In this video, I discuss how the Nigerian Stock Exchange can make it easier for startups to list in the exchange. I propose, among others, for direct listing where any requirement for underwriting is completely waived. The startups, especially technology-enabled ones, will not have to go through the painful process of underwriting new shares, but post-listed, can sell equity to private investors. I want to see Iroko Partners, Flutterwave and Zenvus in the NSE as quickly as possible.
How To Start A Cybersecurity Consulting Business In Nigeria
In this videocast, I explain how any entrepreneur with basic knowledge of ICT and with some supporting professionals can establish a cybersecurity consulting business in Nigeria and indeed Africa. The article is here in case you prefer the written one.
MTN’s Strengths And Weaknesses In Nigeria
MTN Nigeria is a subsidiary of MTN Group, a South African multinational corporation, with operations in key strategic markets in Africa and beyond. MTN Nigeria is the most recognizable telecom brand in Nigeria, enjoying the benefits of the first to market. Its geographical spread is huge and it enjoys the benefits of economics of scale, being ahead of the the second operator, Glo, by subscriber base, in excess of 20 million users. At the end of last quarter, Q1 2017, MTN Nigeria had about 60 million subscribers, according to the Nigerian Communication Commission, NCC, an industry regulator. MTN Nigeria, with local market share in excess of 35%, delivers about one-third of the Group’s revenues.
Technically, MTN Nigeria is owned by MTN Group and a South African holding company, Shanduka Group, which acquired a minority stake in MTN Group’s Nigeria business for $335 million in November 2012.
In this piece, I will explain the strengths and weaknesses of MTN Nigeria. But first the key products offered by this company.
MTN Nigeria Products
- MTN Cloud: Though it may not be known to average users, MTN Nigeria runs lucrative cloud services. These services are geared for all the key industrial sectors in Nigeria. MTN competes with RackCenter and MainOne is this product line.
- Voice and Broadband Services: Modern mobile telephony is Nigeria cannot be discussed without MTN. MTN is a leader in both voice and broadband services. It is the most profitable company in the sector, taking home more than 60% of the total profits, except 2016 when it declared loss, due to compliance related fines.
- Small Business Broadband Service: Besides the business to customer broadband service by MTN, it sells modems to small businesses which use them to connect to the web. This product is available in many key cities in Nigeria.
- Devices: MTN sells devices through different partner relationships.It sells for Garmin, Samsung and other leading global brands. The size of this business is low. Largely, MTN uses this to on-board customers into its network. Etisalat Nigeria which enjoys the highest ARPU (average revenue per user) is considered one of the best telcos that knows how to deliver services in selling hardware and devices to customers.
- Investments: MTN (the Group) has made investments in Jumia, a leading e-commerce company with principal operations in Nigeria. Because Jumia is Nigeria, MTN Nigeria has a strategic affinity to this company. MTN Group had also invested in Travelstart, Snapp and in Iranian Net. Co. It also bought Visafone (Nigeria), Smart Village, Afrihost and Investcom. No data is available to see how these investments have turned out.
- Value-Added-Services (VAS): There are many levels of VAS in MTN Nigeria network. Customers download music, motivational contents, games, comedy, etc and MTN takes commissions from the creators. The regulatory requirement that limit marketing to subscribers has affected this business.
- Others: MTN Nigeria had tried in the past, but failed, in selling different services and solutions. It brought security camera which flopped. It also worked to build app ecosystem which did not pick up. At different levels, it has also tried to work on mobile money through partnerships. That has not been stellar. Some of those solutions are still offered, though muted,
Largely, MTN Nigeria is a company that does two things: voice and broadband services to customers and enterprises, and web/cloud services to enterprises. It generates, in our estimate, more than 90% of its revenue from these two solutions.
Strength: Defaults
As the dominant voice and broadband service operator, MTN Nigeria wins and this success is by default. MTN used the profits it made at inception to fund growth. and that gave it strength. You can determine the age of an average Nigerian through his/her cell phone number. 0803 remains the premium number in Nigeria. It is the original number.
Weakness: Customer Service
Despite being the first to market, at scale, among all the present operators, MTN Nigeria lost focus on service and quality. Etisalat Nigeria tops MTN Nigeria as the most premium brand and a brand most upper middle class Nigerians choose for their broadband services. Etisalat NG is simply better on the experience part of making customers feel better especially in their Geek Shops.
