The Nation Newspaper

Tag: Operators

  • Poor service quality bleeds operators, subscribers

    Poor service quality bleeds operators, subscribers

    When quality of telecoms (QoS) services goes bad, it is not only the subscribers that suffer, the operators too share in the losses, Back-Up Networks Limited has said.

    Its Chief Executive Officer, Mr. Monday Ogbe, said for every 10 minutes of downtime, the operators and subscribers incur substantial losses.

    Ogbe who spoke at a forum organised by the Association of Telecoms Companies of Nigeria (ATCON) for regulators and chief executive officers, said the national economy also bleeds whenever there are QoS challenges.

    Total subscriber base has been put at over 121 million. Analysing a typical loss to the consumer, service provider and the economy of an average 10 minutes of poor QoS per day, which may have resulted into inability to generate calls, he said: “For 100 million subscribers experiencing 10 minutes of poor QoS at N10 average failure rate, the net loss to subscribers is N1 billion per day.

    “Also, providers’ inability to service 100 million subscribers with potential 20 minutes calls due to consistent 10 minutes downtime equals N2 billion. But with less than N1 billion earned as a result of poor quality repeat calls, the net loss to service provider equals N1 billion.

    “As a result, the Nigerian economy losses N2 billion per day as a result of net losses from the consumers and the operators income, bringing the total losses in a year to the economy within 365 days to an estimated N730 billion as a result of poor QoS.”

    He said to address the problem for phone users in the country, Back-Up Networks has come up with web-based solution which allows customers to test by themselves which network is performing well and view result online.

    Ogbe said the portal provides empirical data that operator could also use to correct the problem, saying if an operator fails to monitor the portal to make necessary correction, there is tendency for it to lose subscribers that would be willing to port to other networks.

    Ogbe said customer service experience is presented on the site so the customer could make informed decisions as to which. service providers choose for service provision

    “With idonporto.com, telecoms subscribers can ensure mobile device is compliant and fault free, report service degradation promptly, inform operators if there are planned events that might require extra capacity provisioning to avoid future service degradation.

  • Indigenous insurers fret over influx foreign operators

    More foreign underwriters are coming to the industry through mergers and acquisitions while the indigenous companies are bracing for synergies to meet recapitalisation that is aimed at boosting competition, writes Omobola Tolu-kusimo. 

    A  new dawn is set in the sector following the influx of global insurers acquiring indigenous players.

    The foreign investors have discovered how they can thrive where the indigenous firms seem to have failed in deepening insurance penetration, thereby posing a competition to indigenous operators.

    The ban by the Federal Government on the issuance of new licences to investors has also had its impact.

    Minister of State for Finance, Dr. Yerima Ngama, who made the pronouncement in Abuja during the inauguration of the new board of the National Insurance Commission (NAICOM), said rather than issue fresh licences, any investor desiring to own a firm should acquire existing companies.

    He said the new investors will be able to recapitalise them and start running the companies well.

    He noted that there are many distressed companies, arguing that it is either the regulator liquidates them or get some serious people to take them over.

    He said: “So, there is no need to issue new licences when they have several licences to take over. It is just like the banking system, if we have so many distressed banks, why should we issue a new licence to a bank? Why not buy one of the distressed ones and restructure it?

    “That is why the sector does not have a single distressed bank. So, the same thing should apply to insurance; we have so many of them. Anybody who is interested in investing in them is welcome to buy two or three of these distressed insurance companies, merge them, recapitalise them and run them.”

    Ngama also urged NAICOM to step up its regulatory duties as the government had already initiated several reforms that would help to make the sector stronger.

    Before now, insurers were doing business in their comfort zones, not minding its slow pace of growth and insignificant contribution to the Gross Domestic Product (GDP).

    Last year, the sector generated less than N300 billion premium income instead of the N1trillion target set for it by NAICOM.

    After the consolidation about eight years ago, life, general and re-insurance companies’ minimum capital increased from N150 million to N200million, N350million to N2billion, N3billion and N10billion.

    There are 57 insurance and two re-insurance firms in the country. Some of these have, however, been either merged or acquired.

    In the light of the low performance of the less than one per cent contribution of the sector to the economy, the foreign investors are eager to partake in the domestic market because of its huge population of about 167 million and vast untapped underwriting business.

