Friday, 17 June 2016

How we sold Multi-Links and started Spectranet—Chief E.O. Fatoye + His many battles in 50 Yrs of Telecoms Business

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Chief Fatoye to Asabeafrika....'I think our people often suffer from lack of experience and that is a big problem here'
Chief Ezekiel Olasunmoye Fatoye
in this last part of his 78th birthday Exclusive with Asabeafrika tells us the full story of his 50 years experience in Telecommunications business in Nigeria, the secret behind his clairvoyant approach to business and lifestyle. He equally shared with us why he sees success where others see failure and how he achieved his success. The telecoms Chief equally opened up on the story of the sale of MULTI-LINKS his first baby to a South African company, TELCOM in 2001 and how TELCOM ran aground the CDMA Company. It is a story you never heard or read anywhere before except on your Africa’s number 1 Celebrity Encounter blog, Asabeafrika. Chief Fatoye who is the chief promoter of one of Nigeria’s best data technology, Spectranet shares the story of the birth of Spectranet with us for the very first time in history and why the company remains Nigeria’s number 1 data service provider. Don’t read this interview in a rush as you may possibly learn a lot of things from an octogenarian board room guru. Enjoy!

Chief Fatoye says to the GDA...'SPECTRANET is the future of Data Technology in Nigeria
You have always brought new innovations to the telecommunications the industry; you are today reputed as the Grandmaster of Private Telecommunication’s business in Nigeria. After your tenure as ED in NITEL you started Nigeria’s first private telecommunications firm, MULTI-LINKS and by the advent of GSM in 2001, you moved out of that market before the collapse of CDMA. How did you always see it coming?
Well, I think when we were in NITEL; we could see what was happening. I mean with our exposure then, we knew telecommunication was going to privatization. The Government was struggling to diversify the telecommunications business because telecom was a monopoly then for the government. It was strictly a monopoly for the government but we saw the revolution coming and we said ‘what are we going to do?’ So, we positioned ourselves to be able to compete if eventually Government now brings in private people to come and invest in the sector because we knew much about the industry. In fact, we took part in the formation of NCC. The initial money provided to run NCC was raised by NITEL at that time and most of our people also worked with NCC as board member.  So, you will find out that we knew that privatization was coming at that time and we wanted to do something quickly before government came. Unfortunately, we were handicapped because of bureaucracy and procedures; you had to go through a motion before you can do one thing. Limitation of budget approvals and that unfortunately created problem for NITEL. And that was why NITEL could not function as much as people expected it to function.  And a time came government decided that they were going to sell NITEL. And if you are going to sell it, it is not good for you to now start to say ‘oh, NITEL is not good or NITEL is useless’ trying to de-market NITEL. If you have a car and you keep saying ‘Oh, this car is not good oh, they should come and buy it’. So, who will buy it? The person can throw any amount to you to claim the car and that is exactly what happened to NITEL. NITEL has a lot of investment potential, it has a lot of potential as a company but the odds were just too much. Of course, NITEL can still do well, I learnt some people have finally bought NITEL and if they run it well, they can even be bigger that any of the existing telecommunication firms. I think they are now called M-TEL now.
Chief Fatoye to Asabeafrika...'Corporate Governance and racial arrogance ruined TELCOM Management'
How Government Whacked NITEL Money….
Another issue that is pertinent to the sad NITEL episode was the fact that a lot of people were not paid their benefits and a huge number of people actually died. How did you handle that episode?
See, that is a very serious area you have just mentioned. You see, when we left NITEL, we got our gratuity the same day and we entered into pension the following month. So, NITEL was well organized, we had already planned our retirement strategy. We saved enough money for NITEL so that if they invest the money, whatever accrued of the investment is enough to pay pension. That was the plan we left behind in 1994. But unfortunately, the money was just squandered. We left money in foreign exchange, we left monies in naira value and we said ‘ok, let us invest this and we can use whatever accrued on the investment to pay NITEL’ and we had already worked it out. But when the next government came, they started spending the money.  When PDP too came in 1999, they finished the money; they just got the money and wired it. They said ‘ok, pay them (Pensioners) three years, pay them more three years, pay them five years and they paid us em-block. Now, it is over 5 years ago that they have paid that money. When you sign to work for government and you sign for pension, it means that they are going to pay your pension for life. But in this case, the government decided they were going to pay them off.

