Half the world’s population lacks access to the Internet. Without Internet, four billion people don’t have access to the education, jobs, and information the rest of the world often takes for granted. Major corporations are looking at connecting the rising middle class, but the most remote communities, the last billion, are often ignored.
However, visionary entrepreneurs around the world are breaking down barriers to connect the last billion. mSTAR has featured these innovative business models in the report, Business Models for the Last Billion: Market Approaches to Increasing Internet Connectivity, set to be launched on Tuesday, May 24, 2016.
Paul Talley is one of the entrepreneurs featured in the report. Chairman and CEO of ViRural, a company that is creatively connecting remote communities in Africa, Paul writes on the challenges ViRural has overcome to connect the last billion:
Raising more than US$300 million in private/commercial capital to build telecommunications infrastructure in rural Nigeria seemed like a good idea at the time…
In 2013 Nigeria was poised to take the place as the leading economy in Africa. Political stability was a given: Boko Haram was a distant and seemingly manageable threat and the cash flowing into Nigeria was only rivaled by the amount of oil pouring out. Not to say Nigeria was perfect. Nigeria has challenges, many of which have come roaring to the surface over the last several months.
I thought we had a good idea, one that we could finance…but did we have a great idea?
We knew a few facts on telecommunications in Africa that guided our idea. We knew that telecommunications connectivity drives economic development and is a critical element to any aspiring society. We also knew that mobile network operators (MNOs) in Africa and Nigeria were too busy building out their urban networks to even consider building infrastructure in small rural communities.
We knew that telecommunications connectivity drives economic development.
We knew rural communities in Africa and Nigeria have no power. Anything operating in these communities depends on a generator. Generators, however, require approximately US$6,000 per month for fuel and fuel delivery costs. Rural communities have an average population of only 3,000-4,000 people who typically only spend US$3.00 per month on mobile services. In rural Africa there simply aren’t enough people, willing to spend enough money, to support the cost of traditional telecommunications infrastructure.
We knew rural communities in Africa and Nigeria have no power.
Our idea was simple: What if we built and operated a rural network for the MNOs in exchange for a share of the revenue?
The more we spoke to the African MNOs the more convinced we were that we were onto something. African MNOs have fled infrastructure for the past 10 years. By partnering with TowerCos, independent wireless tower companies, and outsourcing network assets with managed services programs, MNOs have effectively been able to extradite themselves from telecomm infrastructure.
We examined how TowerCos serve MNOs and we examined the managed services models that companies like Huawei, Eriksson and ZTE offer to MNOs. We then designed a program that in many ways mimics the managed services programs for MNOs in urban markets: we build and operate the infrastructure, with our own capital, in exchange for a revenue share from each site.
It took 4 years but we now have the first commercial agreement with an African MNO to build rural telecommunications infrastructure based on a managed services/revenue sharing model.
Now in 2016, ViRural is in the market, armed with a commercial agreement, and out raising capital.
However, we are facing new challenges. Boko Haram is an international brand of terror, a new government administration is leading the country, MTN, the leading mobile operator in Nigeria, has been fined US$5.2 billion by the regulator, the price of oil is wreaking havoc on the region, the Nigerian currency Naira is facing devaluation, and the Nigerian economy is in crisis. Not an optimal environment.
It seemed like a good idea four years ago and it seems like a great idea today, let’s hope that the financial markets will cooperate.