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Zambia 2014 | TELECOMS & IT | INTERVIEW

TBY talks to Samson Longwe, Managing Director of Realtime Zambia, on the dynamics of the ISP market, and government incentives to improve internet penetration.

Samson Longwe
BIOGRAPHY
Samson Longwe was appointed as Managing Director for Realtime Zambia in August 2010. Longwe has studied Economics and Business Administration. In 2009, he was seconded to Realtime Zambia from Copperbelt Energy Corporation Plc (CEC) where he worked as Business Development Manager. Prior to joining CEC, Longwe worked for the National Airports Corporation, where he served up to the position of Planning and Business Development Manager. Longwe is also currently serving as Chairman of the Internet Service Providers Association of Zambia. He is also an active member of the Zambia Chamber of Commerce and Industry and also serves as a non-executive board member on the PACRA Board.

What have been the drivers behind your 400% growth in size of late?

That growth has occurred over a period of about four years, and represents a marked increase in our turnover. The company was a typical SME business, and a strategic decision was made to partner with Copperbelt Energy Cooperation (CEC). A joint venture (JV) was formed between the original owners of Realtime and Copperbelt Energy Cooperation. Immediately after the formation of the JV, in 2009, equity was pumped into the company by CEC to adopt fiber optic technology for the provision of services. As a result, we pioneered the provision of fiber to the premises (FTTP) in this country. Until then, customer connections were made via wireless links. When we pioneered the provision of fiber cabling, it immediately gave us a competitive advantage over other service providers. As a result, we were able to attract high-end institutional customers, such as the mining houses, the banking sector, and large manufacturing companies. Following the formation of the JV, it was necessary to restructure the company and hire new staff to ensure we were using appropriate skills. The other change was that prior to the formation of the JV, Realtime was mostly providing services to the mass market; however, after the formation of the JV, we focused on a niche market of large institutional customers.

How would you assess the market demand for internet solutions?

We have reasonable demand for our services, stemming from the fact that the penetration levels are still low and also because Zambia's economy continues to grow at an average of 6%-7%. Further, the government has put in incentives to grow the ICT sector, as it is acknowledged that this is one sector that is going to be responsible for creating efficiencies for business and the economy in general.

How would you rate the effectiveness of those incentives so far?

It has been an ongoing process, and we continue to engage with government. So far, we have seen the government provide incentives through tax measures. For example, we enjoy concessional rates on the importation of ICT equipment into the country. Initially, the government was only allowing the importation of computers at a concession, but over the years we have seen the government increase the range of ICT equipment that comes into the country at concession rates. Also, in terms of regulation, the government reviewed our license fees downwards in order for the ICT sector to penetrate more markets. Of course, there is more we hope can be done, but over time we have enjoyed the tax incentives offered to the sector.

What is your view on the regulatory framework and its development?

Our regulator has tried as much as possible to ensure that regulations are provided in an environment that is conducive to the sector, whilst meeting the requirements of the international community. We have seen progressive changes in terms of regulation in the sector. So far, national regulation is in tandem with international practice. If there are going to be further changes, they will not be extensive. One area where we keep pushing for changes is the further reduction of license fees. In particular, our thinking has been that we are paying quite a bit more compared to others in the region in terms of operating fees, which currently stand at 3% for service providers such as us. That is 3% of the turnover. We hope it could be reduced to as low as 1%, which is as low as other countries around the world.

How would you assess the competitive landscape for ICT?

In Zambia, we have about 22 registered internet service providers. However, of the 22 that are registered, maybe only about 10 are active. There is intense rivalry in the sector, and at the same time because of the intensity of the competition, it acts as a barrier to entry for new companies. Secondly, the sector requires that you have adequate capital because the technology changes so often. That, too, is a barrier to entry for new entrants and start-ups.