    So far, Old Mutual, one of Africa’s biggest insurers with headquarters in the United Kigdom (UK) is here to set up shop. The firm provides life assurance, asset management, banking and general insurance to over 14 million customers in Africa, the Americas, Asia and Europe. It started in South Africa.

    Last year, Assur Africa Holding, a consortium of three European Development Finance Institutions (DFIs) and two Private Equity (PE) firms acquired 67.68 per cent shareholding in GTAssure, now Mansard Insurance Plc. The DFIs are Netherlands Development Finance Company (Holland); German Investment Corporation (Germany) and French Development Finance Company (France), while the two Private Equity Firms are Development Partners International, based in the UK, and Africinvest existing shareholder based in Tunisia.

    Also, Group NSIA, a company based in Abidjan, Cote d’Ivoire bought 96.15 per cent equity of Diamond Bank Plc in ADIC Insurance Company Limited.

    Law Union and Rock Insurance Plc also had its share of foreign mix when 60 per cent of its controlling shares were acquired by a consortium comprising Alternative Capital Partners (ACAP) and Swede Control Intertek Limited.

    Sources said a strong management team with a track record was put together by the new core investor to work with external consultants.

    According to the source, the new core investor has already set a target of being among the top five insurance companies by the end of 2015.

    UBA Metropolitan, a subsidiary of United Bank for Africa, has a South African presence from Metropolitan Life, while FBN Insurance Limited, a subsidiary of FirstBank of Nigeria Plc also has strong presence of South African Investors, Sanlam Group.

    Determined not to be left out, indigenous firms in the local market are rooting strategically. Custodian and Allied Insurance Plc, one of the top players, have merged with Crusader (Nigeria) Plc having secured the nod of their shareholders through the court.

    Also, Cornerstone Insurance and Fin Insurance seem to be warming up while AIICO Insurance and Linkage Assurance are also mulling mergers and acquisitions.

    According to the Nigeria Insurers Association 2011 Insurance Digest, the long term call on the sector is supported by its demographic advantages and the economic prospects relative to other emerging markets.

    “Although a fast-rising bottom population base provides significant headroom for premium expansion, decades of poor insurance uptake exacerbated by widespread cultural aversion and the inefficiency of the micro economic parameters have slowed down the desired growth in the insurance sector.

    “However, if the various initiatives in the sector is sustained and strengthen, the insurance sector revenue will assume a positive dimension in the coming years,” it said.

    Group Chief Executive Officer, Old Mutual West Africa, Offong Ambah, said the economy is moving fast.

    According to him, the country offers significant growth opportunities and Old Mutual is banking on this.

    He said: “Old Mutual is in Nigeria as part of the group’s overall strategy to build a franchise in the West African sub-region.

    “Following our acquisition of Oceanic Life, we are in the final stages of acquiring the short-term insurance company, Oceanic General business, which enables us to provide a broad range of short term and life insurance products to the market.

    “Our objective is to work with existing insurance companies and regulator to broaden and deepen the insurance market in Nigeria. This we plan to do through the introduction of innovative products financial education reaching out to the underserved and un-served segment of the market tackling the sceptism of Nigerians regarding insurance through prompt settlement of claims and excellent service delivery among others.”

    According to him, Old Mutual has set aside R5billion ($600million) of capital to fund its expansion in East and West Africa.

    Managing Director, Cornerstone Insurance Plc, Mr Ganiyu Musa, said the company was looking at various opportunities available to it in its merger plans, adding that it would announce its plans soon.

    Managing Director, FBN Life, Mr Val Ojumah, said the sector will do better with large companies that can compete fairly well in the world insurance market.

    The retention capacity of the industry is low. Majority of the risks in the oil and gas, aviation and other high technology and high value risks are reinsured abroad.

    Chief Operating Officer, AIICO, TundeFajemirokun, said the company is considering merging.

    He affirmed that there is an influx of foreign investors in the market.

    He lauded the Federal Government for stopping the issuance of new licences, noting that existing companies need to team up.

    He said: “To cope with the ongoing competition, we are investing in our operations, technology, people and agency network.

    “There has been some strong influx of foreign investors in the insurance market and most of them have positioned themselves. For AIICO, we have had a lot of potential suitor that want to merge or even acquire us.

