T. Ahmed Rufai, CEO, Nigerian Communication Satellite Ltd. (Nigcomsat)

Africa remains a hotbed of opportunities for satellite operators, but what traditionally has been a market reserved for international operators is finally seeing some homegrown competition.

Nigerian Communication Satellite Ltd. (Nigcomsat), a public-private partnership created with the Nigerian Federal Ministry of Science Technology, launched its first satellite, Nigcomsat-1, in May aboard a Chinese Long March 3B rocket.

Nigcomsat-1, located at 42.5° East, carries four C-band transponders, 14 Ku-band transponders, 8 Ka-band transponders and 2 L-band transponders and is expected to provide a wide range of communications service over Africa for 15 years.

CEO T. Ahmed Rufai is responsible for directing Nigcomsat’s growth strategy, and with demand for capacity on the satellite already strong, Nigcomsat looks set for a bright future. “We want to play a leading role in terms of satellite communications in Africa,” says Rufai. “This is a satellite by Africa for African people.”

Nigcomsat completed testing of the spacecraft July, and the company looks to be launching operations during a time when demand for satellite capacity and services in Africa has never been higher.

In an exclusive interview with Via Satellite Associate Editor Mark Holmes, Rufai discusses the potential markets for Nigcomsat-1 and the plans for future spacecraft as well as the impact the operator hopes to have in Africa.

Via Satellite: What are the major challenges for Nigcomsat over the next 12 months?

Rufai: We are entering the market for the first time, and we want to guarantee that we can be a strong service provider and provide a strong quality of service. We have been developing and training a lot of engineers who will be part of our technical support services staff. We know that the public and the consumers are very anxious to receive satellite services.

Via Satellite: What role can satellite technology play in Nigeria and surrounding countries?

Rufai: We have a big challenge when providing services to mobile operators. We are providing them with capacity which will enable them not to have to roll out terrestrial backbones on their own. So satellite will help them reduce their transmission costs. The expectations are that the costs of telecoms services in Nigeria will come down in the next two years.

Via Satellite: What markets across Africa are you targeting?

Rufai: In terms of the make-up of our customer base, we think the major customers for us will be mobile service operators, [direct-to-home] operators and national telecoms operators in Africa as well as the [Internet service providers]. You also have the government and the business community as potential customers for capacity.

Via Satellite: How much capacity on Nigcomsat-1 already is reserved, and what percentage of capacity on the satellite do you hope to have sold in the first 12 months?

Rufai: Over 50 percent of the capacity has been sold already. We expect to sell out 100 percent of the capacity in the first year.

Via Satellite: What are your capital expenditure plans as you ramp up operations?

Rufai: At this stage we will be investing in the customer premise equipment. We are looking at a situation where we can attract some foreign investors. We want to be in a position where we produce some of the customer premise equipment here in Nigeria. We also hope to attract more GSM services to Nigeria as well as set-top boxes.

Via Satellite: When do you anticipate looking at adding more satellites to your operations?

Rufai: We are anticipating before 2008 that we will sell out capacity. This means we would then have to start looking at Nigcomsat-2 and Nigcomsat-3. There will be strong demands for bandwidth here. If we are able to sell out the Nigcomsat satellite we will plan immediately for the next one. We would also look at other areas in Africa such as Egypt.

We would hope to have Nigcomsat-2 satellite up in orbit in the 2009-2010 timeframe. We have not started a tender process for that. We are still marketing capacity for the initial satellite. The tender process would not happen until the end of the year at the earliest. We will talk to manufacturers later this year.
We will also have to decide how we want to do this. We could do an open tender or we could do it as a joint cooperation with a partner. It really depends on what the government wants to do. There are different options available which could be economically advantageous.

Via Satellite: Have you learned any lessons from the operations of Nigeria’s Earth observation satellite, Nigeriasat-1?

Rufai: Nigeriasat-1 was a huge success, and the success achieved gave the political will for the Nigcomsat-1. To date, over 2,000 images have been taken by Nigeriasat-1 and applied to assist the development of agricultural programs of government, environmental and ecological problems and support of research in higher institutions of learning.
With Nigeriasat-1 a lot has been achieved in the area of ground station operations and management, as this was completely handled by engineers trained by Surrey Satellite Technology Ltd. The operations are being well managed, and the satellite is performing well in orbit.
Nigcomsat-1 is much bigger than Nigeriasat 1. While Nigeriasat-1 is barely 100 kilograms, Nigcomsat-1 is over 5,000 kilograms. Over 50 engineers were trained in China for the operations and management and another 50 are being trained to enhance the human capacity. A state-of-the-art network control center and satellite control center is in place in Abuja, Nigeria, for the operations and management. Thus, Nigcomsat-1 is a tremendous improvement on Nigeriasat-1, and we can only improve as we progress in space business over time.

