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Tag: telcos

  • Anger as telcos bar customers from using mobile phones

    Anger as telcos bar customers from using mobile phones

    Many telephone subscribers were thrown into confusion yesterday as their telephone lines were barred from either making or receiving calls by their mobile network operators (MNOs).

    This is sequel to the expiration of the seven-day ultimatum handed down to the telcos by the regulator of the telecoms industry, the Nigeria Communications Commission (NCC) to deactivate subscriber identity modules (SIMs) registered irregularly by the operators.

    Its Director, Public Affairs, Tony Ojobo, in a statement had explained that the directive was the fallout of a meeting between Office of the National Security Adviser (NSA), Department of State Service (DSS), MNOs and the NCC. The meeting which took place at the NCC boardroom in Abuja, took into cognisance crimes committed against members of the public either by kidnappers, terrorists, robbers and threats to lives, through the use of unregistered SIM cards across all the networks

    A young lady who simply identified herself as Bola said she was shocked when someone called her on her alternate line and said her operator told her that her number had been barred from receiving calls. She complained bitterly because, according to her, she was not given earlier notification about the development and had been using the line for more than one year.

    “I was shocked to discover that I could neither make nor receive calls on my phone number. I feel my MNO was not polite enough on this matter because I am supposed to have been advised accordingly if they had discovered anything irregular in the biometric data I supplied during the process of registering my SIM card. Now I am confused because I don’t know what to do because when I visited the office of my service provider this morning, it was filled to capacity,” she said, adding that she was advised to do another registration with the agents along the road for which she paid N100 and have since not been reactivated.

    A young man who gave his name simply as Chukwudi who sells motor spare parts in Ladipo Market, Lagos said his wife travelled to the Aba yesterday and was monitoring her movement on phone till she got to Asaba, adding that her number was snapped out of the network.

    “In a country where there are no good roads and insecurity is all time high, especially armed robbery on the highway and kidnapping, the mobile phone has become the only tool through which one could get monitor one’s family members on transit. So, it is very disheartening that my wife was removed from the network abruptly without any notification. It is bad and demonstrated lack of respect for the customer,” he said.

    He was particularly bitter that if the MNOs wanted to sell their services, they will call their customers or send unsolicited text messages to harass them, adding that when it came to the issue of irregular SIM registration, they just went ahead to rudely cut them off the network.

    Bola and Chukwudi are but few examples of many customers that may have been cut off the network unnotified contrary to the directive of the NCC.

    Director, Corporate Communications and Corporate Social Responsibility (CSR), Airtel Nigeria, Emeka Oparah said the telco is complying with the directive of the NCC, insisting that it issued a press statement to that effect in the newspapers on Monday. He added that SIM registration has been on wondering why customers should wait this long.

  • ‘Outsourcing will help telcos to cut cost’

    ‘Outsourcing will help telcos to cut cost’

    Last year, infrastructure leasing giant IHS Towers raised $2.5 billion to acquire telecoms towers from Nigeria and other parts of Africa. The sale of this ‘passive’ infrastructure by the telcos has not translated to improved service on their networks. But, IHS Managing Director Mohammed Darwish says taking off the operators the burden of managing the towers will enable them focus on serving subscribers better. In this interview with Assistant Editor LUCAS AJANAKU, Darwish describes broadband as the next frontier in the information communication technology (ICT) world.

    How would you assess the development of the telecoms industry in Nigeria over the last one decade?

    Africa’s population is just over one billion and is set to double over the next 40 years. This rise in population is more affluent, mobile and connected than ever before. Nigeria alone has around 170 million people in it. As one of the world’s fastest growing economies, as well as being the largest African economy, surpassing South Africa, Nigeria is leading this change. The country’s economic fundamentals are very attractive to mobile network operators and infrastructure companies. Nigeria is Africa’s largest mobile market with more than 125 million subscribers and a market penetration of around 75 per cent and it is still growing year-on-year, effective penetration rate could be lower due to the fact that it is common for average Nigerian to carry more than one phone with him.

    Quality of service remains an issue, with operators blaming it on inadequate infrastructure. Do you think the operators are ploughing back substantially what they make in the country into capacity expansion?

    Currently IHS manages around 15,000 towers in Nigeria and over 21,000 towers in Africa. IHS is planning to invest roughly $500 million and we recruited around 400 staff (mostly engineers) in 2014 as we expand network capacity into new territories as well as improving quality and reliability. At IHS, we also invested over $10 million in 2012 and planning to double the amount, into developing the most advanced network operating centre (NOC) in the country – this gives us 24/7 awareness and data capture of tower performance driving constant improvements in uptime and energy consumption.

    IHS has worked hard to exceed 99.9 per cent network uptime across the continent, even in areas where electricity does not exist and sites depend on diesel generators; we will bring the same commitment to the newly acquired towers in Nigeria. IHS raised more than $2.5 billion last year to finance the expansion of its portfolio and upgrade.

    Revenue from voice calls will continue to drop as Google, Facebook and other social media platforms not only ‘steal’ revenue from instant messaging (IM) but are also doing voice calls. What does this portend for the industry?

    If we want to simplify the issue, such companies require reliable data networks to perform such services, and broadband is what Africa presently lacks more than voice. IHS has been investing in tower acquisitions across the country.

    You have acquired towers from three of the operators. What is the rationale for this action? How profitable is this?

    At the end of last year, IHS completed the acquisition of 9,151 of MTN Nigeria and 2,136 of Etisalat towers in Nigeria. We also acquired about 1,500 sites from Airtel in Rwanda and Zambia.The transaction will reduce MTN and Etisalat Nigeria’s operating costs, drive network efficiencies and further expand MTN and Etisalat’s voice and data capacity.Opening the largest tower portfolio in Nigeria to all other mobile operators, internet service providers, LTE/WiMax providers, who previously had no chance to provide that much coverage.

    Any savings that mobile network operators (MNOs) generate through the more efficient running of their tower operations by IHS are indirectly passed over to the consumer in the country, through overall reductions in mobile pricing.Our core business is to run an efficient and effective network. Mobile network operators outsource their tower portfolios to IHS creating three significant and almost immediate benefits. These include, for the customer: the network improves; uptime increases to over 99 per cent; and the network expands through sharing towers with other networks.For the mobile network operator: costs are stabilised and capital is released to spend on improving the network and developing products for customers; and for Africa: wider, more reliable and efficient networks, built and maintained by professionals, promoting economic growth and protects the environment.