Strength: Coverage
No other network operator in Nigeria comes close to MTN in coverage. Any village or community where you cannot find MTN means that the village or community has potentially no coverage. There has been debate on the inability of some communities to enjoy services most Nigerians enjoy. Realistically, most expect MTN to be the one to solve that challenge.
Weakness: Regulatory Compliance
MTN Nigeria is a lousy company in terms of regulatory compliance. It was fined $5.2 billion which was later reduced to $1.7 billion. The company has paid dearly for that as investors punished its parent company in Johannesburg Stock Exchange. But it does not seem to be only Nigeria where this systemic problem is happening in the MTN Group. MTN Group may have a culture that allows it not to cross the “ts” and dot the “is”.
MTN Group stock performance (source: Bloomberg)
Strength: Brand
For most Nigerians, MTN is a better place to work in the telecom sector. Its strength provides confidence. Despite the recent mass sack, if things are bad in MTN, in others, it is already worst, goes the thinking. MTN is a premium brand and it is a respected one in Nigeria and beyond.
Weakness: Innovation
MTN Nigeria as the industry leader would not have been expected to destroy established norms which helped it to make huge profits in Nigeria. If not for Glo, it is possible that Nigeria will still be on per-minute billing where the cost of making a 2-second call (yes, those dropped calls) is the same as 59 seconds.Increasingly, MTN plays catch up but quickly uses its scale to dominate others. Its key innovation engine is its scale and size.
Strength: African Brand
Everyone is proud of MTN because it is an African brand. While Glo is also an African brand, it is mainly region-centric in West Africa. Airtel and Etisalat are foreign. So, largely, MTN wins that balance of being global and also being local. It is the ultimate glocal company! From Harvard Business School African students to their counterparts in Oxford and Cambridge, MTN is a brand that meets everyone metric. You can say it is African ( operating in at least 20 countries) and it is big. The benefit is huge for partnerships with value-added-services providers.
Weakness: Poor Ecosystem
It is extremely unfortunate that MTN did not build an ecosystem in Nigeria considering its position. When we know that Verizon, a U.S. telecom company, owns now AOL, Yahoo and other media brands, one could note that MTN missed a huge opportunity in its app ecosystem failed project. MTN remains vulnerable, just as other telecom operators, as OTT services like Whatsapp and Skype eat into margins.
Strength and Weakness: Business Model
MTN Nigeria is a cautious industry player being the key beneficiary of any status quo. Keeping things the way they are, provided it enjoys its dominant position, is wisdom. However, that strategy has exposed it to the inability to build a platform which can maintain further growth. As OTT services take root, and deepen, and NCC decision not to regulate them, that business model has failed. It is not likely that MTN can do much now that fragmentation is huge in the market. In the strength area, MTN Group management can be seen as being bold. MTN invested in Nigeria upon the deregulation of the mobile phone market with the introduction of Global System for Mobile Communication (GSM), operating on the 900/1800 MHz spectrum. That is a winning business model as they raked revenue like Father Christmas with excess luggage from Ajegunle to Victoria Island knowing that VI has better gifts.
Y’ELLOW
The future of MTN Nigeria is not assured, just as every telecom operator in the world. MTN Nigeria has to invest in alternative assets which will protect it from the disruptive competition we expect from OTT services. Market has already noticed that as MTN Group has lost more than 50% of its peak value within the last five years. Sure, the compliance related fee is a big part of this stock problems, but do not overlook the fact that telecom has lost its shine.
For Etisalat Nigeria promoters in UAE to allow it to go the path it took shows that markets are not so confident it makes so much sense investing in the sector, at least in the short-term. This will be a low-margin business and is already becoming like utilities where margin is low but reliable (we must always need our telecoms to run the OTT, so they will be here!)
The biggest threat will come from satellite companies like ConnectAfrica which will reach communities at cost model that can keep the terrestrial players looking for cover. Elon Musk, not Glo or Airtel or Etisalat, may be the biggest competitor to all telecom operators in Africa in 5-10 years, with satellite broadband. He can crash broadband cost by 90% and suddenly GSM will be recorded only in museums. But that will happen if MTN Nigeria and others do not take action today.