Via Satellite: How will the Nigcomsat satellite improve the quality of life for people in Nigeria?

Rufai: Satellite is fundamental here. When you look at the infrastructure here, you see the wireline infrastructure is very limited. In 1999, fixed line penetration was about 0.45 percent. It was less than half of one. GSM services in 2001 had a penetration of over 20 percent of the total population. Satellite is important in terms of providing a critical [information and communication technology] platform. The cost of covering the country in terms of fiber or terrestrial links is very high.

Via Satellite: How important is the satellite in terms of the overall communications landscape in Nigeria?

Rufai: It is not just about Nigeria. This satellite provides coverage of the entire African continent. If you look at it from the perspective of time, we have a lot of rural and nomadic settlements where it is almost impossible to have terrestrial infrastructure. Here, the best solution is the satellite link for connectivity. This is where the satellite is going to make a difference. We want to try and bring information and communications technology to as many people as we can in Africa. The government is aiming to make such lofty ambitions a reality by making this investment in the satellite project.

Via Satellite: Are you targeting the broadband access market in Africa?

Rufai: The broadband market in Africa is still very poor. It is a niche market. We are currently working on setting up a teleport access in Europe. It is particularly important for us to provide broadband access to government institutions and to provide businesses with a broadband link. We have very strong footprints in terms of Ku- and Ka-band to meet those requirements. If we can do that, it will be a real boost to things like e-commerce and e-government. It will have then have an impact on the government’s accountability as well as the efficiencies of businesses.

Via Satellite: How do you see the broadband market developing?

Rufai: Broadband assets in Africa are still scarce. This is one area where the digital divide is still widening. Basic access to Internet is still a major issue. We believe we will be able to have a dramatic impact on the broadband landscape. In 12 months time, the [information and communication technology] landscape will change. Satellite will play a critical role. Once the satellite capability is added, businesses will have access to much faster broadband services. We will be able to more than double the speeds available to customers, which is an important parameter for digital services.

Via Satellite: How do you see the direct-to-home markets developing?

Rufai: [The direct-to-home market] in Africa is a niche market. The question is affordability, especially when you look at the middle and lower classes. We have a channel on the Ka-band which is specifically designed for television. We are obviously looking to take advantage of the need in Africa for a wider variety of television services.

Via Satellite: When do you expect Nigcomsat-1 to be profitable?

Rufai: The satellite has a lifespan of 15 years and we hope to be profitable within four to five years. We are going into end-to-end services. We are also looking at the future structure of the company. It is going to be a public-private partnership.
Also, at some point in the future, we are looking forward to be listed on the New York Stock Exchange. We are looking for investors to buy into the company. We hope to be on there soon, but firstly we want to be on our own local exchange within the next year. Two years after that, we hope we could be on an international exchange. One of the key challenges will be targeting investment.

Via Satellite: How concerned are you about the potential loss of some C-band spectrum to telecoms players? How would this impact Nigcomsat?

Rufai: It is an issue that not only affects Nigcomsat, but it affects the whole of Africa. As you know, C-band is highly used for communications in Africa. Given that WiMax [Internet] services may or may not take-off, we think most African administrations support C-band remaining with satellite players. It could disrupt existing services, which have been properly coordinated.
I believe very strongly that satellite players will be able to keep hold of C-band spectrum. Each regional administration has already discussed C-band spectrum. It is already been confirmed that it is difficult to combine satellite and telecoms services. It is very difficult to avoid interference. Our position is that you need to look for alternative bandwidth for the [terrestrial] players. That is the most reasonable thing to do. The same services can be deployed in other bands that are available. In Africa, we don’t see any reason why the [terrestrial] players would need C-band spectrum.

Via Satellite: Where do you expect Nigcomsat to be a year from now?

Rufai: I hope to be giving you the lowdown on new satellite services in the region. We should also be in a position to tell you about our next mission. This should also be the signal for the [information and communications technology] landscape in Africa to change.