    In terms of operating expenditure (opex) on running the towers, what does it look like especially during fuel scarcity in the country?

    Most of IHS towers are diesel operated and there hasn’t been a drop in price for the commodity in recent times.  In terms of a drop in the price of oil, we have agreements with our clients where we are hedged against any increase or drop in the price of diesel which protects us.Many of our sites are equipped to last many hours without generators; however to safeguard our operations against the scarcity of diesel, we have many measures in place such as partnering with large importers, having our own depots, and others.

    Renewable energy, such as solar has been proposed as alternative for sourcing power from the national grid. How far can this go in addressing Nigeria’s peculiar power challenge?

    Solar is an important way of producing power, but to address Nigeria’s power challenge, I think is not highly probable. We do use solar energy systems a lot on our sites, but their use depends on many factors.

     As an ICT expert, what would you advise the government to do to promote ICT?

    The government and telecom regulator are doing a lot to improve ICT. As the tower business is environment-friendly (through the reduction in carbon dioxide emissions, or lower use of natural resources), and ultimately serves the end user by providing cheaper infrastructure solutions to the mobile operators.

    The mobile operators will in turn pass some of these savings to subscribers and population. The regulators have not forced the operators to prioritise the use of co-location sites, but they went a long way in encouraging the operators to do so.

    As operators are going more and more into rural areas, regulators are working in bringing the operators together and encouraging them to align expansion plans into rural areas.

    What are your footprints in Nigeria and Africa?

    Currently, IHS manages around 15,000 towers in Nigeria and over 21,000 towers in Africa.

    What are your short, medium and long term plans?

    IHS is committed to developing our people and the communities we serve, and to help people and businesses across the region build a powerful and prosperous future, by Africa and for Africa.

    Do you have plans to diversify into other fields such as mobile phone production?

    IHS is a leader in telecommunications infrastructure sharing and leasing; we still see huge growth in this sector and we are focused to keep growing our business.

    What are the latest technologies available on the stable of IHS Towers?

    The first is our systems integration and optimising our supply chain. We have developed a revolutionary 10-year supply and efficiency contracting model with respective original equipment manufacturers (OEMs) and vendors which has dramatically improved the quality and up time of tower management.

    We work with OEMs to produce improved design solutions based on existing technologies such as solar, DC generators, batteries. OEMs supply equipment and technicians to run the equipment on a 10-year contract (we can break the contract at three-four years if they are not performing). Over 3,000 jobs have been created in this way. The contract includes the replacement of equipment by the OEM or vendor as it wears out.

    Through optimising our supply chain in this way, IHS has refurbished its entire portfolio in 18 months, over the usual three years it would take using legacy models. And, we have reduced our operating costs by 50 per cent. The second is our green energy initiatives aimed at reducing our towers’ dependence on diesel. These initiatives include projects in Nigeria, Zambia and Rwanda.

     

  • Telcos’ success strategies, by Ericsson, E&Y study

    Telcos’ success strategies, by Ericsson, E&Y study

    Ericsson and Earnest & Young (E&Y) have collaborated to identify three distinct strategies adopted by successful mobile operators, dubbed Frontrunners.

    According to them, successful operators share a common focus on network performance and customer experience; differentiation, innovation and technology approaches vary by strategy

    Frontrunner revenues grew at 9.6 per cent compound annual growth rate (CAGR), their competitors at 2.7 per cent, while average in markets with no Frontrunners is -1.4 per cent (2010-2014)

    With traditional revenues under pressure and mobile data use soaring, operators have been forced to evolve both their networks and their business models. Some have been more successful than others. A study from Ericsson, in collaboration with Ernst and Young, has identified and classified these operators as Frontrunners. Between 2010 and 2014, Frontrunners enjoyed a 9.6 percent CAGR while competitors in their markets achieved only 2.7 percent.

    In undertaking this research, the results of which are launched , Ericsson has identified three distinct strategies adopted by Frontrunners. Significantly, what is good for the end user is also good for the operator.

    Frontrunner strategies are quality-led progression: These Frontrunners differentiate through high-performing networks and high brand preference; market-led adaptation: includes Frontrunners that differentiate through quick adaptation to market conditions; and offering-led transformation which refers to Frontrunners that differentiate by being first to enter the market with uniquely designed offerings

    The study also showed a number of ways in which Frontrunners are similar including their views on connectivity and services as differentiators rather than commodities, and their focus on innovating new revenue streams rather than maximizing old ones. Frontrunners display greater interaction between marketing and technical roles, rather than the traditional silos, and they leverage network performance by either utilizing superior network performance as a differentiator or by improving network performance to meet customer expectations.

    Speaking on the study, Executive Director of Nordic Advisory, EY, Martin Sebelius, said: “We clearly see that despite their different strategies, frontrunner operators share a common commitment to network quality. Not surprisingly, Frontrunners constantly seek new ways of challenging industry conventions to make connectivity more relevant to people, business and society.”

    Research Director, Mobile Infrastructure and Carrier Economics, Infonetics Research, now part of IHS Inc., Stéphane Téral, said: “This is a well-reasoned study that helps operators in different markets answer the universal question of where to invest and generate returns. Operators are trying to keep up with the growth in data traffic while facing significant economic conditions, including flat-to-declining revenue in often saturated markets. As it provides a nuanced view drawing on a global scope, this study is exactly what is needed for operators to thrive in any market condition.

    “In addition, mobile consumers are very savvy today and understanding what makes operators tick can help them make better decisions as to where to lock in their subscriptions — I think this study could be as interesting to consumers as it is to operators.”

    Head, Radio Strategic and Tactical Marketing, Ericsson, Patrik Cerwall said:: “We wanted to understand what makes operators successful in order to be the best partner to our customers. It may sound self-serving, but Frontrunners focus on growth, both enhancing the core business while at the same time exploring new markets and capabilities to secure future revenues, such as IoT (Internet of Things) and vertical solutions.

    “The journey toward 5G in 2020 will be marked by both new technology advances and new business models, but that transformation really started with the shift from voice to data-driven networking. The operators who are managing that transition successfully may provide the blueprint for success in 5G.”