‘If you are 70, you have gotten your boarding pass and you are in the departure hall. If the flight is early, you are gone, if the flight is late, good for you. The flight could be delayed for twenty four hours or a longer period, you are lucky’

Chief Fatoye to Asabeafrika...'Many pensioners in NITEL are just dying like chicken because they cant get their gratuity'
But why
I am also surprised. In fact, most of my colleagues are dying now like chicken. Every day, they will say ‘this one died’, why, because they don’t have anything again. There is no money, nothing. They were relying on continuous pension. 5 years ago, they finished all the money they got. In fact, it got to a level; the pensioners took government to court and won the case.
Chief Fatoye to Asabeafrika...'I strongly believe in planning ahead and that always help me in my endeavors'
So, what happened to that case?
Of course the Federal Government put up an appeal but they were at the verge of going to the Supreme Court and government urged them to withdraw the case for a round-table discussion. Now, there is no even a penny to pay anybody. People who are working can’t earn money to live, so what will happen to the pensioners? So, daily, people are dying like chicken. In fact, I know the senior ones in NITEL who worked in Britain before, they have gone back to Britain to be collecting pension. They have their houses and they live comfortably well in Britain now. Imagine, after working for thirty something years in their own country, they couldn’t live well.  They worked for 5 years or 10 years in Britain, they are living comfortably well.  In fact, some of them are getting five hundred or three hundred Pounds Sterling in a month. If you get that in a month, won’t you be able to survive?
Yes, of course, you can survive.
And if they come here that money is in their bank account; when they convert that money it becomes something reasonable for them to survive.
Chief Fatoye to Asabeafrika...'The CDMA Technology suffered recession because the promoters of GSM were willing to invest on innovation'
Why we sold off MULTI-LINKS
You were able to survive all that uncertainty by getting investors to establish MULTI-LINKS. That business survived until the arrival of the Global System Mobile (GSM) revolution in 2001 and you sold again and move up to the data Technology sector. How were you always being able to see and move ahead?
You see, one thing about life is that you have to think ahead on time. Telecommunications business requires big investment. You need a lot of money; it is not a little game. It is a game of cash, deep pocket. If you don’t have that, you cannot survive in telecommunications. And you have to look at the technology that is coming. You must review the type of technology that is coming, we have seen it coming. We look at the business modem and we decided to be truthful to ourselves. As we have in the political arena, so we have in the field of technology. CDMA was supposed to be superior in design to GSM. In fact it was QUALCOMM of America that developed CDMA; they made the good use of the technology and sold it to another company to develop it. Before, that technology (CDMA) was strictly used for the military. They used it for the military because of the nature of the global security. They didn’t want anyone to clone it. It is so difficult to clone the CDMA technology and that was just too good for military intelligence especially during the era of the cold war. So, when cold war was over in 1962, they decided to commercialize the technology and that was when they allowed it to be franchised and that was how CDMA became a globally used telephony technology in some parts of the world. Of course they could have come up with more value added innovation to it as the promoters of GSM did but you know QUALCOMM is a very small company. Ericson was the forerunner of GSM; they were the people who really spent a lot of money to really develop GSM. So, when QUALCOMM was going through recession, they bought over QUALCOMM. So, when they bought over QUALCOMM, there was no way QUALCOMM could go forward with her CDMA invention. Of course they have spent a fortune on CDMA and when Ericson took over, the CDMA went down and GSM began to thrive. So, we knew that GSM was going to wipe the market because of the value added innovations. We were aware of the data technology, the sms and all other facilities that came with it. So, it is obvious that CDMA had no chance to survive in that market anymore. If it is voice market, yes, CDMA would have been okay but now the system is beyond voice. It is now data that is the major business. So, that is what we saw that we said ‘Gentlemen, I think we have to move’. That in another few years to come, things will change. So, you find that, eventually we now sought data and we started data business all over again in a very unique way and I think data is the new way to go. Eventually, penetration is coming high in Nigeria and eventually, it is going to be the in-thing.
Chief Fatoye to Asabeafrika...'We left a huge amount of money in NITEL but subsequent governments frittered the money away'
How we started Spectranet
So, can you tell us the story of SPECTRANET? How did you come by the idea of building such a powerful and fast data brand in Nigeria?
