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Tag: telcos

  • CBN limits generators, telcos equipment import funding to interbank

    CBN limits generators, telcos equipment import funding to interbank

    •Pegs Standing Deposit Facility at N7.5b

    All imports involving electronics, finished products, information communications technology, generators, telecommunication equipment, and invisible transactions, will henceforth be funded from the interbank foreign exchange market only, theCentral Bank of Nigeria (CBN) said yesterday.

    In a circular to all authorised dealers, CBN Director, Trade & Exchange Department, O.I. Gbadamosi, informed stakeholders that the policy is desined to maintain the existing stability in  the foreign exchange market and strengthen the various policy measures, already initiated by the CBN.

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

    Also, the apex bank has pegged the Standing Deposit Facility (SDF) for banks at N7.5 billion, remunerated at 10 per cent per annum.

    Standing facilities are aimed at providing and absorbing overnight liquidity, signal the general stance of monetary policy and bound overnight market interest rates.

    In a circular signed by the Director, Financial Markets Department, E.U. Ukeje, the regulator observed that banks and discount houses have preference for keeping their idle balances in the CBN as SDF thereby constraining the process of financial intermediation.

    In order to encourage the banks to increase lending to the productive sector of the economy, the guidelines for the operations of the SDF is reviewed.

    The review, he said, entails that the remunerable daily placements by banks and discount houses at the SDF shall not exceed N7.5 billion. This shall be remunerated at the SDF rate of 10 per cent per annum.

    He said that any deposit by a bank or discount house in excess of N7.5 billion shall not be remunerated. “These provisions are without prejudice to the subsisting Monetary Policy Rate (MPR) corridor. For the avoidance of doubt, the SDF remains operative as a monetary policy tool, but patronage of the facility shall be subjected to the above modifications,” he said.

    The MPR corridor remains at plus or minus 200 basis points round MPR. Continuing, he said: “The SDF shall attract an interest rate of MPR minus 200 basis points, 10 per cent per annum up to the limit of N7.5 billion, while any deposit over and above the maximum will attract zero interest rate”.

  • Telcos urge NCC to create spectrum market

    Telcos urge NCC to create spectrum market

    elecoms firms have urged the Nigerian Communications Commission (NCC) to create a spectrum market where operators could buy and sell the scarce airwaves resource.

    Its umbrella body, the Association of Telecoms Companies of Nigeria (ATCON), argued that since it is the practice in other climes, the NCC should look into the option as it will assist the agency in its pursuit of universal access goal.

    Its President, Lanre Ajayi, said before the regulator puts a cap on  the auctioning of spectrum in the 2.6 gigahertz (GHz) band or allow a single operator have it all, it should first consider giving freedom to operators to have a spectrum market.

    According to him, the matter has been agitating the minds of operators for a long time as the licensing guidelines of the regulator constrained this from happening.

    He said: “Before we can put in a cap or allow someone to have everything, there is one important thing that we will need to do. There is something that has been missing in the industry for a while that people are already asking for and I think the NCC should start thinking about. It is something like a spectrum market. If I have a spectrum today and I buy based on certain business plan and for some strange reason, my plans are not working as I already scheduled, I may choose to sell my spectrum to someone else.

    “Today, that is not possible by the provision of licence document. People are now asking for such leverage, for such market to be created, the spectrum market where I should be able to sell my spectrum to an operator that is ready to deploy immediately with it. If I have a national spectrum and I will be able to deploy to Lagos, Abuja , Port Harcourt and my spectrum covers Sokoto, Bornu, and there is someone in Bornu State that is willing to use this spectrum to deploy service, why can’t  I sell that my spectrum to him?

    “I could sell to someone in Bornu even at a premium. But now you have constrained the operators through the licence regulation that they cannot do that. I think that constraint should be removed; a spectrum market should be created.

    “This is happening in some markets or other countries. So, if that is available, then we may allow an operator o buy the whole 2.6GHz spectrum with the hope that if he is not able to deploy today, he could sell it some other time. If that is not in place, there will certainly not be (people holding licences without deploying them to use for a long time).

    Director, Spectrum Administration at NCC, Austin Nwaulune, promised that the regulator would look at the “spectrum trading option” being proposed by ATCON, adding that speculative buying of spectrum licences is one of the things that holding back the industry.

    “ATCON is advocating spectrum trading. That is something different. We are also looking at that too.  In Nigeria, we are very good at speculation and that has hindered it so far. So, until we determine how we do it, .it is not a way yet but we are looking at all the options,” Nwaulume said.

  • ‘Marketing wars among telcos, others healthy’

    The marketing wars that heralded the telecoms industrry when it was liberalised more than a decade ago and the ‘wars’ that took place among big brands such as Bournvita vs Milo, Cowbell vs Peak Milk, Legend stout vs Guinness Stout were healthy for the development of the industry, experts have said.