  • Telcos lose N20b yearly to opex, arbitrary fees

    Telcos in Nigeria lose about N20 billion annually to punitive operating expenditure (opex) and multiple taxation and arbitrary charges, the Chief Executive Officer, Airtel Nigeria, Segun Ogunsanya has said.

    He has therefore urged the Federal Government to come up with a unified tax system to enable businesses and investors know what taxes are supposed to be paid to the government.

    Ogunsanya who spoke in Lagos at CEO Forum organised by Business Day said it is estimated that increased operating costs and lost revenue costs around N9billion each year to the telecoms industry or about N20billion if most of the arbitrary fees/charges in some key states are upheld.

    He said the government should unify taxes under one code and also bring to book vandals who deliberately destroy telecoms infrastructure.

    With Nigerian Telecoms Industry: Five Years Ahead, as the theme of discussion at the forum, he noted that strong growth is expected from the mobile financial services over the forecasting period and operators should ensure they are able to offer products to the large unbanked population of Nigeria, while growing demand for mobile apps and e-commerce will have a positive knock-on effect on mobile operators.

    According to the Airtel CEO, Nigeria offers exciting opportunities for telecoms investors as a large population with rising incomes position the country as one of the most attractive destinations for investment on the African continent.‘

    He said the country has massive bandwidth capacity from the four undersea cables that is yet untapped, arguing that the capacity from these undersea cables will provide opportunities to domestic and international investors to take advantage of the growing broadband and data industry.

    But for the industry to attain its full potentials, he said key bottlenecks must urgently be removed telecoms industry to reach its full market potential. He listed these issues to include spectrum availability and adequacy, government commitment to the National Broadband Plan (NBP), tackling multiple-taxation, reliable and cost-effective power supply, protection of telecoms infrastructure from vandalism and resolving restrictions on telcos’ activity in mobile money.

    He said due to explosive growth in mobile data traffic, operators require more spectrum to support this growth, adding that there is an urgent need to expedite the release / award of frequency to operators as this will facilitate industry development.

    Ogunsanya also decried the incident of multiple-taxation, lamenting that revenue loss from idle or shut down base stations represents the main source of negative impact of multiple taxation and network vandalism for the industry. Between two and three per cent of Nigeria’s sites are affected by arbitrary shutdown and vandalism at any given point in time, he lamented.

  • Telcos fret over govt’s economic policies

    Telecoms operators have again raised the alarm that they may be constrained to stop offering services flexibility and added benefits to subscribers, given the state of the economy.

    Oil prices have been falling.This has affected the value of the naira against the dollar and the Central Bank of Nigeria (CBN) has restricted the importation of telecoms equipment, generators and other items by directing that foreign exchange be sourced through the interbank only. The efficiency level of services rendered will be affected, according to operators.

    The operators, acting under the aegis of the Association of Licensed Telecoms Operators of Nigeria (ALTON), lamented that those government policies will impact negatively on the cost of service delivery.They however, hope that they would not be forced to pass the cost of the impact to the end users.

    ALTON Chairman Gbenga Adebayo told The Nation  that since the software and hardware that oil the engine of the telecoms industry are import-dependent, it  follows that when attempts are made to constrain access to the funds   required to keep the industry up and running, there is bound to be negative impacts.

    He said: “Certainly these policies will have grave impact on the industry. All the things we use in the industry, to a large extent, most of the hardware and software are import-dependent. So, once you tamper with the source or access to foreign currency, you tamper with the direct effect and, by extension, the cost of service provision. So that ultimately will have its impact.”

    Adebayo said naira devaluation would make cost of service delivery to go up relative to prices end users pay for such services. He added that this would inevitably determine what the operators could do and what they could not do.

    Experts say the resort to interbank for foreign exchange sourcing to import hardware and software for the telecoms industry will increase cost and hamper expansionary drive. This is against the background that there is a huge deficit in infrastructure provision in the country with its attendant effects on quality of services (QoS).

    Adebayo said: “The second is the issue of service prices relative to (the cost of offering the services). All these will have direct impact on the cost of service provision and what we can do (as telcos) and what we are expected to do. It will certainly have impact on our services, but we are hoping that it would not be so significant that we will have to transfer it to the end users.

    “If we don’t have increase in end user tariff, we may not be able to introduce other benefits in terms of areas of flexibility on services. If tariffs are not increased, it will impact on the features and added benefits that we can give to subscribers.”

  • Telcos explore new frontiers

    Telcos explore new frontiers

    Monday  marked the 14th anniversary of the liberalisation of the telecoms industry. While subscribers’ figures are approaching the 140 million mark from 450,000 analogue lines before the liberalisation, foreign direct investment (FDI) has gone up from $50million in 2001 to about $35 billion. With the achievement of these milestones, carriers and regulator are exploring data and digital services as new frontiers to redefine customers’ experience earn revenue. LUCAS AJANAKU reports that there is still a long way to go.

    Shortly after the deregulation of the telecoms industry and the award of digital telephone licences to offer service through the global system for mobile communication (GSM) to the two early birds in 2001, the Chief Executive Officer, SO4 Engineering Limited, Soji Oluwasuyi, approached one of the service providers to acquire a telephone line. He was not subjected to the rigours of filling forms and waiting on a long queue. He paid N25,000 for his subscriber identity module (SIM) card and N35,000 for his Nokia 3310, a feature phone.

    Oluwasuyi went home elated. “At least, this is better than trying to apply for a NITEL line for which you will not only wait for months after paying about N200,000 but also have to grease the palms of all manners of characters in the organisation before you will eventually get a line. I will no longer invade the privacy of my neighbour to make or receive calls.” he mused to himself.

    Like a dammed river suddenly losing its fetters, telephone hungry Nigerians took advantage of the new vistas opened by the telcos and started talking. It began with N50 per minute regardless of whether the line cut off within the first two seconds. Then the airtime too had the very provocative validity period. A myth was created around service by the first two players that per second billing could only be done through rocket science. Then came Globacom and the story changed. Today, calls could be made for between N10 and N9 per minute while the caller could pay less depending on the number of seconds used. Some of the operators even give one free minute for every minute spent on their network to their customers.

    Speaking on the phenomenal growth in the industry, Executive Vice Chairman, the Nigerian Communications Commission (NCC), Dr, Eugene Juwah, said: “Over $32 billion investment has been recorded in the sector as at June 2014 from $50 million in year 2001. The investment stood at $18 billion in 2010 and $25 billion in 2012.”