Like I told you earlier, we have seen that the future is data. What we wanted to do was more than just data. We wanted to create a complete bundle, where you have voice, television and data together. Like in Britain if you say you want to buy Sky today, you have a telephone line, you have television and you have the data or wifi or whatever you want to have in your house. That is a complete bundle. That is what we wanted to do, but first of all, the various governments did not appreciate our effort. We said ‘ok, we want to run fiber to every home in Lagos and Abuja, so that every home will be able to have television, telephone and data. That was our major plan, land line, television and data. Even at the initial stage we were even discussing with Sky in London to see how we can partner with them in the area of buying content from them for the Lagos publics. But Lagos State Government unfortunately refused to even give us right of way to develop our fiber network.
Chief Fatoye to Asabeafrika...'We took the decision to sell MULTI-LINKS when we saw the new technology coming up'
How Lagos blocked us….
Why did they do that?
I can’t lay my mind on the reason for stopping us. We even offered them some nice incentives, that ‘look, if you give us this thing, we are going to give you free connection to all your schools, to the ministry of education, all the hospitals in Lagos’. We wanted to introduce e-government. So, that from the governor’s table he can look at what is happening in any of the schools, any of the hospitals. They will have complete link to it. We wrote them, we made proposals to them but they didn’t show any interest. And we said ‘well, maybe in the future, they will see what we are seeing and that type of technology will come up’ because it is a thing that is happening in many advanced countries.
So, why did you limit the idea to Lagos when there are other big cities who can buy into it?
Well, we looked at the octane lifestyle of Lagosians and we discovered that the customers in Lagos will be interested. The money is here in Lagos more than any other part of Nigeria. There is no doubt about that; even though we have relocated Nigeria’s headquarter to Abuja, Lagos is still the center of commerce and industry. When I was in NITEL, Lagos generates 70% of the entire revenue of NITEL for the whole country. The rest of the country generates 30%. In fact, Lagos generates 80%. You will find a single subscriber that can generate more than a state. Let me take Shell as an example, Shell is a subscriber, it generates more than six states puts together. So, you can imagine what I am saying about the Lagos being the hub of such a lofty idea.
Chief Fatoye to Asabeafrika....'I regret allowing my people give out our Gbagada Warehouse to TELCOM'
So, Lagos did not see what you intend doing and maybe that is why they refused to give you right of way?
It is Lagos State government that couldn’t see it, not Lagosians. With all the proposals and intention of interest we gave them, they refused to see. Now, I think they are coming back to reality. They are now seeing it and they are now changing because we pressurized them on the industrial level. You will find out that Lagos State Government wanted to be taxing telecommunications companies and we went to court. They said they are going to tax towers, that anything we put there, we pay tax yearly. But we said ‘you don’t have the authority to take that from us because the Nigerian law is very clear on that, the constitution says the federal government is in charge of communications’. So, you cannot tax what you don’t know. So, I think because of that annoyance, I think that was why they said ‘ok, we are not going to approve right of way for you’. But when they now decided to be lenient with us, they said ‘ok, we are going to give you Twelve Thousand Naira per meter length when the Federal Government said it is N45 per meter length. They want us to pay twelve thousand something per meter. If we want to run fibers round Lagos and into individual houses, there is no way we can survive on such an exorbitant amount of money. So, that is one of the problems we have. It is one of the major problems that we have.
Chief Fatoye to Asabeafrika....'I warned the new management that took over MULTI-LINKS not to exhibit racial conduct at the leadership level but they ignored my warning'
Can we call that ‘Black man’s syndrome’?
Well, I wouldn’t know what to call it. But maybe your term might describe it so well.
So, how is SPECTRANET doing in terms of market share?
