NigComSat: Making Nigeria’s satellite profitable

In May 2007, Nigeria joined the league of countries that have deployed communications satellite with the launch of NigComSat-1 into orbit. While the first satellite had since been replaced, Nigeria has little or nothing to point to as the gains of this multi-billion-naira venture.SAMSON AKINTARO reports

 

Recent effort of the Federal Government to market the country’s satellite to the private sector as part of Nigeria’s ICT roadmap evoked responses that confirmed that Nigeria Communications Satellite, the government company managing the satellite, has not done enough to market its services to its prospective customers. Long before now, different stakeholders had raised concerns that the satellite was being underutilised and the situation has remained unchanged. Indeed, the Communications Minister, Adebayo Shittu, just last week, echoed the same sentiment, as he urged the management of the company to do everything in attracting patronage. This also came with the realisation that most organisations in Nigeria that need the services of NigComSat-1R are not patronising the company.

 

Nigeria’s first communications satellite, NigComSat-1, was put in the orbit in May 2007, but de-orbited in November 2008, following a power fault. However, the country’s presence in the communications satellite industry was not jeopardised for too long as some insurance arrangements made it possible for a replacement satellite, known today as Nigcomsat-1R, to be built by the China Great Wall Industries Corporation. The replaced spacecraft was successfully launched into the orbit in December 2011 amid high expectations among Nigerians. With a communication satellite in orbit, Nigerians expected reduced cost of Internet access, bridging urban and rural digital divide, improving broadband connectivity in homes, offices, businesses and schools and boosting e-learning, telemedicine, e-government, agriculture, public safety and security, among other benefits.

 

 

Unfulfilled promises

 

When the replacement for the first satellite, NigComSat-1R, was launched into the orbit in 2011, the then NIGCOMSAT Managing Director, Timasaniyu Ahmed-Rufai, said the communications satellite, a critical national asset, together with the broadband capacity of the National Public Security Communications System, would facilitate the availability of broadband connectivity to at least 35 per cent of Nigerian homes by 2015, especially in rural areas. But currently, nationwide broadband penetration in the country is still at 22 per cent and there is no indication that the satellite has contributed to any of that as most telecommunications operators source their bandwidths elsewhere.

 

In the broadcast space, NigComSat-1R was to ensure that Nigerians have access to quality communication without necessarily paying exorbitant fees for the opportunity and redress the long-term damage to the Nigerian broadcasting environment created by years of technological dumping and inconsistent approach to signal and content distribution by practitioners. That has not happened as Nigerians are still left at the mercy of DStv, which increases subscription costs at will.

 

Also, the satellite is not playing the expected role in national security as promised. At launch, the satellite was described as a veritable tool in tackling security challenges in the country. NigComSat-1R was expected to provide communications and tracking capability for the Nigeria Police Force and other security agencies in the country. But the current security situation in the country does not suggest the satellite has been helpful in that regard.

 

 

Cost factor

 

Aside the failure to deliver on national projects, Nigeria’s communications satellite is believed to have been rendered unprofitable due to pricing issue. According to telecommunications service providers, cost of obtaining services from the nation’s satellite is far higher than what they get from foreign facilities.
Although the satellite was launched with the hope that it would save the country billions in foreign exchange and earn huge revenues for the government as well, that has not happened in over 10 years of the first satellite launch. Indeed, investigations reveal that aside the private operators, many government agencies still patronise foreign satellites and, as a result, continue deny the country huge sum in revenue while putting more pressure on forex.

 

Speaking recently at a forum, President of the Association of Telecommunications Companies of Nigeria (ATCON), Mr Olusola Teniola, said most of the association’s members were still sourcing their satellite services from abroad because it was cheaper over there than in-country. “The issue with NigComSat is the pricing. Service providers are taking capacities from foreign satellites because of that and this has been going on for quite some time” he said.

 

Teniola said for NigComSat to attract local operators, it has to review its pricing and also create service differentiation by offering what the telcos cannot get from the foreign satellite services.

 

Corroborating the ATCON President, the President of Nigeria Internet Group (NIG) Mr destiny Amana, said high cost service from NigComSat has been driving many Internet Service Providers (ISPs) to patronise foreign satellites. According to him, it is far cheaper to obtain satellite services from outside the country, compared to local facility. However, an Executive Director at NigComSat, Engr. Sam Osagie said the operators might have taken their decisions based on old pricing regime of the satellite company. He insisted that NigComSat’s prices are competitive globally.

 

 

Time ticks

 

Unlike the life of other infrastructure, which can be extended through maintenance and upgrades, a satellite typically has a limited life span, which cannot be extended by repairs and upgrades. NigComSat -1R, which was launched in 2011 has a lifespan of 15 years, which means the satellite now has about seven years left before it becomes useless. As such, everyday of under-utilising NigComSat-1R is a day lost in terms of revenue and life span for the country and the people of Nigeria.

 

The cost of underutilising Nigeria’s communications satellite is humongous. For instance, digital mobile operators and telcos in Nigeria are believed to be spending in excess of $2billion annually on the importation of bandwidth and related services, which causes serious strain on the scarce foreign exchange and the country’s external reserves.

 

 

Rescue mission

 

Apparently disturbed by the status quo, the Minister of Communications, Barrister Adebayo Shittu is now pushing for a repositioning of the satellite’s services, with a view to getting patronage. The minister last week tasked the board of NIGCOMSAT Limited to strive to boost patronage of the company’s facilities, which he described as underutilised. He gave this charge when he received a delegation comprising members of the board led by their chairman, Chief George Moghalu, NIGCOMSAT’s Managing Director, Abimbola Alele, and top management staff of the company in his office in Abuja.

 

Shittu urged the board members to see their assignment as a rescue mission and ensure that the government’s huge investments in the company were not wasted. He told them that the government was working tirelessly to procure two additional satellites for the company. He said, ‘‘It is unfortunate that a lot of people over the years have not really appreciated what NIGCOMSAT is doing and stand for the Nigerian fledging economy, and as such, receive little or no patronage from the public and private organisations who patronise foreign satellites for their services. ‘‘NigComSat, even though, is a business is such an important entity because it was set up to provide true intervention facilities for satellite communications. But because of the capital-intensive nature of bringing about such services, the potential of the agency had not been optimally explored. ‘‘We should see the mission of NigComsat as a rescue mission because this is one establishment the government has spent a lot of money on. We have to make do with only one satellite in the orbit. We have been working tirelessly to have two more satellites in the orbit, by which time we can really enforce companies and established businesses to patronise the services. ‘‘That is still the challenge we are working on. Before the end of this administration, we would have attained that,” he said.

 

 

Last line

 

While the recent charge by the minister may have signaled government’s awakening to the fact that NigComSat has been a wasteful venture, stakeholders believe privatisation of the company is the only solution to make the country reap maximum benefit from the satellite. They urged government to look at the past experience with NITEL, which for years remained inefficient as a government company until it was sold.

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