As I write this, there is no doubt that MT has crossed the 60 million subscriber landmark. By the end of June, according to the Nigerian Communications Commission, MTN had 58,516,759 active subscribers. Judging by the average rate at which the company has grown over the last few years amassing over a million additional active subscribers in each of the quarters of the second half of the year, MTN has certainly hit this milestone.
Sixty million active subscribers is a formidable achievement and a far-cry from the day when at 60,000 subscribers, MTN called a press conference to announce to the world how much progress it had made. Could those bright eyed executives have imagined that just a little over a decade later, they would be celebrating the attainment of 60 million subscribers? Did any analyst anywhere on earth believe that the Nigerian market was sufficiently robust as to enable a single player amass 60 million subscribers?
The milestone is a testament to the beauty of market liberalization and excellent regulation. Less than 15 years after the telecom industry was liberalized and opened up to private sector participation under the guidance and active oversight of a regulator which understands the delicate nature of protecting multi-stakeholder interests, Nigeria is recording the kind of progress previously unimaginable. According to the Nigerian Communications Commission, the telecom industry has been responsible for an inflow of foreign direct investment in excess of USD25 billion so far.
Clearly the social and economic empowerment that is attendant to the ability to communicate in the way telecommunications makes possible is phenomenal. Whether it is by drastically reducing transaction costs or availing people with economic opportunities; whether it is by driving innovation or by fostering closer relationships; whether it is by enhancing economic productivity or creating jobs, telecommunications is a potent force for economic growth and development. Indeed, economists say that its potential to facilitate GDP growth is greater, the lower the country is on the development ladder.
But telecom’s impact on development goes even deeper than the aforementioned and their related economic spin-offs. MTN for instance, has invested in infrastructure across Nigeria, to the tune of several billions of dollars. Apart from its record over 10,000 base stations, it has long erected fiber-optic transmission networks across the country and within specific cities. Its transmission backbone provides a critical intermediary platform for practically every other industry in Nigeria from oil and gas to banking and finance, from agriculture to defense and security.
While MTN’s achievement is no doubt, formidable, the achievement of other players in the telecom space bears mention as well. Etisalat whose promoters were far-sighted enough to commit USD 400 million for a digital mobile license in Nigeria many years after the initial players who had paid much less had become entrenched in the market space, now has in excess of 20 million active subscribers. The combination of Airtel and Glo is also responsible for more than 50 million telephone subscribers across Nigeria.
Overall, the telecom industry pays close to N300 billion to the government in taxes annually. The taxes comprise annual operating license fees, VAT, Rights of way; state taxes as well as federal taxes and sundry other levies.
The success of the telecom sector, manifested in increasing subscriber numbers and by extension, enhanced telecom penetration, has spawned a huge multiplier effect across practically every sector, including government. Today, the digital route is fast evolving as the preferred means of engagement between government agencies and the citizens, business enterprises and even government establishments themselves. The use of electronic payments for public sector transactions is fast catching on and is quietly plugging some of the leaks and waste (read corruption) that hitherto existed. In the area of education for instance, it is increasingly common to have examination results released within a few weeks and uploaded onto the Internet for students to access.
The challenges of rolling out telecom infrastructure across Nigeria have been detailed so many times, that followers of the industry’s trajectory may wonder if doing so again would achieve any effect. But repeat those challenges we must, if we are to correctly situate the context of MTN’s achievement and by extension the achievement of the overall telecom industry.
With electricity from the national power grid insufficient and unreliable, an inordinately high proportion of operational expenditure, by some estimates up to 60 percent, goes into fuelling generators which operators rely on to power their base stations and other infrastructure. The result is that compared with many other African markets, network costs as a component of operating expenses, are disproportionately high in Nigeria.
Telecom infrastructure vandalism which could include malicious damage to cables and other infrastructure or outright theft of such infrastructure is another critical issue. Industry-wide, there is an average of 500 such incidents per month.
Multiple taxation is yet another albatross which the telecom industry shoulders. Multiple taxation itself is a simple term that like AIDS, aggregates a complex syndrome whose manifestations are sundry. In a nutshell, similar taxes and levies are arbitrarily imposed on the same income by different levels of government and at other times, arbitrarily increased. In some instances taxes are created arbitrarily and expressly targeted at telecom companies
Of course, it is no news that telecom installations have been sporadically shut down by agents of government in the last few years, for defaulting in some of these arbitrary payments. This worsens the issue of quality of service, the age-old complaint of the telecom subscriber and in addition to the inconvenience and disruptions it instigates in the economy, disrupts national security, creating avoidable problems for the government and citizens alike. Thankfully, the Nigerian Communications Commission has since issued a stern yet diplomatic warning to its peer government agencies and other agents of state on the dangers of indiscriminate and unwarranted forceful closure of telecom installations situated around the country.
Standing still, however, cannot be an option for MTN. The organization needs to aggressively gird its loins for the next stage of growth in the IT industry. Broadband will play a defining role in that next phase. The various dimensions in which ecommerce is creatively manifesting – from the rapid emergence of mega online retail stores to the emergence of music streaming and an entire online music and entertainment ecosystem as well as advances in mobile payments may be pointers to the fact that broadband is the future.
In fact, the Presidential Committee for a National Broadband Strategy and Roadmap has since determined that broadband is an essential right and a basic requirement for social transformation and in so doing, outlined a vision for Nigeria as a “society of connected communities with high-speed internet and broadband access.”
Capital requirements, however, remain huge as are infrastructure demands. Though it currently operates in excess of 10,000 base stations, MTN will need to put several more thousands on the ground to sustain voice and data operations especially in a future that will be increasingly data driven. This implies a future of continuous investment.
As the industry enters this defining phase of growth, government must raise its game through policy action to ensure that the country is well positioned to benefit from the long-terms gains of sound policy interventions.
Designating NITEL infrastructure as critical national infrastructure was a key policy approach of the military rulers of old, who sought to protect the then key national asset from the kind of arbitrary pressures to which today’s telecom companies are now being subjected to by all arms of government. The Association of Licensed Telecom Companies of Nigeria, ALTON, has long advocated that in the current dispensation, telecom infrastructure should be designated as critical national infrastructure. While doing so may not necessarily automatically redress all of the problems with which the sector is beset, it will certainly help create a protective bulwark against the onslaught of multiple taxation and multiple regulatory regimes that the telecom industry currently faces to Nigeria’s detriment.
While congratulations are in order, no doubt, there is clearly an imperative for broad policy action to help drive the optimization of the promise which MTN holds for wide scale economic development. It is a challenge that our governments must brace up to, urgently.
- Okoruwa is communications management consultant
