‘Businesses are operating in suffocating environment’

Mr. Logan Pather, Chief Executive Officer of
Starcomms Plc.

His brief is to turn round the cash-strapped Starcomms Plc, the only telecoms firm listed on the Stock Exchange. Logan Pather got the job of Managing Director/Chief Executive Officer, Starcomms, based on his antecedent. He has worked in some of the world’s leading telecoms firms. He worked with Telkom (South Africa), Vodacom (South Africa), MTN (Cameroon), Telecel (Zimbabwe). He was with Roamware Africa for five years before he landed the Starcomms job. With Starcomms striving to hedge competition, Pather is tasked with leading the company into a new era of stable growth and returns. In this interview with Taofik Salako, he speaks on the economy, the telecoms sector and his plan for Starcomms.

What are you doing to improve shareholders’ values?

We are looking at value creation for all stakeholders, not only the shareholders. Our stakeholders include shareholders, staff, customers, government and the environment, among others. The essence of any business is revenue; if you don’t get revenue, then you don’t have a business. So, there is a huge focus on revenue at the moment. We are addressing a whole lot of issues on our shortcomings.

One of the things we have not been good at is the training of our staff. It is easy to see why we are not selling enough because the money comes from sales. We must train people; they must be clear on what is expected of them. To that end, there is a huge focus on revenue and training. So, we have started implementing changes. They started the day I arrived. For me, key focus is revenue. How do we do that? We have to get more customers onto the network.

What is your agenda?

My agenda for the company is survival. I have to make sure I acquire more subscribers. I must ensure that we are extremely efficient when it comes to cutting costs. We have made significant in-road in cost reduction. Besides, what will differentiate us from other operators is customer service delivery.

Looking at the performance of Starcomms since listing, do you think the company made projections on wrong assumptions?

I disagree with the aspect that probably we did not get our assumptions right. When Starcomms was trading, we were strong. We had no clue that two other licences were granted - Etisalat and Visafone. That was what nobody knew about.

If they had known about this, they could have made an alternative plan. May be even talk to the authorities that: no, why are you issuing more licences when our businesses are where we are? And you can see what has happened to the industry. You get a company that came with a sort of Asian model and crashed the price so low that it became not even profitable for them.

They have admitted this much in newspapers that they made mistakes of dropping prices so low; and now they have jacked up prices, saying retail voices is not going and all that. Now, they want to focus on data. Everybody is focusing on data because that’s where the money is. But, whose data do you use?

When people talk to you about data, Internet, which Internet network do you think about immediately? Starcomms. Everybody knows Starcomms is the leading network when it comes to Internet. So, we are a powerful company. I had explained the reason retail voices dropped. It wasn’t that the company was not careful about its business; we didn’t have a crystal ball, we can only understand what the market is doing.

What other challenges do you have?

There is the problem of operating environment, which has been a major drag on performance. There is the high cost of doing business in Nigeria and it has been affecting our revenue. So, we are planning to go into partnership with other organisations to provide alternative power supply that will be regular and cheap.

What are the competitive advantages of Starcomms as a brand, given the competition in the telecoms sector?

First of all, we will build on our strength.  One, we are a powerful brand, we go back a long time. Two, we are a truly Nigerian company; any money we make in this company, today, is in this country. Can that be said of others?

Every kobo we make stays in the country. We will focus on data, where we are extremely strong. We will focus on roll out to boost revenue. We may not necessarily be rolling out in every nook and cranny. But, there are some technologies we are discussing. Hopefully, we will implement them soon to be able to get access to other networks with the Starcomms phone. So, you still can use the network you are using anywhere in the country with the Starcomms phone.

Right now, we are offering international roaming. We are remaining competitive. You know how many awards we have won for being the industry’s first. We are still a powerful company. Last year, we won the Code Division Multiple Access (CDMA) operator of the year. And this year, we won the global roaming award. Again, we are very smart in what we are doing as an organisation; we just need to get more customers onto the network; that is the bottom-line.

Tell us your plans for the company

If you look at it from a futuristic perspective, the present GSM and CDMA technologies being deployed by telecoms operators in the country will be phased out and replaced with Long Term Evolution (LTE), a fourth generation technology. Some leading global telecoms firms around the world are already testing it. At Starcomms, our current facility has some features of LTE. So, all we need is to finetune our system and upgrade our software with minimal cost to operate LTE. Wireless Equipment Providers are stepping up their development programmes to support the large growth potential of LTE deployments.

To gain an edge in the market requires being early in the market with differentiated features. So, we have an edge in that our technology is ready for LTE. All our base stations are LTE ready, but we need more spectrums to achieve full roll out. We are working in the background to achieve this. Our prime focus is to maintain optimum efficiency while reducing operating cost.

When I am LTE ready, I will become an attractive company. Do you know how many investors have come into the telecoms market and failed? Those investors will want to come back given the right conditions. If there is going to be consolidation, we will have to put the business in a position where it would be valuable.

We have also engaged a cell phone manufacturer in China to provide affordable and quality phones for our customers. We are also looking at the possibility of giving free phones to our customers who stayed with us for about 12 months. We will invest heavily in capital expenditure this year to complete our network roll out. There will be a huge marketing push where we have network coverage presently and potential ones to enhance our profitability.

We are in a transition to empower our major dealers to handle complaints of customers within their territories while we will exit areas where our dealers have strong presence as part of the empowerment plan.

Given the impairment in balance sheets due to losses over the years, is there any effort to restructure the company’s balance sheet either in terms of loans or equity?

Some of the loans we had, we have restructured; we have been successful with some of them. So, there is no much pressure to pay, which is a big relief to us. Again, as an organisation, we will continue to do that; to buy more breathing space in terms of loans.

Where do you see Starcomms in fufure?

I think a year from now, we will see a consolidated CDMA business. What it will look like, I don’t know. It could be Starcomms, it could be another company, it could be a merger of two or three companies. There are quite a few small CDMA companies around and I think for CDMA to really remain in force and still be profitable, we need to come together. We are in discussion with two other companies; smaller companies that we are looking at acquiring. Starcomms will be the surviving entity.

What is your timeline to return the company to profit and begin to pay dividend?

We are where we are because of 13 years history. Can I fix it in three months? I don’t think so. We have evolved over the years. From being a fixed wireless operator in Lagos with 2,500 subscribers and four base stations in 2002, the company has grown into a national telecommunications operator with presence in 22 states, 31 cities, 175 towns, more than 900 base stations and 1.6 million active subscribers as well as being a leader in broadband data and has won many awards for brand, quality and innovations.

For me, the objective is to turn the business around within a year; we can’t take much longer than that. We have to make sure we turn the business around within a year, if we can’t turn the business around, then we have serious challenges. So, the objectives right now are: turn the business around, reduce the losses you have talked about, start looking at strengthening balance sheet and become a stronger company.

For me, the take is that we have to get more spectrums to move to the next generation of technologies. If we do that, we will become a very very attractive investment opportunity. You know there are other companies who are willing to come to Nigeria; so if we become LTE ready, I am sure people will come. We are looking at more ways to improve our business. We appeal to our shareholders to be patient with us, as they will enjoy the benefit of high returns soon.