    ‘’Two years ago, we had agreement with shareholders to raise some money and we have been talking to investors. We have acquired before but sometimes there is need to be careful with acquisitions. Sometimes the company acquired most of the value and not the other way round; so, we are being careful about acquiring any company.”

    Fajemirokun agreed that insurance penetration was still low.

    ‘’The foreign investors believe they can improve on this and develop our products a lot better than they are today. We also have the National Pension Commission (PenCom) regulated annuity, which is a huge part of the market coming up,’’ he said.

     

  • Success of Dangote’s $9b refinery depends on govt, say operators

    The latest attempt by Dangote Group to build Africa’s largest refinery in Nigeria when investors, both foreign and local, have kept a far distance from investing in the downstream sector, could be light at the end of the tunnel, operators have said.

    The investment, worth $9billion, comprises a 400,000 barrel per day oil refining capacity and a fertiliser plant. The project is being financed by a consortium of local and foreign banks.

    Of interest in the project, is that the refinery is coming against the backdrop of failed efforts by the government to encourage private sector participation in the establishment and management of private refineries.

    For example, in 2002, the government issued 12 operational licences to firms to build private refineries. Since then, not one of them was able to convert or utilise them until they were revoked five years later.

    Many reasons were advanced for the failure. They ranged from poor pricing of petroleum products, lack of interest in bank funds, and increased restiveness in the Niger Delta, the oil rich region, among others.

    Besides the challenges that stalled the take-off of these licensed refineries and other three greenfield ones proposed by the government, the state of the four refineries, in Port Harcourt, Warri and Kaduna, owned by the Nigerian National Petroleum Corporation (NNPC), have not elicited any hope to would-be investors in the sector.

    The immediate past NNPC Group Managing Director, Austin Oniwon, said running private refineries was not feasible.

    Oniwon, who spoke with reporters after he delivered a paper as Guest Speaker at the pre-convocation ceremony of the Ahmadu Bello University (ABU), Zaria, said the cost of running a private refinery is so enormous for a businessman to survive.

    He urged those calling for the establishment of private refineries before the removal of oil subsidy to do a rethink, saying it was only the government that could withstand the financial rigour of the project.

    He said where you control a price of petroleum products to a point that is below the cost of manufacturing, only the government can really invest in such sector because it alone can bear the loss.

    He said: “Anybody you tell to go and pay for crude oil at international price and earn below the international price for the product he is going to bring, will not do it.

    “That is why private refinery licences are stalled. But once we have the courage to deregulate the sector, you will be surprised. The upstream was deregulated. In fact, nobody ever regulated the upstream and you can see how many people are there. The telecoms was deregulated, you see how many people are playing there.”

    Oniwon’s argument for the deregulation of the downstream petroleum sector, may have spured Dangote into this gigantic project.

    One of the major marketers told The Nation that one of two factors must be in place to make the $9 billion Dangote planned refinery to be viable, adding it is either that the government deregulates the sector before the refinery begins operation, or that it would put stringent measures in place to regulate importation of petroleum products.

    He said access to foreign exchange is paramount, in addition to the government giving the company waivers in crude supply.

    The marketer said: “Businessmen are not Father Christmas. They invest to make profits. Maybe Dangote has done all the arithmetic and has been assured by the government that prices will be deregulated before the refinery begins operation. So, he is sure that he will cover all his cost and make reasonable margin.

    “The second factor is that the government might have assured him that he will be given concession for crude supply at prices lower than what obtains at the international market. You know that the government doesn’t give waivers, but in Dangote’s case, it is different. Even if the government deregulates the petroleum marketing sector, it (government) will make it impossible for people to bring products to save the refinery. The government may direct the Central Bank of Nigeria (CBN) not to give forex to importers just to ensure that the investment is protected.

    “In the absence of these factors, I don’t see the viability of the project because there is no way he can sell gasoline (petrol) at N97 per litre and the business surviving.”

    On supply of crude oil to the refinery, NNPC Group Executive Director, Exploration and Production, Abiye Membere, assured that the corporation will give uninterrupted supply of crude to the refinery, barring any acts of vandalism of pipelines that convey the crude there.

