Omar Farouk Edewor is a vibrant Nigerian professional who is doing great things in the Nigerian telecommunications industry. Meeting him for the first time, the thing that would catch your attention about the London-trained economics graduate is his gentle and soft-spoken nature. However, beyond these qualities, he is a serial entrepreneur who is steadily building his business empire.
Edewor is the Co-founder of Teleology Nigeria, the holding company of 9mobile Nigeria. He currently serves as a Director in the company, a role he performs while pursuing numerous other business interests. In 2018, he founded a company called AE Technology Nigeria Ltd, which offers value-added services to telecoms industry players. The Nairametrics team recently caught up with him somewhere in Ikoyi and asked him questions about his business venture. Below are excerpts from the conversation.
Nairametrics: Good afternoon, Mr Edewor. May we get to know you, Sir?
Omar Edewor: My name is Omar Farouk Edewor, I’m an Economist. I’m also a Co-founder at Teleology Nigeria, the holding company of 9mobile. I have other business interests located in Nigeria and Kenya, including a Value-Added Services company, a lottery company, as well as a prospective infrastructure sharing and communications services company.
Nairametrics: You recently started a Value-Added Services company called AE Technology Nigeria Ltd. Tell us more about this new venture.
Omar Edewor: I think I should start by explaining what Value-Added Services entail. As most people already know, the core business of telecommunications is data and voice. So, revenue generated outside of data and voice is called Value Added Services. These include short-code content services, ringer tunes, the USSD codes that bank customers use for quick transactions, “borrow me credit” services, etc. All of these services basically help telecoms operators to augment/grow their revenues.
That said, AE Technology is primarily a Value-Added Services company. But we also do a whole range of B2B services, including license acquisition services such that we help clients to acquire licenses from the Nigerian Communications Commission (NCC), from the Central Bank of Nigeria (CBN), from the lottery commission, and others. For example, we have a track record of acquiring Lagos lenders licenses for our clients. We also do value chain consultancy whereby we help our clients to build B2B relationships with other businesses in the telecommunications space as well as the finance space. We introduce our clients to original equipment manufacturers that are relevant to their businesses. So yeah… We essentially help our clients to develop their businesses. We believe in excelling together.
Nairametrics: Can you tell us who your target audiences are, using the top-to-bottom pyramid approach?
Omar Edewor: At AE Technologies, we have two strategies — the B2B strategy as well as the B2C strategy. So, with our B2B strategy, our target audience would be corporate SMEs who are planning to offer either Value Added Services or lottery services. We also target financial technology (fintech) firms who are looking to work with aggregated partners like 9mobile, MTN, Glo, etc. We essentially help them to develop distribution channels. A USSD code is a distribution channel.
In regards to our B2C strategy, our target market is essentially the one hundred and twenty million Nigerians who own phones, because whether you have a feature phone or a smartphone, you can easily access shortcodes.
Nairametrics: Which one provides more financial opportunities for you?
Omar Edewor: Our B2C strategy is what we consider to be our main business. It has the most revenue-generating potential as well. Generally, in business, we believe it’s always a better idea to go for a mass-market product/service that has a smaller margin. For example, Apple Watch is the most valuable watch brand more than Rolex. This is because they are doing a mass-market kind of product with smaller margins, but they are still earning more than a company whose average product retails for $10,000.
So, yes, we obviously make smaller margins with our B2C strategy, but it gives us the opportunity of scaling because the scale is critically important.
Nairametrics: One of the services you offer at AE Technology is an advertising service. Can you tell us about this?
Omar Edewor: So, at AET, the things we specialise in are: increasing access to infotainment, financial/insurance services, as well as lottery. In terms of advertisement, we have two platforms including our smart messaging platform, which advertises via SMS to the subscription base of telcos. What this does is that it advertises the telco’s services and products, as well as the services and products of third parties; essentially VAS providers who have partnered with telcos.
How it works is that a lot of VAS services are usually delivered in conjunction with licensed VAS providers. For examples, services like “borrow me credit” and caller tunes are not directly rendered by the telcos. Instead, the telcos offer these services in partnership with VAS providers.
We also have what we call the Push ad Platform which essentially entails monetising the traffic of websites with significant traffic as well as mobile network operators. This works in such a way that we can, for example, use the out-of-bundle page, which is the page that once you run out of megabits you are directed to that page. Or we can use the “Error 404 page” as our customer acquisition point. For example, when you land on these pages, you will be prompted to download a cookie. Now, once you download this cookie, you will then receive targeted advertising based on your location. Location is the only information that will be saved, due to privacy reasons. We also use a randomised identification number called the NSIBM and it essentially serves the purpose of differentiating one user from the other.
