Last year, the telecoms sector had a huge bag containing a mixture of the good, the bad and the ugly. While milestone achievements, such as growth in subscribers/internet users and deeper access to broadband services, increased the sector’s contribution to the nation’s gross domestic product (GDP), it continues to battle its legacy challenges, reports LUCAS AJANAKU
The telecoms sector continues to drive the economy-providing connectivity to other sectors such as financial services, oil and gas, maritime and others. It also keeps increasing its contribution to the nation’s gross domestic product (GDP) as well as boosting foreign direct investment (FDI) flow into the country.
Last year, according to the data from the Nigerian Communications Commission (NCC), the country recorded over 162 million active subscribers, with a tele-density of 116 per cent, and contributing over $70 billion to the GDP. This is aside direct and indirect jobs created from the sector.
Broadband penetration
At the twilight of last year, the NCC said the country has achieved the 30 per cent broadband penetration as stipulated in the National Broadband Plan. Broadband penetration in Nigeria is largely mobile, which makes it necessary for the government to provide backbone infrastructure, according to Association of Licensed Telecoms Operators of Nigeria (ALTON) Chairman, Gbenga Adebayo.
The licensing of Infrastructure Companies (InfraCos) has been concluded. MainOne was licenced to cover Lagos Zone, iConnect, a subsidiary of HIS, was granted licence to cover the Northcentral zone (which has been returned). Four Infracos to provide broadband infrastructure were also licensed. They are Zinox Technology Limited for Southeast Zone, Brinks Integrated Solutions Limited for Northeast Zone, O’odua Infraco Resource Limited for the Southwest and Raeanna Technologies Limited for the Southsouth. The licencees are to provide fibre optic infrastructure on an Open Access model.
Completion of
9mobile sale
A major milestone during the year was the conclusion of the sale process of 9mobile (formerly Etisalat) to its preferred bidder, Teleology Holdings Limited. A crippling $2.1billion debt owed a consortium of local lenders had threatened the soul of the fourth largest telco. Stakeholders were particularly elated by the conclusion of the process, lest it would have become another NITEL. The NCC and the Central Bank of Nigeria (CBN) intervention had saved the telco from going under. According to a statement by one of the new non-executive directors of the board, Mohammed Edewor, Teleology, said: “It is pleased to announce the constitution of a new Board of Directors for Nigeria’s multi-award-winning telecommunication company, 9mobile.”
This follows “the successful completion of the tenure of the former board appointed by the Central Bank of Nigeria (CBN) and in fulfillment of the consequential transfer of final ownership to the new investors, Teleology Nigeria Limited.
“We thank all out-going members of the Board for helping to shepherd 9mobile through the critical transition phase it has passed through since July 2017 and wish them the very best in their future assignments.
“For us, the composition of the new Board of Directors is another significant milestone, and this follows the issuance of final approval of no objection by the Board of the Nigerian Communications Commission (NCC) to the effect that the technical and financial bids Teleology submitted for 9mobile met and satisfied all the regulatory requirements. This is indeed, the dawn of a new era in the evolution of the 9mobile brand in the Nigerian market.”
According to the statement, the new board has Nasiru Ado Bayero as Chairman; Stephane Beuvelet-Acting Managing Director; Abdulrahman Ado-Executive Director; Asega Aliga- Non Executive Director; Adrian Wood-Non Executive Director; and Winston Ndubueze Udeh, also a Non Executive Director.
Bayero appreciated the telco’s employees and subscribers, who he said should be prepared for best-in-class services forthwith.
He said: “As we begin this new epochal phase, we wish to thank all the employees, who built this viable business.
“Our debt of gratitude also goes to our subscribers even as we assure them to get ready for real best-in-class additional value for their relationship with the 9mobile brand.
“Without you, there could not have been a 9mobile business for us to invest in today. We will justify your confidence in our brand by making significant investments that will improve the value you get for using 9mobile.”
MTN vs CBN over
$8.1b cash repatriation
During the year, Africa’s telecoms giant, MTN Nigeria, dialed into regulatory trouble with the CBN. The CBN had ordered the telco to refund $8.1billion it allegedly repatriated without recourse to laid down procedures while the apex bank also imposed fines on four local lenders that facilitated the transaction. Specifically, Certificate of Capital Importation (CCI) in respect of the cash repatriation was at the centre of the disagreement between the telco and the CBN.
Also coming hot on the heels of the $8.1billion problem, the Office of the Attorney-General of the Federation issued demand notice of $2billion on the telco, which it alleged, reflected taxes unpaid over a period covering about one decade. This grew the total cash hanging on the frail neck of the telco to $10.1billion. The telco strongly rejected both allegations. The CBN, however, said it had reached an agreement with MTN over the matter.
Earlier, MTN said the matter was resolved and it agreed to make a $53 million payment. The CBN did not refer to a figure, but said both sides decided that the agreement would lead to amicable disposal of the pending legal suit between the parties and final resolution of the matter.