Why Nigerian Banks Or Etisalat Nigeria Acquirer Will Continue To Pay Etisalat UAE
The crisis in Etisalat Nigeria is huge. But for the Etisalat UAE which owns the intellectual property of the brand, it may not necessarily be a killer. Whoever takes Etisalat Nigeria will have to negotiate IP licensing deal with the Group. If that does not happen, the telecom regulator in Nigeria could revoke the license. To avoid that happening, anyone taking over must ensure that the original license owner feels very good.
The statement also reminded Etisalat and the banks what they cannot do with the collapsed company, owing to the conditions attached to the licensing.
“Sub section 1 – The grant of a license shall be personal to the licensee, and the license shall not be operated by, assigned, sub-licensed or transferred to another party unless the prior written approval of the Commission has been granted;
Sub section 2 – A licensee shall at all times comply by the terms and conditions of the license and the provision of this Act and its subsidiary legislation.
In the press release by Etisalat parent company in UAE (pdf), they noted that Etisalat Nigeria is owing them $52 million as of March 2017. This money is due to the parent company, no matter what happens.
There are many implications here:
- Anyone that takes over Etisalat Nigeria must be paying IP for using the brand. If the person refuses, NCC can revoke the license. Etisalat NG cannot transfer its license. The easiest way will be to hold the license in Etisalat NG name to avoid NCC problems. That is part of ET Group IP which must be serviced.
- Depending on the agreements, the banks may be sending cheques yearly to Etisalat Group to keep the brand. Changing the brand name may be hard. It means the new owner may spend millions of Naira to build a new brand and that will be difficult for a #4 operator. Many customers may be alienated in the process
- Things are really not going well in Etisalat Nigeria. According to NCC March 2017, it lost the highest number of customers in Nigeria
Tomorrow is the D-Day when the transfer will be made. The parent company has already written off the value of its stake to zero in Etisalat Nigeria. But that does not mean it will not be getting IP licensing fees on Etisalat Nigeria.
NCC licensing requirement makes a transfer deal with another company challenging. Provided Etisalat Group owns the brand and license, in future, if there is no transfer of license to avoid NCC problems, dollars will be hitting Etisalat UAE bank account yearly from Nigeria.
How You Can Establish A Cybersecurity Consulting And Advisory Business In Nigeria And Africa
In this piece, I explain how any entrepreneur with basic knowledge of ICT and with some supporting professionals can establish a cybersecurity consulting business in Nigeria and indeed Africa.
VALUE PROPOSITION
As internet penetration continues to advance in Africa, so are the perils that come with the increased degree of digital connectivity – cyber crime. However, most organizations lack both proper security plans and trained in-house staff to counter or quickly recover from any cyber attacks. Nigeria, for example, is increasingly moving its business processes into the digital ecosystem, exacerbating the risk of hacking. This trajectory is global and no nation can be relevant without this transition. There is an opportunity to create businesses in the areas of “Capacity Building” and “Incident Response” in Nigeria.
CAPACITY BUILDING
The goal will to provide specialized cyber security and investigative training courses to digital forensics examiners, cyber investigators and selected information technology security professionals, to ensure the information systems of their sponsoring organizations are secure from unauthorized use, criminal and fraudulent activities, and exploitation.
INCIDENT RESPONSE
The goals and services in this phase are as follows:
- Investigate and respond to cyber intrusions/breaches into public and private sector networks in Africa at the behest of the organization or law enforcement agencies.
- Develop a virtual cyber crime lab to conduct digital and multimedia forensics to acquire comprehensive evidentiary analysis in support of the following mission areas: Cyber crime investigations, Cyber fraud investigations, Countering threats to critical infrastructure.
POTENTIAL SCOPE OF SERVICES
The company can offer services in these areas:
- Computer forensics: The forensic preservation and analysis of computing systems
- Live memory forensics: The forensic preservation and analysis of live memory on systems to identify suspicious or malicious actively running programs
- Malware forensics: The forensic collection and analysis of malicious software (malware) to understand its purpose and capabilities, a process that often speeds up an investigative effort
- Network forensics: The collection and analysis of live and historical network traffic, as well as network monitoring logs to identify suspicious or malicious network-based activity
- Expert Witness Testimony: Coordinate with both domestic and international law enforcement as appropriate and provide expert personnel to provide expert witness testimony as required.