I think we have a good lead. We are okay in Lagos and Port-Harcourt, Abuja and even in Ibadan. We are okay now. But the only problem that data people have is the cost of the bandwidth; although, it is coming down now, the cost of the bandwidth, that is the one that carries signals from Main-One or Glo or SAT-3 or whatever to enable us international cyber link. And why it is costly is because people who invested in bandwidth want quick returns on investment. Yes, they have the capacity but they are now reducing the capacity because of the cost. The cost is too high. If the cost has been reasonable, maybe the cost of running data would have come down completely because it takes a bigger chunk of the production cost. That is the bandwidth cost.  So, if that comes down like in many countries, we could enjoy cheaper data consumption in Nigeria. In some countries the equivalent is N9 per meter length but in Nigeria, they are asking for twelve thousand naira. So, this is the real challenge we are facing but I can equally tell you that they are coming down. In fairness to them, they are coming down because of the competition between Glo, MTN and May-ONE. Those are the three companies that are offering data services. Of course NITEL also has but I don’t know if they still function.
Chief Fatoye to Asabeafrika....'In starting SPECTRANET we brought a lot of goodies for Lagos but they refused to honor our proposal'
We learnt NITEL is coming with a 4GE data speed and they promise to make that a niche game, do you see that succeeding? 
Well, that is what they said; they want to start from the top. You see, people are running away from landlines and that was what NITEL was doing before, and anybody that has ‘national carrier’ they are obliged to provide landlines. Glo and M-Tel are supposed to provide landlines because they are national carrier. Glo is second national carrier while M-Tel is first national. They are supposed to provide Nigerians with land phones. For instance, if I want a land telephone in my house now, who do I apply to? Nobody
So, you mean Globacom and M-Tel are not fulfilling their agreement to the later?
That is why NCC should have insisted that they follow their license condition because the license says they can provide every aspect of communication including data, mobile network and the rest. But it is easier to provide data, it is easier to provide GSM, and it is even easier now because of this common sharing of sites. If you know you need ten sites in this area you just go to HIS or Heoles and say ‘can you give us ten sites?’ and they charge you and you get ten sites already and within ten months if you have the money, you can cover the whole of Lagos. All you need to do is just to provide the location and pay for the service, and people will come to you that they want to co-share with you. So, NCC can insist that they follow their license condition to the later.
Chief Fatoye to Asabeafrika....'My Uncle Justice Bolarinwa Babalakin told me that at 70, you get your boarding pass and wait for the flight to take off'
Why TELCOMS of South Africa failed to turn around MULTI-LINKS
As it were now, it seems MULTI-LINKS have sank in shape and visibility, is it right to say TELCOM of South Africa did a great mistake by buying MULTI-Links due to the arrival of GSM revolution?
That is a story for another day
Sir, I think it has to be today because we need to all learn. As it is now, TELCOM seems to have burn their fingers
Yes, they ran away.
So, why did they have to run away?
Anyway, I don’t know whether I will be allowed to say anything because my feeling is that TELCOM failed in the area of corporate governance. Corporate governance killed the company. At the time they left, they shouldn’t have left. They came to Nigeria with the impression that they are coming to live like kings. They got accommodations in Lekki, they said they cannot live in Lekki, they went to take multiple residence in Banana Island, I mean that was quite ridiculous. They took apartments in an environment where they were paying in dollars. They don’t want to ride cars they want to ride jeeps. Everybody, every TELCOM man had a jeep. Weather he is a cleaner from South Africa or whatever he is, he must drive a jeep. And they have one weakness which also culminated in their failure and I warned them before I left there. I think they have this racial arrogance. They had three races running the administration of MULTI-LINKS as at the time they took over. They had Nigerians separate, Indians separate and South Africans separate. But South Africans were on top, every other person was down; that is what they were doing and I warned the man there, I even put it in writing. I said ‘look, I warned you not to behave like this, this thing will not augur well for you if you continue like this’
Chief Fatoye to Asabeafrika....'NCC must force Glo and M-Tel to honor their license agreement to the letter'
Oh, you think the Indians should have taken vantage positions because of their technological know-how?