    He told The Nation that the steady supply of crude applies to any investor that builds a refinery in the country, but however noted that it may not be possible to sell crude to the refinery at a reduced price.

    He said even the NNPC buys its crude at international price, insisting that the government would sell crude to the refinery at international price.

    However, President Goodluck Jonathan has assured that the Dangote Group will not find the government wanting in this endeavour.

    Jonathan, who spoke while receiving the President of the Dangote Group, Alhaji Aliko Dangote, who led other investors and bankers to the Presidential Villa, Abuja, moments after the $3.3 loan agreement was signed, said his administration was committed to removing major impediments to investments in the country, such as inadequate infrastructure and unsteady power supply.

    “We are pleased that you are now investing in refining, petro-chemicals and fertiliser production. It is the downstream sector of oil and gas that can really create many jobs. Your interest and investment in that area will help in the area of job creation which we have been emphasising. You are also helping us to move away from being a mere producer of raw materials by adding value to our natural resources.” he told Dangote and members of his delegation.

    Dangote has acknowledged government’s support in the phenomenal growth of his Group. He said government’s policies have helped “us greatly.” “Without them, we will not be where we are today. We have taken the challenge and we will replicate the successes recorded in the cement industry through the backward integration in petroleum refining,” adding that the refining, petro-chemicals and fertiliser complex will make Nigeria a net exporter of petroleum products.

     

  • Police warn tricycle operators

    The Police Commander in Aba , Rabiu Dayi, has warned tricycle operators to operate within the law.

    Dayi warned operators, whose tricycles were used to rob, to desist.

    “These keke riders are not strangers; they are people who live and drive keke in Aba, Abia State.

    “We have placed our intelligence team on alert. Any person caught or any ‘keke’ said to be used in robbery, kidnapping or duping people shall be impounded.

    “We shall make sure that the owner of the ‘keke’ is charged to court.

    “Aba is returning to normalcy. The peace we have now is still fragile and we (the police) will not allow it to be jeopardised.

    “We shall make sure that the security of Aba people, their property and business are protected.”

     

  • ‘Operators not complying with ifrs’

    • Five firms submit report

    Five months into 2013, only five of the 60 insurance companies operating in Nigeria have submitted their 2012 International Financial Reporting Standards (IFRS) compliant audited financial statement to National Insurance Commission (NAICOM) for clearance.

    The Commissioner for Insurance and Chief Executive of NAICOM, Mr. Fola Daniel who spoke to reporters in Cairo, Egypt, revealed that out of the five that submitted, only one has been approved by the commission.

    Warning insurance firms against late account submission, Daniel said the commission recognises the challenges they face in migrating to IFRS standards, and noted that a help desk has been dedicated to guide them on compliance indicators.

    In April 2013, NAICOM issued a circular to the 31 underwriters listed on the Nigerian Stock Exchange NSE warning them against delay in submission of their 2012 accounts to avoid sanctions from the regulatory bodies.

    The circular signed by Director, Supervision, Nicholas Opara, read in part : “We are concerned about non-submission of your IFRS complaint audited financial statements for year ended 31st December 2012 as at today 11th April, 2013. As your primary regulator, our review and subsequent approval precedes submission to both the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) which hitherto was on or before the close of business on 31st March following the year end of the financial statements.”

    The commission, however, advised the operators having challenges in meeting the directive to revert to the commission immediately stating in clear terms what the issues are.

    The circular also stated that the commission now has a policy to notify any insurer that has submitted its account within four days whether there are still issues to be addressed or whether the submitted account is good enough to be considered for approval.

  • Operators await LTE licence auction

    Operators await LTE licence auction

    Telecoms operators are waiting for the auction of the operating licences of Long Term Evolution (LTE) of 4G.

    Chief Executive Officer, Airtel Nigeria, Segun Ogunsanya, said the telco has launched the technology in the country, adding that it was a huge success.

    National operator, Globacom, said the contract for its national equipment upgrade which costs over $1 billion is also aimed at the LTE licence. The first contract was struck between the firm and Chines equipment vendor, Huawei; the second was with ZTE. While the former costs $750 million, the latter is $500 million.

    Officials of the equipment vendors said on completion, the telco would only require software upgrade to plug into the LTE when the licence is issued.