    He said this represents giant strides, adding that the commission will continue to regulate the industry in a way to continuously make it more attractive to global investment community.

    Over the past 14 years, the telcos have been able to deploy some 68,124-kilometre optic fibre cable (OFC).Last year, an additional 38, 000 kilometre OFC were laid. Experts say this represents an increase of about 44.2 per cent investment in OFC by the telcos last year alone.

    Services cannot be rendered without base transmission stations (BTS). The telcos have invested massively in building BTS across the country. According to the NCC, the telcos have built over 27, 000 BTS. But more still needs to be done in this area as there is still a deficit of some 53,000 BTS to assure seamless service delivery.

    In line with the focus of the telcos on the provision of data and digital services, the BTS are gradually being upgraded from 2G to 2.75G and 3G. Some of the operators even say they have done trial of 4G or long term evolution (LTE).  Currently, there is about 11 terabyte of bandwidth capacity brought into the country firms such as MainOne, Glo1, West African Cable Systems (WACS), among others that have landing points in the country. .

    The Ministry of Communication Technology said in the last two years, 2G-enabled sites have increased from 22, 578 to 28,289 while 3G-enabled sites have increased from less than 10,000 to 15,048 during the same period. It added that a backbone infrastructure project, started by the NCC, through the Universal Service Provision Fund (USPF), has also continued to bridge the gap between the underserved and unserved areas in the country, especially areas not considered commercially viable by the telcos.

    Funded through the Universal Access Provision Fund of the NCC, subsidy is provided for the project which is designed to facilitate the bridging of the digital divide. It is expected to cover all the 774 local government areas of Nigeria. Minister of Communication Technology, Mrs Omobola Johnson said about 1, 200 kilometres of OFC has also been run so far, adding that over BTS, had been deployed through the fund. She said the sector now contributes about 10 per cent to the national Gross Domestic Product (GDP).

    Tariff has relatively been friendly. The NCC adopted a progressive reduction in interconnect rates whereby new entrants and small operators had termination rates for voice services pegged at N4.90 in April 2013, N4.40 in April 2014 and by April this year it will drop to N3.90 for all networks.

    Mobile Number Portability (MNP) was introduced into the market to deepen competition. Though not many subscribers have yet taken advantage of the service, Director, Public Affairs, NCC, Tony Ojobo said the fact that it was introduced into the market will make the operators to sit up and improve service quality since they know they might lose their customers without losing their numbers. “So, for us, it is not about total number of subscribers that have used the service but the freedom it has brought to the subscribers and the fact that it has deepened competition and consequently service quality,” he said.

    With the revolution also came the Digital Bridge Institute (DBI) which was established by the NCC to produce the requisite manpower needs of the industry. DBI began in Abuja but now has campuses in Lagos, Enugu, Asaba, Yola, Oturkpo and Kano to represent the six geo-political zones of the country.

    Juwah said the sector has also served as an enabler to other sectors of the economy as it is the only sector that runs 24 hours daily for the whole year. This may not be far from the truth as the sector has nipped in the bud, the billions of naira usually siphoned through fertiliser distribution by the ruling Peoples Democratic Party (PDP). Through the Growth Enhancement Scheme, the Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina, was able to block the conduit pipe known as fertiliser and other inputs to the farmer directly through their cell phones using an e-wallet.

    Chief Operating Officer, Computer Warehouse Group (CWG), Mr. James Agada, agrees no less. According to him, the sector has created jobs and fostered the emergence of e-commerce platforms such as Kong, Jumia and a host of others that have contributed enormously to the GDP.

    He said: “Apart from multiple job creation and the multiplier effect on other sectors of the economy, telecoms sector is driving the growth of e-commerce with the likes of Jumia.com, Konga.com, Dealday.com, Kaymu.com, wakanow.com as major players.”

    Chief Executive Officer and Executive Secretary, E-Payment Providers Association of Nigeria (E-PPAN), Mrs Regha Onajite said the increasing volumes of e-banking transactions, being driven by the cashless policy of the Central Bank of Nigeria (CBN), “are all resting on the shoulder of the telecoms industry.”

    Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON), Mr Gbenga Adebayo said the telecoms sector has performed well as an enabler of most of the ICT-driven activities that have brought about efficiency in the country.

    He said: “Today, we bank with ease, we do online cash transfers, we use Automated Teller Machines (ATM), mobile money operators, e-wallet in agriculture, telemedicine, among others, but we forget that all of these activities, in addition to their traditional duty of providing voice and internet service, run on the networks of telecoms companies. Yet, cashless transactions are on the rise every day.

    “So, rather than criticise the sector for its little shortcomings, we should commend the players for helping the country to manage all these loads. I can imagine what will happen if telecoms companies decide not to carry any traffic (voice and data) in a day the way we witness it in the oil sector, where companies suddenly stop petrol distribution, thereby creating scarcity.

    “There have been sanctions on erring operators especially on the issue of QoS and related issues in the last four years. But the commission wants to go beyond sanctions by ensuring that it helps in addressing the obstacles to smooth operations by the telcos collaboratively,” Juwah said in an interview.

    The NCC said it has put in place adequate compliance, monitoring and enforcement activities which it said have worked very well.

    As the telcos shift attention to the provision of data and digital services to their customers, the Association of Telecommunications Companies of Nigeria (ATCON) said the industry is still bedevilled with myriad of challenges which needed to be addressed with vigour.

    Its President, Mr. Lanre Ajayi, identified the drawbacks to include vandalism of telecoms infrastructure, bottlenecks in securing approval to build infrastructure, multiple taxation/regulation, and others.

    He said: “A number of challenges are affecting the spread of infrastructure and they include multiple taxation by different levels of government; environmental hostilities such as bringing down BTS, especially in parts of the North by terror groups and some government agencies; grant of permits challenge as well as vandalism and theft of telecoms equipment from sites.”

    Ajayi said more still needed to be done by the regulator and players in order to continue the auspicious march towards fully transforming Nigeria into a truly knowledge economy and a major player on the global ICT development map.

    The policies of the Central Bank of Nigeria (CBN) will have a far reaching effect on how far the telcos can go in their quest to chart a new revenue course from data and digital services provision. Two major ‘hostile’ policies have already been put in place by CBN. One is the devaluation of the naira which will increase the cost of importing telecoms equipment. The other is contained in a circular the apex bank issued to all authorised dealers late last month which directed that importation of ICT equipment shall be through the interbank market only. Endorsed by its Director, Trade & Exchange Department, O.I. Gbadamosi he decreed: “The importation of electronics, finished products, information technology, generators, telecommunication equipment and invisible transactions importations shall henceforth be limited to the interbank market only.”