- Up-to-Date Threat intelligence: Serve as the operational focal point for up-to-date threat information sharing through a Virtual Collaborative Information Sharing Environment for eligible subscribers.
- Cybersecurity Policy, Cybersecurity Management
REQUIRED INFRASTRUCTURE
Virtual Lab Environment: A virtual lab environment employs the concept of virtualization and allows one to use a single physical computer for hosting multiple virtual systems, each running a potentially different operating system.
Note: Running multiple virtual systems simultaneously on a single physical computer is useful for analyzing malware that seeks to interact with other systems, perhaps for leaking data, obtaining instructions from the attacker, or upgrading itself. Virtualization makes it easy to set up and use such systems without procuring numerous physical boxes.
- Tool Name: VMware
- Price: $5,750 (Enterprise Edition)
Required Hardware for Virtual Lab
- Server
- Laptops
- 50 Blank Hard Drives
- 50 flash USB Drives
- Budget Estimate: $17,000
Computer Forensics Tools: Computer forensic tools are used for digital image acquisition, analysis, reporting, recovery and investigation of material found in digital devices.
- Tool Name: EnCase Forensic
- Price: $2,995 for 1 License
Malware Analysis Tools: Malware analysis tools are used to disassemble, debug and analyze compiled malicious executables. This is a key tool in reverse engineering and facilitates malware analysis. While analysis relies primarily on the expertise of skilled and trained personnel, these tools enable the process to be accomplished much easier.
- Tool Name: IDA Professional Edition
- Price $1,059 for 1 License
Live Memory Forensics Tools: Memory forensics tools are used to acquire and/or analyze a computer’s volatile memory (RAM). They are often used in incident response situations to preserve evidence in memory that would be lost when a system is shutdown, and to quickly detect stealthy malware by directly examining the operating system and other running software in memory.
- Tool Name: HBGary Responder Pro
- Price: $9000 for 1 License
Network Forensics Tools: Network forensic tools provide real-time network forensics and automated threat analysis solutions. It can also aggregate the best advanced threat intelligence and multi-source content of the global security community, and fuses it in real-time information to enable prompt and proactive intervention.
- Tool Name: Netwitness – There are four applications in the suite
- Spectrum applies information sourced from threat intelligence and reputation services to identify and prioritize malware.
- Informer delivers threat reporting and alerting, presented in dashboards and charts. Informer’s primary audience tends to be upper management.
- Investigator is used to determine the root cause of security event.
- Visualize enables rapid review and triage of content leaving a network by extracting and presenting entire artifacts carried by recorded traffic.
- Price: $57,000 for License
Note: This tool can also be used to provide Threat intelligence
Optional Tool: This tool, although not required would be nice to have because it provides automated threat forensics and dynamic malware protection against advanced cyber threats, such as advanced persistent threats and spear phishing. Malware Protection System for web security, email security, file security, and malware analysis.
- Tool Name: FireEye
- Price: $54,950 for system. Approx $12.00 for each license seat.
Expert Witness Testimony: To provide expert witness testimony, one must be able to provide a visual presentation of associations and linkages that may exist for any person, location or thing under investigation. This is perhaps one of the most daunting challenges faced by those investigating cyber crimes as they seek to coherently understanding the linkages between events. To simplify this process, the following tool is proposed.
- Tools: Analyst Notebook
- Price: $4,560 per user.
SOFTWARE ACQUISITION STRATEGY
In deciding the software acquisition strategy, you need to conduct a price comparison between a “Floating License” and individual licenses based on “3 -5” users.
It must also be noted that there are a number of open source software tools which can be used to conduct rudimentary forensic analysis. However to meet the requirement of authenticity and reliability for the admissibility of digital evidence in a court, it is recommended that the tools identified above be considered.
TEAM COMPOSITION
We recommend at least 4 people with two in technology, one legal expert and one business development professional. The team must have capabilities in policy, technology, management and forensics. First Atlantic Cybersecurity Institute (which I own) offers training in these areas. The Institute can prepare anyone interested in moving into this area.
photo credit: CSIS.