    A book, Kill or Get Killed, The Marketing Killer Instinct, written by MTN General Manger, Consumer Marketing, Kola Oyeyemi chronicles these ‘wars.’

    According to marketing experts, the book is replete with many case studies of marketers’ wars which shook the consumer landscape. It also showcased the major marketing contentions in the telecoms industry spanning over ten years and involving all the major players including MTN, Glo, Airtel and Etisalat.

    The book presents the exciting behind-the-scene thinking and results of the great price wars occasioned by commoditisation in the industry, how creativity has been used to sustain market leadership consistently and how the networks’ marketing mavens constantly strike hard at the competition’s jugular in the search for new customers or in the effort to keep current customers.

    The case studies are comprehensively treated with major focus on Nigeria, Kenya, Tanzania and a few markets while the author also provides some critical insights into African markets in general.

    Kill or get Killed (KGK) is regarded as the first serious attempt by an African marketing practitioner to pen real life case studies of the great material, intellectual and nerve-racking battles that characterise the rise and fall of brands in Nigerian and to an extent, the African theatres of war for the consumer’s mind and wallet.

    The book presents some good case studies depicting a multitude of brands fighting for market space and the dynamics that shape success or failure in different African markets. Specifically, is the effort of the author to identify the key differentiating factors affecting or determining mode of operations in the African environment, excluding South Africa and Africa north of the Sahara, which has fundamentally different tendencies in terms of culture, human psychology, climate and history.

  • State-run telcos inhibiting growth

    State-run telcos inhibiting growth

    The telecoms sector has made enormous contributions to the growth of the gross domestic product (GDP) of some African countries. Nigeria is one of them. Experts have said this trend will be sustained with the appropriate policies. This growth projection may, however, remain wishful thinking as some state-run telcos in the continent are still pulling back the hand of the clock. These firms have kept prices high for customers and stalled the modernisation of many economies. 

    A decade ago, fierce battles were fought to get a number of Africa’s state owned telcos into private hands and to strip them of their monopoly privileges. This happened in all but two of what are now sub-Saharan Africa’s most successful economies: Ethiopia and Tanzania.

    These state-owned incumbent telcos stand in the way of developing a country’s economy for some reasons. Almost without exception, they are poorly run and the quality of infrastructure and service they provide is sub-standard.

    Because they are monopolies, they keep prices high for other players in the marketplaces, such as Angola, Cameroon, Ethiopia and Djibouti have some of the highest international, national wholesale and surprising retail prices on the continent.

    Because they are owned by cash-strapped governments, they are under-invested in and wages for their employees are often late. Chinese loans have helped with under-investment but cannot deal with the other problems identified here. Incumbents are significantly over-staffed and under-skilled.

    Hardly any one of them has a business strategy that is worth the paper it is printed on. Like the baobab tree, very little grows in their shades so they become the only pool for certain types of skills and these remain sub-standard.

    The easiest part of the Gordian knot at the heart of the divestment problem is that governments protect them because they fear what will happen if there are wide-scale redundancies. Therefore, they are reluctant to remove the monopoly protection from them. In places such as Mali, when there was more competition from Orange, the government Sotelma lost customers quickly and they largely stayed lost.

    However, governments such as Kenya and Ghana that bit the bullet on this issue lived to see another day. Some like Nigeria have made such a mess of the process that they have lost most of whatever the value might have been of the assets of NITEL and its mobile arm, MTel.

    Others like Niger and Zambia privatised only to see the collapse of Lap Green during the Libyan civil war mean that they had to re-nationalise. Zambia has held on to Zamtel because a new government felt that the previous deal to sell was not at a fair price.

    The trickier part of the conundrum is about politics. Often corruption extends back into the owners, the government. Politicians have a nasty habit of treating these telcos as cash tills that could be dipped into, particularly at election time. In the case of Swaziland, the ownership is directly held by the King. Why should he sell it off in those circumstances?

    Where corrupt money is not involved, patronage has gone a long way to help wreck what efficiency might notionally exist. Everybody’s brother who is connected potentially gets a job and the management jobs are plum positions under political control in many countries.

    African politicians would like to persuade the citizens that state telcos are a key part of closing the digital divide and joining the information societies. Because the rhetoric is warming and positive in intent, does not mean that they should be believed. All the countries identified are lagging behind in closing the digital divide.

    One of the key issues in African telecoms liberalisation has been the way that state monopoly incumbents hold up the development of a more complex, higher skilled market. If the incumbent sells wholesale capacity to local internet service providers (ISPs), you can be sure that its employees are going to those ISP customers and trying to poach them.

    Furthermore, these kind of state companies have no idea of the cost of providing wholesale capacity for two reasons: firstly, they lack the commercial ability to work it out and secondly, there is no benchmark price in the market.

    To tackle this problem, some governments have taken the sensible step of separating wholesale and retail functions. Ghana Telecom was sold on the basis that this had to occur and though there was skepticcism, it has worked better than expected. Botswana has done the same with BTC while holding on to both parts.