    Justifying the directive, Gbadamosi told stakeholders that the policy was to maintain the existing stability in the foreign market and strengthen the various policy measures already initiated by the CBN.

    Analysts have wondered the stability the CBN is referring to when the naira has kept falling against the dollar. “Which stability in the foreign exchange market is the CBN trying to maintain? These policies will do more harm than good to the economy. The impact of these policies will begin to manifest in the coming months, especially in an election year,” a sector analyst said.

  • Cloudy horizon for telcos, regulator, subscribers

    Cloudy horizon for telcos, regulator, subscribers

    Amid the monetary policy and dwindling oil revenue, things may be tough for the telecommunications sector in 2015, reports LUCAS AJANAKU.

    These are certainly not the best of times for the country. The prices of crude oil in the international market, Nigeria’s economic mainstay, have witnessed an unprecedented dip of more than 40 per cent in so short a time. There appears to be no end in sight to the woes of the economy as the oil cartel to which the country belongs, the Organisation of Petroleum Exporting Countries (OPEC), has refused to bow to pressure to cut supply to ease the pressure on demand.

    Nigeria’s national currency, the naira, has been on a free fall after the Central Bank of Nigeria (CBN) had frittered away the national foreign exchange (forex) reserves in a most unsustainable attempt at defending it. At his wit’s end, the CBN Governor, Godwin Emefiele announced the devaluation of the naira by eight per cent.

    The apex bank also directed that all importations involving electronics, finished products, information technology (IT), generators, telecommunication equipment, and invisible transactions would henceforth be funded from the interbank foreign exchange market only, a development telcos say will hurt efforts at expanding capacity by unwittingly increasing cost.

    Its Director, Trade & Exchange Department, O.I. Gbadamosi, via a circular to all authorised dealers, said the policy was to maintain the existing stability in foreign exchange market and strengthen the various policy measures, already initiated by the CBN.

    He said: “The importation of electronics, finished products, information technology, generators, telecommunication equipment, and invisible transactions importations shall henceforth be limited to the interbank market only.”

    The telecoms industry thrives on importation of most of its inputs. The naira devaluation will inevitably put more pressure on the ability of the operators to expand capacity and upgrade existing infrastructure.

    Executive Vice Chairman, Nigerian Communications Commission (NCC), Dr. Eugene Juwah, said to get a seamless, hitch-free service delivery in the country, between 70,000 and 80,000 base transmission stations (BTS) would be required. Currently, there are about 29,000 BTS serving both the licencees of the four global system for mobile communication (GSM) and one code division multiple access (CDMA) operator.

    With this scenario, quality of service (QoS) is expected to dominate the telecoms space once again this year. This is because the operators will not be able to grow their network while the quest for subscriber acquisition will continue.

    Country Manager, Ericsson Nigeria, Kamar Abass said it will be a dangerous precedent for any regulator to attempt to bar any operator from taking more customers onto its network. NCC agrees no less as it has insisted that at the core of its mandate is telecoms access provision to all.

    Customers Service Executive at MTN Nigeria, Akinwale Goodluck said the directive of the CBN will only worsen the woes of the industry. For one, about 80 per cent of the cell sites across the country run on generators as major source of power while power from the national grid is stand by. Generators, IT equipment and telecoms equipment are among the list of items the CBN has prohibited from direct importation except via interbank foreign exchange market only. Goodluck argues that going through the interbank forex market will add between six and seven per cent to cost. The government’s policies are bound to impact negatively on service delivery and put the regulator once again on the spotlight as it will be helpless.

    Chief Executive Officer, MainOne Cable Company Nigeria Limited, Ms. Funke Opeke said both the telcos and the consumers are unwittingly under pressure arising from the currency devaluation.

    Opeke who was former Chief Technical Officer (CTO) of MTN Nigeria spoke on the sideline at a telecoms forum in Lagos, said: “Well the declining value of the naira is definitely putting pressure on margins for telecoms operators. As you know, a lot of the technology inputs into the sector are imported, so they are dollar-denominated and most operators have long term supply service contracts.”

    According to her, with these supply service contracts entered into on a long term basis and the “value of your naira receivables against the dollar not at par puts a lot of pressure”.

    She said consumers will also feel the pinch of the inflationary trends as they would not have so much disposable income to spend on telecoms.

    “So, it is a two-sided equation. I think we are all hoping that there will be additional stimuli instituted by the government to try to advance the economy a little bit faster to stimulate spending in all the sectors aside from oil so that the economy can quickly recover,” she said.

    On whether a sustained unease on the economy could ultimately dovetail to an increase in telephone end user tariff, she said it was too early for any operator to contemplate that as all the telcos would strive to avoid that.

    She said: “I think its early days. Given where the industry is, everyone will like to avoid that (tariff increase) because in an environment where consumers are also under pressure, they can least afford those increases. But perhaps for us as Nigerians, it is also an opportunity to look at other areas where we can grow our economy and add value and provide services out of Nigeria on a global basis and to earn revenue andforeign exchange. There are other economies in the world that have done that successfully and we really need to be more aggressive in trying to push for new frontiers in our economy.”

    One other issue that may take front burner this year is the propriety or otherwise of compelling the four major carriers-MTN, Airtel, Globacom and Etisalat, to list on the Nigeria Stock Exchange (NSE) to allow for their broader ownership by the citizens and share in their annual huge profits, most of which are repatriated to South Africa. Nigeria remains the cash-cow of MTN while the country contributes immensely to the African operations of Bharti Airtel.

    All the four except Globacom are listed in Johannesburg Stock Exchange, The Stock Exchange, Mumbai (BSE), Delhi Stock Exchange (DSE) and the National Stock Exchange (NSE) all in India and Abu Dhabi Securities Exchange in the United Arab Emirates (UAE) respectively. In spite of these, there is no law barring them from cross-listing their shares in Nigeria.

    Coordinating Minister for the  Economy and Minister of Finance, Dr. (Mrs.) Ngozi Okonjo-Iweala, last year said  government,  the Securities and Exchange Commission (SEC) and the NSE had set-up a working group that is in discussion with big firms such as telecommunications, consumer goods, as well as oil and gas to list on the bourse.

