NigComSat-1R: Wasted effort five years after

By Adedeji Adeyemi Fakorede

Information and Communications Technology, including satellite systems and telecommunications, is critical to the growth of any nation. This was clear to the Nigerian government when it sourced $362m (N144bn)Chinese loans to build NigComSat-1R with the hope that the satellite would serve as a major backbone to leapfrog broadband (high speed Internet) penetration in the country while improving access to ICT services.

The Head, Public Affairs of Nigeria Communications Satellite Limited, the government agency operating the satellite, Mr. Adamu Idris hadsaid “As an organisation, we are committed to using the country’s satellite resources towards developing the needed infrastructure platform for engendering overall economic development.”

When NigComSat-1R was launched into the orbit in 2011, the then NIGCOMSAT Managing Director, Timasaniyu Ahmed-Rufai, had also 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.
Even as 2016 ends, the promises are far from being fulfilled. If the35 per cent promised had been a reality as of the end of 2015, it would have been a huge gain for Nigeria. This is so because broadband has the potential of enabling entirely new industries and changing how children are educated (e-education), how health care (telemedicine) is delivered, enhance farming (e-agriculture), ensure public safety, engage government, and access, organise and disseminate knowledge. In low and middle income economies, 10 per cent increase in broadband penetration yielded an additional 1.38 per cent in GDP growth. The Federal Government  knew this when it chose to invest in a communications satellite but like Nigeria, which is a sleeping ‘Giant of Africa’ because of her failure to achieve its potential, NigComSat-1R has continued to drift towards the white elephant precipice due to very low patronage, under utilisation and other
challenges. In fact, a widely industry mindset is that the satellite is lying idle in space.

NigComSat -1R has a lifespan of 15 years and it is almost six years old now, meaning it still has about 9 years of life. Hopefully, the satellite won’t fail before its end of life but with the low patronage it is experiencing, breaking even will likely take a longer period and profits may not meet expectations.

Investigation by National Daily revealed that between 2011 and 2016, NIGCOMSAT spent over N22bn taxpayers’ money on recurrent expenditure such as salaries, training, conferences, entertainment and hospitality, printing and stationery, hotel and accommodation, transport and travelling, among others. The N22bn was outside the N144bn ($362m) spent on the satellite alone and the groundinfrastructure in Abuja and China, which according to NIGCOMSAT’sChief Executive Officer, Ms. Abimbola Alale, is about $1bn.

In fact, the administrative expenses alone incurred by NIGCOMSAT wereover N665m in 2011 and over N589m in 2012. It struggled to make atotal of N74m within the same two-year period. The total expenditureof the agency was N9.6bn in 2011 and 2012 alone.

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.  As such, every day 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 currently spend in excess of $2bn (N794bn) annually on the importation of bandwidth and related services, which causes serious strain on the scarce foreign exchange and the country’s external reserves.

At 50 per cent growth rate, global satellite services were projected to generate $30bn in 2015; $45bn in 2016; $67bn in 2017; $101bn in 2018; and $151bn in 2019. NIGCOMSAT, which at inception set a target of 40 per cent share of the communications satellite market/ revenue
for itself (considering the fact that it is the only Africa-based communications satellite operator for now and Africa has huge potential in terms of Internet access), must have lost $12bn to under-utilisation in 2015.  This figure was arrived at using anexchange rate of N160 to a $1.

At an exchange rate of N160 to $1, NIGCOMSAT must have missed 40 percent revenue which amounts to N1.92tn in 2015 and N2.88tn in 2016. This will rise to N4.3tn in 2017; N6.48tn in 2018 and N9.7tn in 2019. This is estimated based on the 50 per cent growth rate of the global satellite services market.

At 7.8 per cent growth rate and a market share target of 40 per cent, NIGCOMSAT, according to satellite experts, must have missed $14.85bn (over N950bn) in 2015 from transponder leasing alone. This is expected to rise to $16bn (over N1tn) in 2016; $17.2tn (N1.1tn) in 2017; $18.6bn (N1.19) in 2018; and $20bn (N1.28tn) in 2019. Of course, these estimated revenues will be more if the current exchange rate of over N450 to a dollar is used to calculate the potential accruals to NIGCOMSAT.

Some stakeholders have claimed that NigComSat-1R is being underutilised partly due to inter-agency rivalry between the National Space Research and Development Agency and the NIGCOMSAT and also because of inadequate funds to pay for foreign training of local satellite engineers. But investigation has since revealed that this line of argument may not be totally true. A NIGCOMSAT audit report prepared by Emerging Markets Communications revealed that over N2bn cannot be accounted for by NIGCOMSAT’s management over the past few years. The report was also said to have been submitted to the Attorney General of the Federation and the Federal Ministry of Communication Technology (now Federal Ministry of Communications) shortly before
President Muhammadu Buhari assumed office.

