Africa's Liquid Telecom is known as one of the continent's biggest investors in long-distance fiber, but the operator has also been expanding into the metro and residential markets and is now even getting into the content business.
In this second part of an interview with Telco Transformation, David Eurin, Liquid Telecom 's chief strategy officer, talks about the operator's metro moves, FTTH ambitions and long-term vision. (See Liquid Telecom's Eurin Targets Africa's Enterprise Sector.)
Telco Transformation: What are your expectations about growth and pricing trends in the metro market, which increasingly seems to be a focus for Liquid Telecom?
David Eurin: For metro we've got three types of customers. Mobile operators are relying more on us to deploy metro networks to connect base stations. That is going well because the trend is to have fiber to all base stations. For us there is a big rollout to do that. The price points we can get are making the investment worthwhile in the long term. Second, there is enterprise. We need metro to be sufficiently deployed for efforts to bring fiber to buildings to be minimal, so either we pass right in front of them or it's the next block. The amount of cost we need to recover from this client is then quite small because it's shared. That business is also booming. We've invested in most of the capital and secondary cities in the countries where we already operate. We are going to continue and target new markets where we'll see the same model.
TT: Which markets are the most promising?
DE: In our footprint, we see a lot of growth in Rwanda and Uganda. There is also a lot of growth in Tanzania, where we are not present. Nairobi has growth but is extremely competitive with people deploying a lot of assets and therefore the price points are very low. It's big but almost too competitive for its own sake. South Africa is also doing quite well for the enterprise and for the third kind of customer, which is FTTH. That is probably the largest investment we've been making -- deploying tens of thousands of connections to key areas in key cities like Lusaka, Bulawayo and Harare. We are now starting in Nairobi and Kigali and we're looking at Kampala.
As we've done with our metro network, as soon as we see there is a pocket of premises or residential areas or building blocks that are able to sustain or pay for service as a community we deploy FTTH with GPON technology. That is a long-term investment because the ARPUs are low compared with the size of the investment. But for us it is also again to make use of our greater network to bring connectivity all the way to people that need it.
TT: So it makes sense to do this as you are expanding the metro network? It improves the net present value?
DE: That's right. It's something that starts quite quickly and then you need to be patient and explain the service to more and more people. We have introduced a lot of interesting price plans and we're now introducing value-added services on top of that to make the connectivity valuable. So we are moving into TV. We have launched a sister company called Ipidi TV, which is a video-on-demand and TV service. We are busy working on other value-added services that will appeal to households and small businesses.
Next page: Future visions
TT: Can you provide more details of those? Are we talking IoT-type services?
DE: No, something that people can relate to very easily like education services. We are looking at business continuity, which is a back-up service. We are slowly pushing those services to really serve the immediate needs of households in Africa. Education is extremely important in Africa because it doesn’t always cope with the population.
TT: Does the fiber build depend on the competitive environment? Are you looking to be the first into the home?
DE: Most of the time we are the first because there is almost no FTTH in Africa. We are definitely the first in sub-Saharan Africa to do something on the scale we have done. A lot of players are now getting on the bandwagon because we've shown FTTH can work if you're patient. We tend to be the first. A lot of players then say they can't leave us alone to do the whole market. Most of the time we would wish they don't deploy fiber exactly on the side of our own trench but we can't control exactly what they do.
TT: What are you doing in South Africa?
DE: Mobile operators there find it quite difficult to cooperate because of different needs and ways of working. We've approached mobile operators and asked what we can do for them to make it easier to have access to fiber. We've had a few successes. In the north we've been expanding the main route, which goes from Johannesburg to the Zimbabwe border, and building a route towards the east. That is a direct consequence of mobile operators asking us to build that route and saying we'll come to the party. That model can work.
No doubt, South Africa has a lot of fiber already. The government has two companies deploying fiber and there are also a number of private initiatives deploying long-haul and metro. There are still a few things to do but the bulk has been served.
TT: What's the medium and long-term vision? You are involved in so many different areas, so is the plan to be an enterprise-focused network service provider, a carrier-focused wholesale provider or something else?
DE: I think Liquid as a vision will remain really focused on being a wholesale provider. But we also consider the multinational market and the large enterprise market to be almost wholesale. We find, however, that in some markets we've got to go further because the network we built is not used sufficiently for us to recover our investment, so it's worth pushing into the value chain a bit further so the ecosystem starts growing. We've done FTTH in some areas and then the next player comes and says we can invest as well. But the focus of Liquid will remain to build the largest fiber network as fast as possible to serve the MNOs, the ISPs and the enterprise market.
This is where we operate the best because we've become quite good at rolling out networks that are not too expensive to build or maintain. We use ducts as a matter of fact -- we don't do dark buried fiber -- and we put in the right quality of fiber. We've invested a lot in assets and people to make what we deploy very long term and not fall into a trap where in three or four years we have questions about the asset. Is it in good shape? Can I do something else with it? That is a trap we are trying to avoid. We have invested a lot behind the counter to make sure we are here to stay.
— Iain Morris, , News Editor, Light Reading, Editor-in-Chief, Telco Transformation