Once we do that, we partner with what we call programmatic ad agencies. These ad agencies have a bidding platform where potential people who want to advertise with them go on and bid for advertisement space. So, the way our platform works is that we have some categories that we do not advertise such as pornography, alcohol, and other morally-questionable categories. We exclude such contents and essentially the rest of the process is automated.
Through this means, we are able to advertise to, for example, 9mobile’s data customer base which is about seven million customers. We are able to advertise to them in a non-intrusive way. That’s essentially how it works.
Nairametrics: So, just to clarify, AE Technologies is not involved in the process of creating the ads, right?
Omar Edewor: No, we do not engage in the business of ads creation. We only concern ourselves with ads’ distribution.
Nairametrics: Let us deviate a little bit. How would you rate the quality of marketing campaigns coming out of Nigeria nowadays?
Omar Edewor: That’s an interesting question. Well, I feel in the media space, Nigeria has made tremendous progress in the last ten to five years in terms of the quality of contents being created. We can now see better editing, the use of more quality cameras which has resulted in better productions. It seems like a lot of practices have been emulated from more advanced economies. So, in short, I feel like the creators of the content have improved and are continuing to improve.
Nairametrics: How would you rate the Nigerian business operating environment, bearing in mind how government policies often affect startups like yours?
Omar Edewor: I will say that Value Added Services, in general, have been detrimentally impacted by government policies in the last two years, particularly some regulations coming from NCC. There are two main policies now which are: the double opt-in policy which basically seeks to protect customers from unsolicited deductions from their accounts for services that they did not register for. In principle, it is a good policy. However, the way in which it was implemented is detrimental to the sector as well as for the regulator. As you know, we live in a taxed society. When service providers and the sector as a whole is doing well, the regulators are able to raise more in tax.
For example, in 2014, the Value-Added Services segment of the telecoms industry was generating about a billion dollars annually. Today, due to the direct impact of double opt-in, the sector is only doing about $400 million.
There is another regulation passed by the NCC which basically constricts the use of airtime as a means of payment. In Nigeria, airtime can only be used to buy voice and data services according to NCC policies. And this has detrimental impacts on Value-Added Services providers; constricting the number of activities we can get into easily because it’s easier for us to charge airtime as opposed to naira.
Let me give you some concrete examples. A partner of mine has an insurance platform. Now, one of the main bottlenecks hampering customer experience and getting this product into the market is the question of how he can charge his customers for the insurance policy that they are buying. He has had to partner with NIBBS in order to be able to charge his customers. Unfortunately, this brings added costs. This also makes the customer experience more complicated because, in order for people to want to use your platform and pay you for it, you need to be making it easier for them to be able to do what they want to do. Nobody is going to come on your platform if it is difficult to transact because you are not the only means of getting the service. So, the customer experience and increasing access are both equally important.
Nairametrics: Let’s stay on the double opt-in policy for a minute. One of the reasons why the NCC had to implement the policy is because millions of Nigerians were getting ripped off, with some having to pay for services they never signed up for. Isn’t this enough reason for the regulator to act?
Omar Edewor: It is, you are right. There was large scale fraud going on and everyone was aware of that. However, seeing as the vast majority of the businesses that were going on were legitimate businesses, perhaps there could have been a better way to go about preventing these fraudulent transactions. My point is never that it’s a wrong idea to protect the consumers. It’s a matter of how do you go about it without negatively impacting the entire industry. This is an industry that has lost about sixty percent of revenue in the last two to three years. This shows that the way they chose to remedy the situation was faulty.
There are other ways they could have remedied the situation without hurting all the players in the field. For example, any service provider that is caught wanting should refund twice the amount. If you know that you are going to be fined twice the amount that you are making illegally, that should serve as enough deterrent not to do the wrong thing.
Nairametrics: So, at AE Technologies, another service you offer has to do with finance. Please, tell us more about it.
Omar Edewor: At AET, what we do in the finance space is twofold. We develop digital distribution channels for financial institutions – meaning web, USSD, and app banking channels. On the other hand, AET in conjunction with its financial partner Fint has a USSD-based channel for micro utility loans. Right now, we’ve partnered with EKDC. They are the first DisCo that we’ve partnered with in order to provide finance for their customer base. In the event that a customer does not have enough money to buy electricity, they can come on our USSD-based platform, put in their metre number, put in their BVN, and then put a loan amount of their choice to be credited unto their metre. Those are the two services we currently offer in the financial space.
Nairametrics: Is the metre payment service currently active? And do you have plans to extend it beyond EKDC?
Omar Edewor: The metre payment service will be launched next month. And yes, we have plans to partner with all the DisCos in Nigeria. We are just starting with EKDC, but we intend on partnering with the Kano DisCo, the Yola DisCo, the Benin Disco, and the rest of them. Every service that we embark upon, the intent is always to make it a national project, after which we expand it into other countries.