“The CBN, upon review of the additional documentation, concluded that MTN Nigeria is no longer required to reverse the historical dividend payments made to MTN Nigeria shareholders,” MTN said in a statement. However, the CBN has found that a 2008 private placement remittance worth around $1 billion was based on certificates that did not have final approval.
The $2billion demand from the Attorney-General’s office remains unresolved.
Challenges
The legacy challenges in the sector remained. The poor state of telecoms infrastructure across the country remained a challenge. The government did not invest in telecoms infrastructure, thus leaving operators with no option, but to plough back their profit in building network infrastructure and expanding the networks to distant parts of the country.
Data harmonisation remained a challenge during the year. This has been an issue despite the data collection and processing by various agencies such as the NCC from SIM card registration; Federal Road Safety Corps on (FRSC) driver’s licence; and Biometric Verification Number (BVN), among others.
The issues of multiple taxation/regulation, unilateral shutting of base stations, willful vandalism of telecoms infrastructure, snail speed of granting right of way (RoW) and others, persisted during the year. Mr. Adebayo, had to raise the alarm when Kogi State shut about 150 base stations at the twilight of the year under the review. It took the intervention of the NCC to restore order.
Call masking/refiling, SIM boxing
Another challenge that rocked the telecoms sector in the year was call masking, call refiling and SIM Boxing. According to the Executive Commissioner, Stakeholder Management at the NCC, Mr Sunday Dare, a whopping $3 billion is lost yearly to this phenomenon.
NCC Chairman, Prof. Danbatta, said aside the revenue loss, the situation posed serious national security threat to the entire country.
According to him, the revenue loss started in September 2016 when the NCC reviewed and implemented a new call termination rate for international inbound traffic from N3.90 kobo per minute to N24.40 kobo per minute. He said the operators involved in call masking and refiling took undue advantage of the hike in international termination call rate to tamper with international calls and terminate them as local calls in order to avoid paying the new rate, thereby defrauding the telecoms industry, trillions of naira within a space of two years.
Danbatta said in the process of addressing the issue, the NCC barred as much as 750,000 lines assigned to 13 operators from the national network.
The lines, which were barred during the year were suspected of being used for masking and NCC took a hard and uncompromising stance to withdraw the use of such lines.
Call masking and refiling is basically when an international call ID is tampered with and terminated in Nigeria as a local number, while SIM Boxing is a process of creating an artificial middle man with device that alternates call rates.
Service quality issues
As it was at the time of issuing GSM licences in 2001, the quality of service (QoS) has remained an issue. This problem particularly became accentuated because of the legacy challenges inherited by the operators. To address the challenges, the NCC has taken several measures, which included the introduction of Key Performance Indicators (KPIs) and fines, as well as ban on telecoms promos, yet the mobile network challenges continue to bite hard on subscribers across all networks. Determined to ameliorate subscribers’ sufferings, the NCC declared 2017 the year of the consumers. It also developed 2442 DND Short Code to solve unsolicited text messages/calls; and issued Direction to telcos on Data Roll- over which now enables consumers to roll over unused data for period of time, ranging from one day to seven days, depending on your data plan. This took effect from June 26, 2018.
During the year, it issued directive to service providers on forceful subscription of data services and Value Added Services (VAS), which directed them to desist from forceful/automatic renewal of data services without prior consent of subscribers. This took effect from May 21, 2018.
The Commission also developed 622 Toll-Free Line through which you can easily lodge complaints for any unresolved service issue to the NCC.
Growth trajectory
Despite the avalanche of challenges that faced the industry, stakeholders are of the view that the industry impacted the economy tremendously.
Danbatta said despite the challenges, the sector’s contribution to the GDP has surpassed $70 billion.
He said telecoms investment to GDP was $70 billion as at 2017, but explained that the figure had since been surpassed, following the steady growth in telecoms contribution. He added that telecoms contribution to Nigeria’s GDP rose to 10.5 per cent last year, up from the initial 9.1 per cent in 2016.
Adebayo agreed no less with the chief regulator. He said the telecoms industry significantly impacted on the economy in GDP growth, infrastructure development and job creation.
“Governments at all levels and the private sector, all depend on ICT for their growth and development. This is true because ICT has since become the fundamental and most reliable public infrastructure that we have in the country today,” Adebayo said.
Tech start-ups
There was an upsurge in tech start-ups, major technology innovations that are currently driving the telecoms sector. FinTech players that are disrupting the industry. Although they have funding issues, their solutions are already disrupting the financial sector.
The President, Association of Telecoms Companies of Nigeria (ATCON), Mr. Olusola Teniola said the growth of technology start-ups and fintech players would boost technology development, if given the adequate attention.
Citing instance with Remita payment software that was developed by SystemSpecs and currently being used by the federal government to drive the Treasury Single Account (TSA) initiative, Teniola called on government to support more local solutions like Remita.
Nigeria had in the past, missed out in several global evolutions, but with conscious efforts and commitment from government, Nigeria can develop her technology and become a force to reckon with in the global digital transformation initiative.