    She said: “We are already talking with the Minister of Communication Technology, with the DG SEC and the CEO of NSE. We actually have a working group that is talking to big companies-MTN, and other telecommunications, consumer goods, industry and others. Even the power sector, oil and gas, we are trying to persuade them to list because this is the way we can deepen our capital market.”

    She said although the government was exploring the option of incentivising the telcos to encourage them to list on the local bourse, the government would resort to other measures to get the companies listed if  the persuasive measures failed to take them to the floor of the NSE.

    The Chief Executive Officer, NSE, Oscar Onyema said the bourse is making progress in its bid to get the carriers listed in the country.

    Onyema told Bloomberg that discussions “have moved from them (the telcos) not wanting to list, to them looking at how to deal with the issues that would make it unattractive to list.”

    He said the NSE is “gaining traction,” in trying to entice more firms to place initial public offerings (IPOs) to reflect the health of the economy. He spoke on the sidelines of the World Federation of Exchanges (WFE) in Seoul, Korea.

    Minister of Communications Technology, Dr. (Mrs) Omobola Johnson said the telecoms sector now contributes about 9.5 per cent to the nation’s gross domestic product (GDP). According to the rebasing of Nigeria’s economy, the telecoms sector is a major contributor to the GDP.

    Onyema said though none of the operators have come with proposal to list its stock, the carriers did raise “structural issues” topping them from IPOs, adding that the bourse is working with the Federal Government to address any shortcomings.

    “Some don’t need to raise capital, but some do. If any one of the four carriers wanted to raise capital on the NSE, I don’t see that not being successful,” the SEC CEO said.

    Stakeholders in the industry have urged the National Assembly to enact a law that would make blue chip firms such as the telcos and oil majors to cross-list on the Nigerian bourse.

    CEO, Teledon Group, Dr. Emmanuel Ekuwem said if the telcos list on the local bourse, it will be in their best interest. According to him, opening up the space for individual and corporate Nigerians to be part-owners of the companies will not only engender liquidity, it will also give Nigerians a sense of belonging.

    He said the spate of wilful vandalism of telecoms equipment would be a thing of the past as the would-be-vandals would start to see themselves as co-owners of the assets.

    The embrace of Business Process Outsourcing (BPO) by the telcos too has raised fears about job security in the sector. At the twilight of last year, some of the telcos offloaded the yoke of tower management by selling them off. All the four carriers, except Globacom, have sold their towers in the country.

    Regional tower management specialist IHS Holding, bought 2,136 towers from Etisalat, it also bought more than 9,000 from MTN.

    Mobile operators are exploring ways to reduce the heavy investment needed in maintaining and improving their networks at a time when customers are expecting faster speeds over 3G and 4G services. The deal is part of a plan by Etisalat to improve the quality of its network performance and accelerate roll out of 2G and 3G coverage across the country.

    Its CEO, Mathew Wilsher said the partnership with IHS is designed to promote network sharing, ensure higher quality, sustain reliable mobile services, lower overall costs and also promote a cleaner environment through reduced diesel usage and increased investments in alternative energy solutions.

    IHS has installed a large number of alternative energy sites across the country in addition to the construction of a state-of-the-art Network Operations Centre (NOC) with 99 per cent on its own sites.

    IHS has further committed to investing $100m in the towers acquired, on advanced generators, efficient batteries and alternative energy solutions to reduce diesel consumption and improve efficiency of grid use.

    IHS will also own and manage over 6,540 towers in the country and market services on the towers promoting tower sharing and co-location to help drive network improvements, better service to subscribers and economic growth.

    For Airtel, it will sell 4,800 towers and then lease them back from American Tower for 10 years, the two companies said in a joint statement.

    American Tower in a filing to the Securities and Exchange Commission in the U.S. had said the total consideration for the deal is expected to be $1.05 billion.

    “The agreement will allow Airtel to focus on its core business and customers, enable it to deleverage through debt reduction and will significantly reduce its on going capital expenditures on passive infrastructure in Nigeria,” Bharti said in a statement released to a stock exchange in Mumbai.

    American Tower Cor is an independent telecommunications and broadcast real-estate company which owns, operates and develops about 70,000 towers for cellphone companies and television stations. This deal will mark American Tower’s first foray into Nigeria. It already has operations in Ghana, South Africa and Uganda. Bharti and American Tower expect to close the deal during the first half of this year, subject to regulatory approvals, the company’s joint statement said.

  • Mobile money target: The banks’, telcos’ connection

    Mobile money target: The banks’, telcos’ connection

    The controversy over who controls the mobile money market seems to be stalling the project. If not resolved, it could hamper stakeholders’ target of raising the value of mobile money transactions by 2015, COLLINS NWEZE writes.

    The success recorded in mobile money business so far is below expectation. The platform which allows mobile phones to be used to send and receive money, buy recharge cards, pay subscription fees for DStv, pay electricity bills, use of Point of Sale (PoS) terminals to pay for goods and services, among others, is under threat.

    For the Head, Payments & Oversight at the Central Bank of Nigeria (CBN), Musa Jimoh, the mobile money framework identifies the roles of every participant in the mobile money operation in the country. He said the apex bank excluded telcos from leading any of the mobile money schemes due to certain reasons.

    Firstly, he said the telcos are not regulated by the CBN, and that  the Nigeria Communications Commission (NCC) and  the telcos are not banks that enage in settlement schemes.

    These hiccups, not withstanding, stakeholders in the mobile money business expect transactions to hit N1.1 trillion by 2015. Data from the Central Bank of Nigeria (CBN)  showed a rise in mobile money transactions to N93 billion in January-October 2013, from N31.5 billion in 2012. It said that sustained growth at this pace would meet analysts’ aggressive forecast of N1.10 trillion in 2015.

    Head Equities Markets at FBN Capital, Olubunmi Ashaolu, said the rapid expansion of e-payments, have resulted in major fiscal and developmental benefits as well as new revenue streams for Information Technology providers, mobile operators and banks.

    He agreed that there is a momentum, but nonetheless explained that the expansion is at a low base, saying an estimated 46 per cent of the adult population has no access to financial services. CBN data showed total e-payments of N2.1 trillion in 2012, of which Automated Teller Machine (ATM) transactions accounted for N1.98 trillion, or 94.7 per cent of the total.

