Nokia Mobile Networks SVP of Middle East and Africa, Mikko Lavanti, sat down with Developing Telecoms to discuss a range of topics affecting markets under his remit. Here the executive explored markets he believed will be opportunities for growth, his ambitions and what operators need to keep an eye out for over the next 12 months.
What are the current trends and key challenges for the telecoms industry in the Middle East and Africa?
The Middle East and Africa is a very diverse market. You have on one side operators with 50 cents ARPU and on the other side US$20-US$30.
On the more advanced end of the spectrum looking at 5G, we are at the forefront in the Gulf area. Here in the UAE as well as in Saudi Arabia, we are already moving towards 5G-Advanced, and Cloud RAN/O-RAN deployments.
We signed a 5G-Advanced deal with Zain in Saudi Arabia and a key point of conversation was monetisation and ‘how do I best find revenue for my investment’. One way is of course fixed wireless access (FWA), Zain Saudi Arabia is a shining example of FWA and they have been taking up market share.
Going to emerging markets, obviously [there are] similar types of challenges but a key difference is that over 95% of customers in Africa are prepaid. To aid in driving ARPU, what we are doing is helping operators to understand where they can increase their revenues by showing them densely populated locations that would be profitable to increase capacity and coverage, as they were losing out on revenue by having no presence.
Another major trend in emerging markets is of course energy. It’s not just managing the OPEX around energy use but also in sourcing the availability. We work with operators on three different levels for energy saving.
On one side, it’s what we do on sensors installed on radios. This is where we shrink chipsets from five nanometres to three nanometres, in order to minimise power consumption. Then on the product innovation side we develop features such as extreme deep sleep mode so that operators can switch off the radio when it’s not being used.
Another major issue in emerging markets operators are looking to erase is low rural coverage. Operators are looking at how to make deployments more affordable, which is extremely important.
At a time when volatile foreign exchange rates and rising inflation are battering Africa, how do you chase opportunities there?
Indeed, if you look at Nigeria where the Naira dropped, other markets on the continent have the same story. We’re still gaining contracts despite the currency challenges because traffic is exploding on the continent and everybody understands that digital services are key for Africa’s future. Combined with affordable handsets, we are seeing a big increase of data, which means that operators need to and are continuing to invest.
But if affordability is still an issue, we work with a lot of different European and US-based financial programmes to help operators finance their products.
Energy availability is a major issue particularly in Africa, how does this affect the telecoms market?
It is a real problem, especially If you look at South Africa specifically, I don’t think operators have even publicly said how much money they put into resilience. It’s not only the blackouts, but also vandalism. Equipment gets stolen; batteries on site or diesel in generators, these are valuable things that people steal.
To solve this problem operators have deployed a zero footprint site as an example to solve vandalism. In such a site, we put the batteries up in the tower that don’t resemble batteries to deter thieves, as they do not understand that it’s a battery and even if they did, it would not be useful from them.
It is a big investment for operators and then of course it’s also a burden one energy availability. I’ve seen some networks where the availability is clearly below 70% to 80% and that’s far from acceptable for proper service.
What do governments have to do to provide stable energy?
We know that it’s not available in many emerging markets and it’s not as simple as building more capacity. Diesel generators are the easiest way to power our sites but that’s not very environmentally friendly. So we implemented solar panels, and explored wind power but I think it’s still too expensive as a solution.
We have to explore alternative energy sources – operators have to run parts of their network off the grid. We’re working with government organisations to underline the importance of connectivity in their economies.
Nokia had a hiccup in its recent financials, how important are emerging markets now to fill in this profit and revenue gap?
We are seeing less spend in certain markets, this the reality for many of our competitors as well now that spending in North America has dropped. We reported in Q1 that Middle East and Africa are the only markets that are growing, and we take pride in that.
Our plan is to first of all find the affordable way of how to build, maintain and operate networks in Africa. Our North Star and goal is to be the preferred partner of communication service providers. What we’re doing on that front is we invest not only on the technology, but also our organisation, our approach, and how we build on delivering for our customers.
Where in Africa do you see opportunity?
South Africa is always [an opportunity], Egypt is going to be coming in big time. I see a lot of opportunities also in Nigeria and Ethiopia. In Ethiopia, if they ever get a third operator we will be interested but we have presence there already by serving Safaricom in Addis Ababa. We also see opportunities in Kenya, Tanzania and Morocco. Operators with massive footprints such as MTN, Orange, Vodacom are the ones who need us and want us to seize the opportunities in these markets.
How does the regulatory environment in Africa affect your strategy as the landscape can change so rapidly?
One key event coming up in many countries is 5G licence auction. The frequencies should hopefully be affordable so we can avoid what happened with some 3G auction where regulators became greedy, if I can put it that way, by pricing licences so high that operators were never able to get the actual business going.
Looking on the commercial side, in Jordan the government decided to follow a certain geopolitical trend and we benefited from there being no Chinese competition. We took the top two operators in Jordan, Orange and Zain, and their entire business – this highlights how important it is to stay up to date.
Overall I am seeing that regulators are looking at fair ways to enable competition among operators. They have put incentives in place for operators to encourage ‘two vendor policies’, which is of course good for us.
What are your aims and ambitions in the next 12 months?
We want to continue to grow the business and actually the outlook is good. I want to be able to close a few new customers during this year, maybe specifically on the enterprise side. We have also announced that we are coming to the defence sector and that’s also where I expect that during this next 12 months, we have some breakthrough as the world is unfortunately less peaceful.
The defence sector is an increasing sector and we have announced some acquisitions globally on that side such as Fenix Group in December for example. In summary, I want us to continue to grow by double-digits hopefully as that is the target. We want to make sure that we have new enterprise customers, new CSPs and then maybe a military contract.
Is AI a technology that excites you in your remit, and what is the interest in the Middle East and Africa?
AI is everywhere, right? I started my day today by watching on YouTube, Google’s CEO Sundar Pichai talking about it – that’s how important AI is to me. If I start from our customers I think AI of course means a lot to them. For some of our customers we are looking at right now on how to transform network automation and adding AI on that. Our R&D team is working on AI everywhere in terms of improving speeds, network quality and delivery.
I think I spent maybe two hours today on AI related topics. I think you cannot avoid AI these days and you should not miss an opportunity to tap into it now.