It has been alleged that there are questionable insurance payments made by NIGCOMSAT.  Of the over N665m and N589m administrative expenses in 2011 and 2012 respectively, the 2012 audited reports and financial statements revealed that over N109m and N100m were expended on insurance in 2011 and 2012 respectively.   However, the insurance payout increased to N695,383,409.11 in 2013, meaning it surpassed the entire N665m administrative expenses in 2011.
Of course, NIGCOMSAT noted that of the amount, N362, 383,409.11 went into orbit insurance,   N225,374,000.00 for the Abuja ground stationand N107,687,000.00 for the ground station in Karshi, China.

This conundrum was recently unravelled when the House of Representatives   ad hoc Committee probing insurance companies payouts to Ministries, Departments and Agencies, accused the management of NIGCOMSAT of violating the Public Procurement Act in the award of $500m insurance contracts. The breakdown of the $500m showed that in 2013, NIGCOMSAT spent $188,883m on insurance, $168,135m in 2014 and $143,775 in 2015 without advertising the deals.  A former MD and former directors of finance at NIGCOMSAT were invited by the
committee.
From a technical perspective, Nigcomsat-1R is very much active with 4C, 14 Ku, 8 Ka and 2 L-band transponders to provide the most optimal and cost effective voice, data, video, Internet and application service and solutions to users. It covers over 52 countries in sub-Saharan Africa, Europe and Asia but unfortunately, the satellite does not currently enjoy the desired patronage.
According to an industry investigation carried out by National Daily between April 16, 2016, when the first part of this report was published, and December, 2016, NigComSat-1R was virtually left out of major satellite industry deals. Like a leper, no one wants to have anything to do with the Nigerian satellite.

StarTimes (Chinese pay TV operator) had concluded new multi-year agreements with Eutelsat in July, 2016. This was a huge loss for NigComSat-1R, especially when Nigeria is arguably the largest market
for StarTimes and other pay TV operators on the continent.  Similarly, Gondwana International Networks, one of the largest VSAT operators in Africa through its operating brands, AfricaOnline and iWayAfrica, concluded a long-term capacity agreement with Intelsat that will enable the iWayAfrica to offer Virtual Network Operator services to telcos and Internet Service Providers. VNO services enable telcos extend their networks into rural communities and NigComSat-1R is best placed to offer this kind of service that will help extend reach to underserved areas in Nigeria and Africa as a whole and this can be a source for the needed foreign exchange. However, NigComSat-1R was not
considered.

Eutelsat has also concluded plans to cover Nigeria, Ghana, Kenya, South Africa, Cameroon, DRC, Benin and 13 other sub-Saharan countries by 2019 with its satellite broadband. This, according to reports, is going to be done under a broadband venture known as Konnect Africa.
Konnect Africa is expected to offer bandwidth supply, among other services, to 341 million people in sub-Saharan Africa who live beyond a 50km range of fibre. These 341 million potential customers are the underserved users that NIGCOMSAT has failed to harness despite its pioneer status on the Africa satellite landscape.

Nigeria has set the June, 2017 target to switch over from analogue to Digital Terrestrial Television broadcasting but rather than run with NigComSat-1R, the Nigeria Broadcasting Corporation opted for Eutelsat for the multi-million dollar digital migration. The Minister of Information and Culture, Alhaji Lai Mohammed, was recently quoted as saying NigComSat-1R could not be patronised for the switchover because it has no backup.

He said, “The process of digitalisation is unstoppable and  irreversible; it’s not a matter of choice. If we do not follow the world to digitalise and meet the June 2017 target, it means our
telephones, televisions and radios would not be free from interference.
“When the White Paper on utilisation came out, the Nigerian Broadcasting Commission, the digital team set up by the government, paid a visit to Nigeria Communication Satellite Limited and explained to them how ready they were to patronise them. But unfortunately, as we speak today, NIGCOMSAT has no redundancy. In other words, they have no backup. If we sign with them and for any reason the satellite goes down, it means we cannot transmit. ”
Azerbaijan launched its first satellite, Azerspace-1/Africasat-1a, also known as AzerSat-1, into the orbit on February 7, 2013, 14 months after NigComSat-1R was launched into space. It was built at the cost of $120m, $242m lower than the cost of Nigeria’s $362m satellite. AzerSat-1, like NigComSat 1-R, has an anticipated service life of 15 years. It covers Europe and a significant part of Asia and Africa and equally has transmission capabilities for TV, radio broadcasting and the Internet. As of 2015, almost four years after NigComSat-1R was launched into orbit, the Azerbaijan satellite carried 23 radio stations and 228 television channels, mostly free to air, in addition to servicing the government and enterprise in Azerbaijan and Asia.
This is in sharp contrast with NigComSat-1R, which does not currently carry any radio station or TV channel.  Whereas, close to five years of the lifespan of the critical national assets have been wasted.