     

    Role of stakeholders

    Jimoh explained that Mobile Money Operators (MMOs) are to issue, store and process the e-money which is kept in subscribers’ wallets. They also recruit and manage agents; deploy, operate and manage risks associated with the technology for providing the mobile money services.

    He added that settlement banks manage the pool of funds for the subscribers, provide settlement on behalf of mobile money operators and provide monthly statement of pool account transactions to the MMOs. Also, the telcos provide the telecommunications infrastructure, and agent network services.

    Analysts insist that the Telcos and banks which are expected to jointly drive the process are working at cross roads. In other countries, the process could be: operator-led model, bank-led model, collaboration model and peer-to-peer model. The Central Bank of Nigeria (CBN) chose the bank-led model in which case a bank deploys mobile payment applications or devices to customers and ensures merchants have the required point-of-sale (PoS) acceptance capability to carry out the transaction.

    Mobile network operators’ network merely serves as vehicle through which transactions take place. This is based on the regulatory framework for mobile payment services issued by the apex bank in 2009, which disenfranchised telcos from operating mobile money, except through strategic partnerships with licensed operators.

    The Telcos, have consistently advised the CBN to allow them participate in the regulation of the subsector, but nothing has come out of the demand. The apex bank, which solely regulates the business, has given the Telcos little or no opportunity for control.  This model has deprived the business the needed technological and infrastructural backing critical to its success.

    The disagreement has adversely impacted on implementation process of the mobile money platform in the country. General Manager, IBM Africa, Taiwo Otiti, said strategy being adopted by the key stakeholders is stifling the success of mobile money operation in the country.

    Speaking during an interview with The Nation, he said: “The approach we have taken in mobile money is the challenge. We have over 30 million unbanked, compared with over 100 million mobile phone users. The guys who are unbanked, they may have mobile phones, but how would you get them into the financial system. You must be able to get into his lifestyle for you to be able to get him subscribe to mobile money scheme. Many of the stakeholders are doing that.”

    Otiti said that getting the mobile money scheme running requires both the payment and supply chain properly defined and implemented by the stakeholders. He said there is need for a paradigm shift that sees all the stakeholders working together. “The telcos can’t also do without the banks, so also are the banks. It is only by collaboration, will the mobile money project begin to deliver the needed results,” he said.

    He said the stakeholders should not think of who owns the customer, but focus on products and services that can attract more customers into the scheme because nobody owns the customer. “Nobody owns the customer. What is important is collaboration that ensures that end-user gets what he wants. We need to see mobile money in terms of what the customer can get and use in improving his lifestyles,” he said.

    The CBN said regulation of the telecom sector is not within its control, making it difficult for it to guide mobile money operations under the telco-led model being advocated by telecom operators.

    It said the risk involved in mobile money operations are so high, that regulation has to be closely implemented. It added that it does not control what the telcos are doing, unlike in the existing bank-led model where it provides the operating guidelines.

    He said mobile money operators are being encouraged to increase access to financial services through mobile phones that are either directly linked to a bank account or use of mobile wallets as intermediary virtual money accounts.

    Experts insist that the current regime of mobile money regulation, which is being bank-driven, is not friendly to telecoms companies who provide the mobile payment platform. They said that though there was a lot that telecoms companies could contribute in a cashless economy, their current mandate was limiting.

    The thinking is that since the mobile payments business is 90 per cent dependent on the mobile industry, it was unfair that the mobile networks are prevented from advertising their various mobile payment products which are the foundation on which the bank products operate.

    From the customer’s mobile phone, to the mobile payments system and feedback to the mobile phone, the mobile payment transaction utilises mostly mobile resources, makes use of mobile time and is supported largely by mobile engineers, but unfortunately the CBN has restricted telecom companies from advertising in the mobile payments space.

    Analysts also think that telecom companies should be allowed to speak about the capabilities of their networks, the quality of user experience and the choice of mobile payment services available on their networks.

    It is now roughly two years since the first mobile money went live and approaching a year since cashless economy came into operation. Meanwhile, none of the individual players can boast of having more than 10,000 active subscribers.

    The CBN said over the next few years, the focus of the regulator will be to strengthen the institutional and regulatory frameworks to achieve improved financial inclusion.  The application of mobile technology for financial services especially in rural areas will ensure that a large percentage of the population outside the formal banking system would have access to financial services using one of the three models of card-based, account-based and virtual account.

    CBN statistics showed that only 26 million Nigerians own a bank account out of a population of 167 million populations. With telecoms subscriber base put at about 120 million by the Nigerian Communications Commission (NCC), there are indeed limitless opportunities for the country to achieve financial inclusion by bringing the large numbers of the unbanked to the banking sector through mobile money,” he said.

    The NCC said critical success factors for mobile payment in the country are the integrity and security of the end-to-end transition during a payment transaction process. He said the chain of transaction must be secured from initiation to authentication. Therefore, confidentiality and integrity of the data transition are critical factors in mobile payment.

    The Nigeria Deposit Insurance Corporation (NDIC) has called on stakeholders in the mobile money business to seek ways of extending the service to a larger proportion of the population.

    NDIC’s chief, Umaru Ibrahim who made this known during a roundtable discussion on mobile money services held in Lagos, said that there are over 100 million mobile phone lines in the country.

    He said: “According to Enhancing Financial Innovation and Access (EFiNA) survey, the rural population is 71 per cent, while 76.2 per cent of the population remains unbanked. Mobile phone ownership is 55.6 per cent in the rural areas.”

    He explained that effective rendering of mobile banking financial services can be a key mechanism in achieving the objective of National Financial Inclusion Strategy (NFIS) based on the huge success recorded by Kenya, Uganda and South Africa in enhancing financial inclusion through mobile financial services.

    Ibrahim said mobile banking subscribers will soon get deposit insurance coverage, with each subscriber guaranteed up to N200,000, or N500,000 as applicable to Microfinance Banks/Primary Mortgage Banks and Deposit Money Banks(DMBs) respectively, in the event of bank failure.

    He explained that if a bank fails, the insured mobile account can be transferred to another sound bank, to further engender public confidence in the system and promote financial stability.  According to him, the framework for extending deposit insurance to individual customers of mobile payment services is being finalised.