    Already, the special purpose vehicle for the merger of MTS, Multilinks and Starcomms, Cpacom, said it would provide superior voice and data services to its customers, which are riding on the latest LTE technology.

    Regulator of the telecoms sector, the Nigerian Communications Commission (NCC) had said it would auction the licences that would allow telecoms operators to deploy LTE or 4G in 2005.

    Wikipedia, a free online knowledge platform, defines LTE as a standard for wireless communication of high-speed data for mobile phones and data terminals based on the GSM/EDGE and UMTS/HSPA network technologies, increasing the capacity and speed using a different radio interface together with core network improvements.

    Executive Vice Chairman/Chief Executive Officer, NCC, Dr Eugene Juwah, said already, people on 800 MegaHertz (MHz) were being upgraded to LTE, adding that the regulator would also auction the 3.5 GigaHertz (GHz) and 2.6 GHz spectra to operators.

    According to him, these spectra are in the custody of the Nigerian Broadcasting Commission (NBC), adding that the broadcast sector regulator has agreed to let the spectra go.

    “We are about to auction LTE licences. We are upgrading people on 800MHZ to LTE. We are also going to auction our 3.5 GHz and 2.6 GHz. They are not in the custody of the NCC but the NBC. They have agreed to make it available in 2015. It took us five years to do this. We are a serious member of the International Telecommunications Union (ITU),” Juwah said.

  • e-dividend: Shareholders, operators flay June deadline

    e-dividend: Shareholders, operators flay June deadline

    Shareholders and capital market operators have kicked against the Securities and Exchange Commission’s (SEC’s) June 3, 2013 deadline for investors to provide bank accounts for electronic payment of dividend or risk forfeiture of such dividend.

    SEC had issued a circular directing shareholders of quoted companies to forward bank account details to their registrars and stockbrokers on or before June 3, 2013 to facilitate the electronic payment of future dividends.

    According to SEC, shareholders that fail to comply with the June 3, 2013 deadline may automatically forfeit future dividends as warrants would cease to exist as from the deadline except in the case where a shareholder specifically request in writing for continued issuance of dividend warrants.

    Shareholders and market operators expressed dismay at the directive, describing at ill-timed and draconic. Shareholders said they would resist the deadline and mobilise against any company that fails to pay dividend as enshrined in the Companies and Allied Matters Act (CAMA).

    They said SEC had been foot-dragging on several issues that could have assisted investors to promptly claim their dividends and also encourage electronic dividends including the Commission’s inability to persuade the Central Bank of Nigeria (CBN) and the Bankers, Committee to allow shareholders to pay dividends into their savings account.

    They said SEC failed in its cardinal objective of investors’ education by not channeling adequate resources to educate and galvanise all stakeholders into forming a collective front for key market initiatives.

    General Secretary, Independent Shareholders Association of Nigeria (ISAN), Mr Adebayo Adeleke, said SEC demonstrated poor judgement with the directive as it placed the horse of enforcement before the cart of public enlightenment.

    He described the directive as unfortunate, saying it is capable of heating up the market as shareholders would resist attempt to frustrate their legal rights to receive returns on their investments.

    “Our position is that the extant law of the capital market, especially the Companies and Allied Matters Act (CAMA), has not been amended and any directive that is inconsistent with the law is null and void,” Adebayo said.

    He warned companies from taking any action that will jeopardise their interests as shareholders would not sue SEC but the companies, which are statutorily required to issue dividend warrants.

    A shareholders’ leader and activist, Alhaji Gbadebo Olatokunbo, said SEC has no powers to direct forfeiture of dividends or cancellation of dividend warrants.

    He said SEC should have worked on the efficiency of share registration operations to remove several hurdles being faced by shareholders, which have been the underlying causes for rising unclaimed dividends.

    Olatokunbo said Sec should have engaged in serious enlightenment to encourage shareholders on the benefits of going electronic by completing the e-dividend form.

    He noted that in spite of several appeals in the past, banks have not allowed shareholders to deposit dividend warrants in savings accounts, which most of the small investors have.

    SEC had recently put the value of unclaimed dividend by investors at N60 billion by December 31, 2012; representing N19 billion or 46 per cent rise over the N41 billion recorded at the end of 2011.

