The difference between the existence and exit of HiTV and Zoom Mobile from Nigerian business environment can be related to that of six and half-a-dozen. While the duo are not necessarily guinea pigs for corporate business caution, their last breath stage should certainly serve as an amber to other companies who may be riding on the euphoria stage.
Interestingly, both companies which are service providers are indigenous. There market target is more or less unlimited. But the mission they set out to accomplish was cut short by some avoidable factors and management miscalculations.
Experts say that local firms have inherent disadvantages deriving from narrow product lines, corporate selfishness of holding on to the ownership and not knowing when to let go as well as inability to understand the changing business and technological environment of their businesses.
Most Nigerian companies depend on a single product or service such that any change in the sector would make them victim.
This calls for diversification of product to hedge against such industry changes. Also weak corporate governance often deny local business funding from banks as they cannot trust the integrity of the owner. Nigerian business people also lack the ability and orientation to separate the business from theselves.
Zoom Mobile was incorporated on August 25, 1998, as Reliance Telecommunications Limited, and obtained a National Licence subsequently to provide fixed wireless telephone Services.
It was a code-division multiple application (CDMA) operator. It commenced operations in Nigeria in November 2001 on the first state-of-the-art Code Division Multiple Access (CDMA) equipment operating on 1900 MHz frequency deployed by Nortel Networks of USA.
The speedy rise of Global System for Mobile (GSM) communication in the telecom industry was enough to signal the extinction of CDMA operators which included Starcomms, Intercellular, Multi-Links and Zoom Mobile.
With limited operating licences of CDMAs, they had difficulty in accessing funds from banks.
But Starcomms PLC pulled a fast one on Nigerians when it took a step to relieve itself from the impeding challenges in the industry by breaking the record of being the only telecom operator to be listed on the floor of the Nigeria Stock Exchange (NSE). However, shortly after the offer, the company went under.
However, Annie Okonkwo, the founding Chairman of Zoom Mobile which reportedly had an opportunity on a platter of gold to be bought over by an investor for about $70 million never actualised the prospect. Industry observers are of the belief that Zoom Mobile rejection of the offer will be memorable in the history of the industry.
According to some of them, the refusal of Zoom Mobile owner to sell the network for so much would continue to hurt. The decline of the offer is seen to be self-centred and parochial.
Zoom Mobile with network coverage of over 17 states and over 124 base stations in Lagos alone finally succumbed to defeat when it shut down its switches nationwide due to financial crisis.
On his part while speaking with Hallmark, a former commissioner with the Nigerian Communications Commission (NCC), Mr. Steven Bello, said lack of corporate governance and commitment of business operators make many companies to go underground. He stressed that individualistic tendencies of HiTv and Zoom Mobile largely contributed to their plight.
“There was lack of commitment on the part of the two companies’ management. If you look at the CDMA operators, the owners have NITEL business mentality because they were former staff of NITEL. They don’t want to re-invest in their operation.
What they do is to divert any profit they make to other things that have no link with their immediate business they are operating. Zoom Mobile had opportunity to be bought by an investor, but it didn’t push for the opportunity.
As at now, Visafone is negotiating with MTN. That is a wise decision. It was too late for CAPCOM to bring together the three companies the time it did. Zoom Mobile would have taken a wise step long before now.”
“Any where there is no corporate governance, the success story would be short-lived. This was evident during the operations of HiTv.
There was profligacy. Instead of regularly strategising on how to take the pay Tv to another level, the managers were spending on personal satisfaction. In fact, workers were not being paid.
It is true that the banking sector came up with stringent measures.
But that was not really the reason why HiTV could not get credit facility.
The banks knew that there was lack of corporate governance. They knew that workers’ salaries were not being paid even when the money was available. It is at the same time banks were giving loans to the likes of Dangote and even begging other to collect loans.
The banks knew the internal structure and governance of companies.”
Speaking further, Bello said HiTV’s fall was due to lack of foresight and discipline.
According to Bello, “It is one thing to start a company; it is another thing to sustain it. Zoom Mobile and HiTV started out well but did not sustain their companies’ vision.
I think they and others with the same fate should serve as case studies for our businessmen who want to grow their businesses.”
Indeed, Starcomms was not the only telecom operator that went to the market.
Zoom Mobile also had a deal with net worth investors in a private placement.
The company declined to disclose figures of the transaction. According to the company in 2011, “There are new shareholders. We didn’t do a public offer.
We did a private placement which brought in significant investors. We are not allowed to disclose names.
A public offer announcement will be made in due course”.
In the same year, the telecom operator expressed willingness to commit up to N5 billion on its re-branding exercise.
Speaking with Hallmark, the National Association of Telecommunications Subscribers (NATCOM) President, Deolu Ogunbanjo, said Zoom Mobile would have taken drastic step when its competitors like Starcomms and Multi-Links started struggling.
“The CDMA sector has been hampered by many factors such as lack of fund, corporate governance, unfavourable interconnect rates, limited coverage among others.
In the face of all these challenges, the company would have offered itself for sale. The signs of GSM muzzling the CDMAs were quite obvious. Even when the opportunity came for it to be acquired at a good price, it was missed. It is painful, but cannot be recovered in full,” Ogunbanjo said.
HiTV was another promising service provider that could not actualise its dream.
It was the first television platform in Africa to deploy Hyper cable, a terrestrial pay per view TV decoder system was launched in 2007 and soon became the rave of many Nigerians who have over the years been subjected to the monopoly of DSTV.
The company was recording significance success until July 2010 when it lost licence to broadcast the English Premier League for the European football season, to major rival DSTV.
GTBank was known to be the backbone of the pay Tv due to its financial support.
But the support was not sustained, especially when the banking sector regulator came up with strict regulations.
HiTV services were stopped in November 2011 due to financial difficulties.
Reports had it that Mr. Toyin Subair received huge sum of money from the leader of All Peoples Congress (APC) Asiwaju Bola Tinubu Tinubu, with a promise that he would hand over the company to him later.
It was also revealed by a source that Tinubu absorbed the former staff of Toyin Subair-led Hi Media into his pay satellite television station, Continental Satellite Television (CONSAT).
Inching to its end in 2011, HiTV which was located on Isaac John Street GRA, Ikeja, Lagos was put under lock by the men of the Nigeria Police Force on the directive of Guaranty Trust Bank due to a huge debt of about N8 billion owed by the pay Tv Station.
Beyond the company’s indebtedness, there were reports that HiTV boss, Subair was leading opulence lifestyle.
This was insinuated as the reason why he could not pay staff salaries.
The development led to the resignation of many staff, especially the engineers and technicians who were poached from DSTv.
Unfortunately, many Nigerian companies are still toeing this line of not being ready to give way for better alternative even when it becomes glaring that their businesses which they often see as empires are sinking.
Of course, there are exceptions to this hold-tight syndrome.
One of such is sale of VGC Communications owned by the current Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), Engr Gbenga Adebayo.
Perhaps in admission of fact that the company would be incapacitated by the GSM operators, it was sold to telecom giant MTN without delay.