No, they can use anybody but don’t discriminate. Don’t show it up. You know this apartheid background they are coming from really affected their psyche and that really, really destroyed morals. Some of them are white and that really led to a big problem but to come to think of it again, there were other things they did that did not augur well for the development of the company. In some cases, they went to hire sites in areas they never had signals. They went to Adamawa, Yobe and all those far flung areas to hire sites where they don’t have signals and they don’t even plan to have anything there. And they were paying. Not only that, they now set up another company which they said would be responsible for the operation of the service. Then, they are going to pay 18% of their gross income to that company and that company has no staff. MULTI-LINKS staffs will be doing their jobs and they will still pay the company 18%. Then, the real company, which is MULTI-LINKS, they have nothing for them. When the revenues were going doing, they now signed an obnoxious agreement with that company. They signed ten years. When they eventually found that they are in trouble, they decided to run away. The people they borrowed the sites from, they were already owing them over a hundred million dollars. The houses they paid three years rent for in one place, they couldn’t stay there and ultimately the landlord could not return the three years rent to them. So, when you consider all these, you will see a multitude of actions that led to failure. That is why I told you it is a corporate governance issue that ruined them. So, when they now ran into total confusion, they now called Heoles, the people they were owing money to come and buy the company over and the people said ‘well, we are not operators, we only provide services’. They said ‘okay, bring ten million dollars and we will give you the company’. That was what they did to Heoles, they transferred the whole thing to them and said ‘okay, liquidate all what we are owing, take the company over’
Chief Fatoye to Asabeafrika....'Today, MULTI-LINKS has 2000 subscribers, 20 staff and operates from a palor in Lagos'
So, Heoles took over?
Heoles was like ‘how will they cope? How would they get the company on?’ That was how they now brought this Demola Elesho to go and look at the way to bring the company on. But because they cannot expand anymore and the others are expanding and they are losing customers everyday; subscribers are dumping their network they went lean. They are still operating now.
Oh, you mean with same name brand name?
From same place we used to know on Adeola-Odeku?
What Heoles did was that they just took the important site from them. When TELCOM handed over everything to them, they now asked MULTI-LINKS to come and be paying for site. MULTI-LINKS cannot afford to pay for site. Even the warehouse we gave them in Gbagada, which MULTI-LINKS was using before, Heoles sold it off
You mean they have sold off that your beautiful Gbagada warehouse?
They have sold it.
In fact, somebody just told me he had a customer who wants to buy it recently and I was going to raise it with you?
They have sold it and that is why they have moved out of the place. And it is a big house, a big warehouse.
Is that not asset stripping?
In fact, I was blaming my people that ‘why did we give them so much?’ because the warehouse is not a telecommunication item. We should have known.
I am shocked because a friend of mine, one Mr. Adebola Owolola told me has a customer for the place and I was going to raise it after this interview?
They have sold the place. They already sold it. Last week when I spoke to them, they said they have sold it and they had to move out of the place in a hurry.
They must have sold it at a give-away price because of the present economic condition? That means they don’t have a real estate any longer?
I think you are right. MULTI-LINKS have no office again, their entire office is not more than this place (His VGC sitting room) now, they hired one flat in VI. Everybody packed into that apartment. I don’t think they have more than 20 staff now. They have about two thousand subscribers.
So, how do you cope as a veteran CEO, I think you are 77 now?
I am 78.
Chief Fatoye to Asabeafrika....'We gave Lagos a great proposal for fiber network but they refused to give us right of way'
So, how do you do it, you are still as fit as ever, no walking stick, nothing. What is the secret of your trim look?
Well, I am not hundred percent sound, you know about four or five years ago I had a stroke but I thank God it was mild and I eventually overcame it. I am thanking God for His mercy. It is God’s decision that I should be around till this moment. I thank Him for His unlimited mercy on my life.
Why do you say so?
When you are 70 you should be rounding up. Like my uncle Justice Bolarinwa Babalakin used to say, he said ‘If you are 70, you have gotten your boarding pass and you are in the departure hall. If the flight is early, you are gone, if the flight is late, good for you. The flight could be delayed for twenty four hours or a longer period, you are lucky’ and I think that is the truth.  Look at Stephen Keshi (He died that same day and Chief was sad about his death as a Sports enthusiast) a young man, very sporty, very energetic and he just died like that.
I remembered you told me some ten years ago inside this same house when you were sharing your hobbies with me that you don’t jog around and I asked why? And you said, you can’t just imagine you finished eating your pounded yam and you now start running around VGC?
Yes, that is what I am saying. They will tell you ‘oh, it is all about fitness.  You are supposed to go swimming, you must run around, you must jump and do all that to keep fit. That is Stephen Keshi’s job, running around the field, training footballers, but he just collapsed and died at 54. So, for me to be here seating and talking with you it is God and I return all the glory to Him alone.

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