     

  • Operators fret over restoration of bombed BTS

    Telecoms operators have expressed worry over difficulties in restoring bombed base transmission stations (BTS) in the northeastern part of the country.

    They are insisting on approaching the Federal Government for a financial bailout to shore up the losses suffered in the wake of the premeditated bomb attacks on the facilities.

    Chairman, Association of Licensed Telecoms Companies of Nigeria (ALTON), Gbenga Adebayo, said restoration efforts of the BTS are being hampered by persisting insecurity in the region.

    According to him, aside gaining access to the bombed sites, some of the indigenes too are wary that if the facilities are resuscitated, their communities may easily become vulnerable to attacks by the insurgents.

    “More than 250 sites were affected by the spate of bomb attacks. We are having challenges accessing some of the sites. Some locals (residents of the host communities in which the sites are cited) are wary of allowing restoration efforts to take place because they fear it may make them vulnerable,” he said.

    Speaking in Lagos, Chief Executive Officer, Airtel Nigeria, Segun Ogunsanya, said most of the BTS lost to flood in the Niger Delta area have been restored.

    Specifically, he said the vandalised sites in Bayelsa State have been restored, adding, however, that the same story could not be told of the ones in the northern part of the country.

    He said the security situation in the north has made it difficult to send “engineers” work there.

     

  • 213 operators have expired fidelity bond, says SEC

    The Securities and Exchange Commission (SEC) has indicated that 213 capital market operators, including several high-brow law firms, reporting accountants and banks, are operating with expired fidelity bond. This development is posing potential risks to the system.

    A review by The Nation on the condition of capital market operators under the newly introduced Capital Market Operator Search (CMOS) of SEC showed that some 213 capital market operators pose risks to capital market operations by not providing fidelity bond against internal malpractices. The CMOS is a new special link on the homepage of the apex capital market regulator.

    A fidelity bond is essentially is a form of insurance against internal fraud, malpractices and willful professional negligence. It provides cushion for various losses that might arise from employee’s dishonesty. In line with international best practices, the Nigerian capital market regulation requires operators to possess subsisting fidelity bond.

    The expiration of their fidelity bonds makes the functional registration of the companies and individuals as capital market operators incomplete.

    According to SEC, about 46 per cent of operators with expired fidelity bond, are solicitors including high-brow Senior Advocates of Nigeria (SANs) law firms. At least, 97 law firms registered as solicitors have expired fidelity bonds.

    Accounting firms are the second largest group of culprits with several well-known accounting firms, with registration as reporting accountants, operating with expired fidelity bonds.

    At least four banks, which were registered as issuing house or investment adviser, were listed among the defaulters while several fund managers, registrars and brokers were also listed in the search.

    The Nation gathered that the operators with deficient fidelity bond might not be allowed by SEC to handle transactions.

    The source said what the defaulting operators do is to rush to renew such deficiency whenever they have capital market transaction for regulatory approval. He cautioned investors, issuers and other users of capital market services to request for evidence of full clearance and subsisting complete registration before engaging the service of any operator.

    The list of operators with expired fidelity bond came in the wake of the alarm by SEC that many illegal fund managers have been exploiting unsuspecting investors.

    According to SEC, most of the fund managers are concentrated in the Eastern region, especially Anambra State where some 11 illegal operators have been identified.

     

  • Court jails two illegal lottery operators

    THE Lagos State Special Offences Court has sentenced Messrs Biodun Adegbola and Ahmed Toro to two years imprisonment with an option of N500, 000.00 fine.

    The convicts were arrested in February 2013 at Isokoko, Agege for conducting illegal lottery using coupon in Lagos State.

    The General Manager and Chief Executive Officer of the Lagos State Lotteries Board, Mr. Lanre Gbajabiamila, reiterated that the board will not relent in its effort in ridding the state of illegal lottery activities.

    He added that approved and authorised public online lottery operators in Lagos State include Premier Lotto Limited, Winners Golden Chance Venture and Winlot Global Resources Limited.

    He said patronising operators other than those registered and approved by the State Government is a punishable offence under the Lagos State Lottery Law.

    Gbajabiamila identified lottery as a lucrative venture for potential investors and advised all illegal and unlicensed operators to regularise their operation with the board on or before Friday, 15 March or risk prosecution.