A digital satellite/ terrestrial transmitter engineer, Mr. Francis Pam, said, “The satellite business is a high risk, high profit industry, small players like NIGCOMSAT hardly offer any competition when you consider the likes of Intelsat with a fleet of over 50 satellites in orbit. With any failure, they can easily move traffic around to other satellites.” Commenting on the trajectory of NigComSat-1R, experts noted that poor management and inadequate infrastructure had continued to keep big customers such as Dangote Group, Central Bank of Nigeria, Nigerian National Petroleum Corporation and others at bay.
“Management is a major challenge for NIGCOMSAT right from the outset, this just goes to show how public institutions are not profitable compared to their private counterparts in this country of ours,” Pam said.
According to him, “Anything public in Nigeria hardly yields profit. If this must yield profit, privatisation is the way forward. Intelsat was government owned and not doing well, today it is in private hands and the rest is history. Check their books today and you will understand
what I am talking about.”
A space technology expert, Prof. Tunji Ibiyemi, lamented that several months after the successful launch of the NigComSat-1R, it had not recorded any appreciable achievements or made impact in the lives of the people.
In a paper titled: “Deployment of Communications Satellite in Nigeriafor Mass Economy: NigComSat-1R as a Case Study”, Ibiyemi said there was no reported utilisation of NigComSat1-R transponders for several months after it had been launched into space.
Though NIGCOMSAT had always claimed to be utilising the satellite, investigation  had already revealed that NigComSat rents bandwidth from a major submarine cable provider in Nigeria. Ibiyemi further identified incompetence and lack of proper supervision by the leadership of the NIGCOMSAT as some of the major reasons the NigComSat-1R has been underutilised. He called on the Federal Government to return the satellite to its original parent body, the National Space Research and Development Agency, if its purpose was to be realised.
“I have said it before and now I am saying it again, NIGCOMSAT can never make headway with the kind of workers in her employment,” a satellite technology expert who spoke on the condition of anonymity, noted. “A technical firm should have 90 per cent technical staff and the remaining 10 per cent should be administrative workers.”
While lamenting the fate of NigComSat-1R, a former President, Nigeria Internet Group, Mr. Bayo Banjo, wondered that despite spending a huge government fund on the satellite, NIGCOMSAT had failed to give verycheap Internet to the rural areas.
Insisting that government cannot run any venture successfully, he asked, “If the government cannot manage cocoa or farm produce or the groundnut pyramid as they used to do in the old days, how will they manage a satellite to make money?”
On the way forward, Banjo said, “Sell it to Nigerian investors or put a new management in charge,” adding that corruption is one of the major reasons the government has not been able to manage the satellite profitably.
The Chairman, Association of Licensed Telecom Operators of Nigeria, Mr. Gbenga Adebayo, advised NIGCOMSAT to “come out and tell the public what they are doing and what they have done. Then we can now seek public opinion whether government should privatise it or not.” President, EMEA, Vertical Horizon Group LLC, United States,  Mr. Andrew Oginni, highlighted what Nigeria is missing by underutilising NigComSat-1R.
According to him, the critical national asset can be a vehicle that will help the government leverage ICT as a key growth enabler and veritable tool for economic development  by deepening broadband
penetration that will accelerate innovations in Nigeria and Africa as a whole. He explained that NigComSat-1R could provide and optimise access to and use of affordable fixed and mobile broadband everywhere in the country.
He said, “It should be utilised to promote ICT innovation and investment opportunities in ways that improve the nation’s ability to compete in the global economy, through increased investment in the
youth and promotion of SMEs for the delivery of new business breakthrough.  It can boost increased strategic support for technology startups.”
In his message to those calling for the privatisation of NigComSat-1R, the Minister of Communications, Mr. Adebayo Shittu, said the satellitewon’t be sold. Shittu, while revoking the purported planned sale of NIGCOMSAT, initiated in 2015 by his predecessor, Mrs. Omobola Johnson, said selling off such a national infrastructure would be inimical to the nation’s economic growth.
While preparing the processes for privatisation of the company in January 2015, Omobola had said that NIGCOMSAT could only be optimised through privatisation for Nigerians to derive maximum benefit from it.
However, Shittu  insisted that the Federal Government would purchase two additional satellites for NIGCOMSAT at the cost of $550m.
He said, “We need just about $550m to acquire two new satellites; we are already negotiating with China EXIM Bank, who had assured us that they will deliver the money.
“We will negotiate and procure extra satellites for NIGCOMSAT,  so that there will be adequate backup and once this is done,  whatever data is stored in one satellite will equally be shared by the two or three satellites.
“With that, there will be no fear of any problem because there will be enough data collection centre and there will be reliability.”

Once this is achieved, the minister said all government institutions, agencies and ministries must necessarily patronise NIGCOMSAT.
Speaking on the activities of NIGCOMSAT, its MD, Alale, noted that her company was established to champion broadband growth. According to her, if well supported by the government and patronised by local and foreign organisations,   the satellite technology will provide broadband links to people who could not be reached with fibre cables.
She further stated that besides other traditional services to variousinstitutions including universities in the country, banks, securityagencies, and the Republic of Gabon for the tracking of its railsystem, NigComSat-1R facilities could also be deployed to perfect thecountry’s e-voting system ahead of the 2019 general elections.

She, however, said this could only be made possible if there wascollaboration between the Independent National Electoral Commissionand NIGCOMSAT.