    Razak Olaleye, a mobile money analyst said Telcos are licensed to offer telecoms services and not banking services. According to him, the decision was made because the CBN does not regulate telcos and if the telcos are allowed to lead mobile money, it will mean putting two critical segments of Nigeria’s economy in the hands of a few companies. This, they believe, portends great risk for the country.

    World Bank said the global remittance market has grown rapidly over the past decade. In 2010, remittances through official channels amounted to $440 billion, of which, developing countries received an estimated $325 billion. The majority of these transactions are still cash-to-cash transactions, but the share of digital transactions is steadily increasing.

    Driven by the development of mobile money systems in emerging markets, experts estimate that $16 billion worth of international money transfers will be received with mobile phones in 2015.

    In Nigeria, the scheme is however, confronted with many problems but the CBN said the draft National Payments System Bill, which is undergoing legislative passage, is expected to address the legal barriers to electronic payments such as the admissibility of electronic evidence in the law courts.

    Managing Director, Mobile Money Africa, Mr Emmanuel Okogwale, agrees that there are still challenges. According to him, most of the companies licensed to do mobile payment are yet to have accredited agents who will reside in urban, semi-urban and rural areas. He argued that without well trained mobile money agents, the implementation would not be seamless as agents with the requisite tools and handsets are the infrastructure needed to deliver the money to the customers.

  • Naira devaluation puts pressure on telcos

    Naira devaluation puts pressure on telcos

    The declining fortunes of the national economy which has forced the Central Bank of Nigeria (CBN) to devalue the naira by eight per cent is already taking its tolls on the operation of telcos in the country.

    The value of the naira has been on a roller-coaster dive, exchanging more than 180 to $1 causing stress to businesses with import-dependent inputs.

    Chief Executive Officer, MainOne Cable Company Nigeria Limited, Ms. Funke Opeke said both the telcos and the consumers have been unwittingly put under pressure arising from the currency devaluation.

    Opeke who was former Chief Technical Officer (CTO) of MTN Nigeria spoke on the sideline of a reception organised for judges and winners of the Etisalat Pan African Prize for Innovation in Lagos. She urged the Federal Governmentr  to put a sort of economic stimuli to ease the pressures arising from the policy.

    She said: “Well the declining value of the naira is definitely putting pressure on margins for telecoms operators. As you know, a lot of the technology inputs into the sector are imported; so they are dollar-denominated and most operators have entered into long term supply service contracts.”

    According to her, with these supply service contracts entered into on a long term basis and the “value of your naira receivables against the dollar not at par puts a lot of pressure”on the telcos.

    She said consumers will also feel the pinch of the inflationary trends as they would not have so much disposable capital to spend on telecommunications.

    “So, it is a two-sided equation. I think we are all hoping that there will be additional stimuli instituted by the government to try to advance the economy a little bit faster to stimulate spending in all the sectors aside from oil so that the economy can quickly recover,” she said.

    On whether a sustained unease on the economy could ultimately lead to an increase in telephone end user tariff, she said it was too early for any operator to contemplate that as all the telcos would even strive to avoid taking such step.

    She said: “I think its early days. Given where the industry is, everyone will like to avoid that (tariff increase) because in an environment where consumers are also under pressure, they can least afford those increases. But perhaps for us as Nigerians, it is also an opportunity to look at other areas where we can grow our economy and add value and provide services out of Nigeria on a global basis and to earn revenue and to earn foreign exchange. There are other economies in the world that have done that successfully and we really need to be more aggressive .in trying to push for new frontiers in our economy.”

  • QoS: Telcos get Jan. deadline on subscribers’ compensation

    QoS: Telcos get Jan. deadline on subscribers’ compensation

    With effect from January next year, it no longer would be business as usual with quality of service (QoS) as the regulator of the telecoms sector, the Nigerian Communications Commission (NCC) said it has set up a committee to look into how consumers would be compensated directly by telcos for loss of air time due to their inefficiencies.

    NCC said the telcos have been given up till January next year to come up with proposals on how consumers could be compensated directly.

    This is perhaps a reaction to the agitation of telecoms subscribers that have never concealed their disgust at the current practice where the telcos are fined and payment made to the coffers of the Federal Government. They described the practice as unjust since they are the ones that suffer the poor QoS from the telcos.

    The Director, Consumer Affairs Bureau, NCC, Mrs Maryam Bayi who spoke during the Fourth Quarterly Meeting of the Industry Consumer Advisory Forum (ICAF) organised by the regulator in Abuja, said the regulator is not happy over the way consumers were being haunted  with unsolicited text messages by the telcos, adding that steps have already been taken to address the menace..

    Mrs. Bayi said due to the measures adopted by the NCC in conjunction with the telcos, consumers’ complaints have dropped to about 40,000 per day across the country.

    The regulator blamed states and local government areas in the country for hindering the development of telecoms infrastructures, citing Lagos State as the only state among the 36 states and the Federal Capital Territory (FCT), Abuja,that has shown understanding on the need to put infrastructure development before aggressive pursuit of internally generated revenue (IGR). The Lagos State government had reduced by about 98 per cent, the cost of installing infrastructure by telcos in the state.

    Executive Commissioner, Stakeholder Management, Dr. Okechukwu Itanyi said the Lagos State government has considerably reduced the cost of obtaining right of way (RoW) and the cost of erecting base transmission stations (BTS), while the Abuja has consistently refused to grant approvals to the service providers to expand infrastructure to redefine QoS.

    According to him, aside challenges in the power sector, vandalism, multiple/regulation taxation, access to RoW and stealing of generators at cell sites are factors standing on the way of good QoS..

    Itanyi lamented that it takes an average of six months to get approvals for the establishment of base stations while approvals do not come at all in some states on the excuse that it distort the master plans of the cities.

    He however said the NCC is working with other critical stakeholders in the industry to address the issue, stressing that once they are taken care of, the industry would assume its rightful position as the driver of economic development.

    Participants agreed that telcos and the regulator should collaborate with the Nigerian Security and Civil Defence Corps (NSCDC) to ensure the protection of telecoms infrastructures across the country.

    They also urged the NCC to expand the membership of ICAF to include civil society and advocacy groups while service providers must effect the opt-out and opt-in option in the issue of unslocited text messages.

    Participants also said the National Orientation Agency (NOA) should collaborate with the NCC and the NSCDC in training the youths in the communities on how to install and protect communication infrastructures in their communities.