Nairametrics: Where do you see the company in the next five years?
Omar Edewor: In the next five years, we intend on making AET a continental player in the Value-Added Services segment. VAS consultancy is an area of business where the return on investment (ROI) is extremely high. This is because starting a VAS business is more about your network than capital, and partnerships need not be expensive if all the players are bringing something of value to the table.
Nairametrics: Technology has really penetrated the Nigerian economy and it appears almost every sector has made adequate use of it except the insurance sector. Now, you are offering an insurance service. What do you think has prevented the insurance guys from taking full advantage of technology, and what is the new innovation you are bringing onboard?
Omar Edewor: You see, insurance is actually a very over-looked business in Nigeria. Interestingly, insurance companies are actually doing very well in terms of making use of technology. Leadway Insurance, for example, is a company I have partnered with. It is a billion-dollar company. Yearly, they do about N18 billion in profit. They are very technology-driven and this has helped them.
The truth is, if you are doing any business that is mass scale, you can’t but make sure that you are driven by technology. It helps to control your cost and control risks, as well as helps you have a better picture of what you are actually doing.
That said, there is obviously enough room for the insurance guys to improve. They are not as technology-driven as the banking industry for instance. I also feel like they could definitely improve on their B2C strategy because in the meantime, insurance in Nigeria is largely a B2B business. They are mainly focusing on insuring large corporates, insuring business transactions like shipping and whatnot. Now, even the B2C aspect of it is not a mass-market business. It’s more or less targeted at the elites and it’s something that needs to be revised. They need to change strategy. They need to look more at providing insurance services for the masses at affordable price points.
Mind you, this is not something that I’m saying from a socialist angle. It can be done profitably and sustainably. The micro-insurance space in Nigeria has amazing potentials. Examples include micro-health insurance. Basically, most people in Nigeria do not have insurance covers because of the price points. It’s possible to deliver micro-insurance services at N1000 to N2000 monthly. You just have to limit the payout to N30, 000 and cover maybe medical tests and simple drugs to treat the most common diseases like malaria.
The insurance strategy can definitely be improved, and this is why AET has partnered with some insurance companies to make micro-insurance plans and also to improve distribution channels. You need not go into an insurance company to buy a policy, the same way you need not go into a bank to make a transaction.
At AET, here is what we are doing – we are going to insurance companies and getting them to look at micro-insurance and phone insurance. These are services that are relevant to the masses. We will be launching these products shortly.
Nairametrics: When you look at the Fintech space in Nigeria, are you impressed with what you see?
Omar Edewor: There is always room for improvement. Even the most advanced countries in the world are constantly improving. So, there will always been room for improvement.
Now, speaking of Fintechs, there are factors that are working to their advantage. Some of these factors include the fundamentals and the characteristics of our economy, including our huge population, the young demographic, the issue of limited disposable income, our insatiable needs/wants, and a banking sector which is not geared towards consumer financing especially for those who are self- employed. All of these present an opportunity for Fintech companies to basically ensure financial inclusion for those who have been excluded for long.
As we speak, there is a huge demand for pay-day loans and all sorts of loans and financing. And the fintech firms have, so far, been doing a great job. They are proving that that segment of the market is profitable and sustainable. It is obvious that they have gotten the bigger banks to take note too. As you may well know, GTBank and Access Bank have recently started playing vigorously in that space too.
Unfortunately, government regulation is not quite helping that sector. There is excessive bureaucracy in licensing. And I believe they recently released a fintech license that goes for about a billion naira. How can a startup afford a billion naira to pay for a license if your father is not a billionaire or you are not stealing money or a beneficiary of corruption? It’s certainly not good for innovation. This is fund that they could have used to grow their businesses, but instead, they should just give it to the CBN? The regulatory environment is just not so hospitable.
Nairametrics: Let’s talk about Teleology. Has Teleology fully taken over 9mobile?
Omar Edewor: You know, I find that question amusing. 9mobile is one of the biggest companies in Nigeria. Yes, there has been a lot of confusion about that issue which I find ironic because it’s been well publicised although there have been counter-narratives. So, I do understand that it can be a bit confusing about which one to believe.
But I will tell you this – the Teleology Nigeria board fully took over 9mobile in November 2018. So, Teleology Nigeria has owned 99.999% of 9mobile for over a year now and is now leading the turnaround story for the company. Those who are in the industry all know this.
Nairametrics: What about the counter-narratives, what do you say about those?
Omar Edewor: 9mobile’s Public Relations Officer has officially put out a statement. So, I will leave it at that. Those who are interested in knowing more should find that statement and read it.