a combined N18.4 trillion.
Chuks, a Partner at a top consulting firm in Nigeria admits were it not for the pandemic his wedding could have cost him about N15 million personally and another N20 million spent by family, friends, colleagues and well-wishers. He is in his forties and his wedding had been much anticipated. He went ahead with his wedding last weekend with less than a dozen people in attendance and over 140 others logging on via Zoom. He claims while he ended up not spending millions on food, drinks, wedding halls and other logistic costs, he still achieved his goal of getting married.
Necessity they say is the mother of invention and has millions stay locked in their homes, they have resorted to apps such as Zoom, Instagram Live, Microsoft Teams to hold virtual events. These days Zoom themed parties now have their own rules and conventions. Friends from all parts of the world log in with each person taking turns to say nice things about the celebrants. Games are conducted to spice up the event and stories told by the celebrant. Music is also played by the Zoom host with participants dancing and having fun.
“It is like watching a live movie and also being part of it as the audience and participant” a wedding planner informed Nairametrics. Whilst one cannot underrate the connection physical socializing brings, virtual meetings are gradually becoming a lifestyle and the longer social distancing continues its cultural significance will only continue to increase.
Aderonke Adebamibola, CEO of Unik Ushering Agency, an Event management firm, confirmed to Nairametrics that business has really slowed down in the last few months. “Even though the NCDC has now given rules to guide weddings and other events, the budget now is way less than it used to be due to the cap on numbers of guests” she explained.
Now, most events are kept within the premises of family residences, depriving hall rentals, the money they could have made from leasing out their halls. Venue decorators also have much less on their hands to do, as they no longer have to decorate big halls.
According to Adebamibola, every single business in the chain has been affected, from caterers to ushers.
“Now, we even have to convince them to use one or two ushers for their events because they believe they don’t need ushers for 20 or 30 guests. Caterers cannot even cook a half bag of rice now because of the number of guests. This means that they are also paid less for their services, even if they expend the same energy and time” she said.
The new normal in this industry means that the things that used to be prioritized are no longer priorities. Hand sanitisers, face masks and hand washing equipment are now compulsories in events, while the hand-shaking, and hugs that would have characterized such weddings.
Due to the nature of the industry, a large percentage of the staff are kept on contract basis, so the reduction has not really translated into lay-offs. However, the industry revenue has been badly hit. A contract staff with NPU Events, who preferred anonymity, noted that in the last three months, she has only been called twice for events.
Since this forms a major part of her income, it has caused a major dip in her resources. COVID-19 has brought unwanted hardship to the Nigerian economy with small businesses and workers in the informal sector suffering the most.
A recent World Bank report indicates the Nigerian economy might contract by as much as 3% in GDP growth rate this year. This informed government’s latest decision to inject about N2.3 trillion into the economy to spur economic growth. The funds will be targeted at small businesses through non-collateralized low-interest loans. Whilst all these initiatives are geared towards stimulating the economy, the spending power of Nigerians will remain pivotal and as long as the pandemic persists, ceremonies will remain subdued.
BHH Podcast: What 2020 holds for SMEs (2) – Ugodre
Business Half Hour (BHH) is a weekly podcast targeted at Startups and Entrepreneurs, who are redefining the Nigerian business scene through innovation.
Business Half Hour (BHH) is a weekly podcast targeted at Startups and Entrepreneurs, who are redefining the Nigerian business scene through innovation.
In this episode of #BHH, Ugodre gave an insight into how business climate would be for SMEs and an overall outlook on the global and national economy. Enjoy!
Ikeja Electric, GRA Ikeja residents sign contract to deliver 20 hours daily power supply
Ikeja Electric (IE) announced it has signed a Power Purchase Agreement with residents of Ikeja GRA to deliver “up to 24 hours of supply daily”. The company tweeted this on Friday revealing that it is in line with the company’s Bilateral Power Agreement.
However, the company representatives explain that it is a minimum of 20 hours of power supply for residents of the association. Ikeja GRA includes streets like Oduduwa, Isaac John, Joel Ogunaike, Fani Kayode, etc.
Ikeja Electric signs bilateral Power Agreement with Ikeja GRA.
…Residents to enjoy up to 24 hours of supply daily. pic.twitter.com/13ue5K1wqw
— Ikeja Electric (@IkejaElectric) October 11, 2019
In its previous Power Purchase deal with Magodo Residents, it stated that “with the agreement, IE will provide the residents with electricity supply beyond the existing standards, with guaranteed performance levels. In addition, there will also be access to dedicated Customer Care and Technical teams for prompt resolution of queries and/or technical issues within the estate.”
Also, the Chief Operating Officer, IE, Mrs. Folake Soetan expressed confidence in the success of the trend-setting agreement, which she noted was in line with the Federal Government’s willing seller, willing buyer policy.
What this means: The Power Purchase Agreement suggests residents of the Ikeja GRA will enjoy a steady power supply when compared to non-residents. However, they will have to pay tariffs much higher than is provided for in MYTO. Residents in Magodo who currently enjoy a similar arrangement informed Nairametrics that they pay higher tariffs but have enjoyed regular power supply and often go days without a power cut.
They also explain that even when the power cuts they get messages from Ikeja Electric explaining why the power was cut and indicating when it will return. We understand Ikeja Electric still relies on the grid to deliver this power as such power cuts will still be expected in the transmission and distribution end.
Backstory: In August, Ikeja Electric announced it signed a similar power purchase agreement with residents of Magodo, providing them a power supply of up to 20 hours daily. Residents of Magodo, have enjoyed steady power since then and are thought to be paying about N47 per kilowatt-hour of power compared to the MYTO tariff which is N23.10 for residential customers.
Sources with knowledge of the transaction indicate Ikeja Electric is likely to extend this arrangement to other estates within Lagos, in a move that disrupts the power sector dynamics. Residents in the Eko Franchise area seeking regular power supply have also demanded a similar deal and are ready to pay for a tariff that is higher than the MYTO approved tariff for general customers.
It is however not clear if the Nigerian Electricity Regulatory Commission, NERC has approved this arrangement.