    Also, the World Bank has sponsored and helped financed operator consortia to eat away at the more egregious of these monopoly privileges such as landing stations and national networks (as in Burundi).

    So, there are 31 countries where there is a state owned incumbent telco that is either dominant or has monopoly privileges that hamper the growth and efficiency of the market.

    These are Algeria, Angola, Benin, Burundi, Cameroon, Central African Republic, Chad, Comoros, Congo-Brazzaville, DRC, Djibouti, Egypt, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Libya (which has several state entities), Mali, Mozambique, Namibia, Niger, Sao Tome, Sierra Leone, Swaziland, Tanzania, Zambia and Zimbabwe.

    Several of these countries are in political turmoil that make it imposible to do anything about privatising the incumbent telco. Others such as Comoros are going through the privatisation loop again.

    But in Africa, telcos to be privatised are in:

     

    Ethiopia

     It is the North Korea of telecoms regulatory practice and maintains what is now called EthioTelecom plays a crucial role in closing the digital divide. Its equipment and network procurement has been a mess and even with Chinese loans, it is still serving less customers than it might if it were in private hands. Prices remain high and market development was not helped by things like the ban on short message service (SMS) for several years. It remains, more or less, the only company in the market whereas other more open economies have seen jobs and skills flourish. Rather cheekily, we’re going to add their traditional enemy Eritrea in here as it is the only telco without an international fibre landing station or any plans to build one.

     

    Mozambique

     It is going through a phase of talking about privatising but don’t hold your breathe. Incumbent telco TDM retains a number of monopoly market privileges and charges neighbouring countries high transit prices for access to international fibre capacity.

     

    Cameroon

     There was one attempt to privatise Camtel and either the government didn’t like the price or no one came to the party. Despite the huge amount of pride some Cameroonians still have in Camtel, it is inefficient and its monopoly control of both the landing station and national fibre networks mean prices are higher than they should be. It refused World Bank money to create a national wholesale fibre consortium and its market development has been delayed by not dealing with this issue.

     

    Namibia

     Telecom Namibia is one of those cozy unnoticed monopolies. The country is small and has a relatively high standard of living compared to many of its neighbours. It has a relatively well-equipped national infrastructure but keeps national wholesale prices high. In an act of hubris it had a commercial strategy to get involved in neighbouring telcos in Angola and South Africa. Like the investments of South Africa’s Telkom, these were without exception a disaster.

     

    Zimbabwe

     It hasn’t been for want of trying as the endless stream of rumors about potential buyers show. But the recent spat about whether an ISP can run voice over internet protocol (VoIP) services shows that there are still red lines in what is now otherwise a competitive market. The issue here is that the government clearly wants more money than potential buyers are willing to pay. Something has to give and it’s probably the government’s negotiating position.

    Privatising a state-owned telco in the African context is about a government making a commitment to having an efficient economy that will produce sustainable jobs and grow the national economy substantially.

     

    •Culled from The Balancing Act.             

  • Telcos pay N1.76t to govt, says Airtel CEO

    The Federal Government has collected about N1.76trillion as taxes from telecoms operators over the last 11 years. It has also collected another N605 billion in various forms as regulatory levies, the Chief Executive Officer, Airtel Nigeria, Segun Ogunsanya, has said.

    He said the sector generates close to N160 billion annually to the Federal Government in form of taxes, adding that another N55 billion acrues annually to the government in various forms of regulatory levies.

    Ogunsanya, who made this known in Lagos, said the direct contribution of telecoms operators to the country’s gross domestic product (GDP) is estimated at about N400billion in 2012.

    He said: “Taxes and regulatory levies are the most important sources of direct contribution from network operators in Nigeria, accounting for about 55 per cent of the direct contribution. By our estimates, network operators pay close to N160billion in taxes annually, with another N55billion paid in various forms of regulatory levies.

    Ogunsanya said Nigerian operators have paid close to $4 billion (N640billion) in license and spectrum fees since 2001, adding that a further, three per cent to five per cent of Nigerian telecoms services’ revenues are paid out in wages and benefits for some of the highest skilled jobs in the economy.

    He listed other contributions to the economy to include payments to contractors, corporate social responsibility (CSR) programs and dividends to shareholders. “CSR programmes have been of particular significance, with many operators investing a substantial portion of their revenue on such programmes,” he said.

    He explained that operators also contribute to the economy through their wider ecosystem which includes the entire industry value chain, from contractors for base transmission station (BTS) deployments and system integrators, to resellers of devices, adding that the third channel of contribution came through multiplier effects and productivity gains from the society at large, using telecoms services.

    He said the telecoms sector is a major contributor to Foreign Direct Investment (FDI) in the country, along with the banking and oil and gas sectors. Cumulative FDI in Nigeria over the 2001-2011’s been around $45 billion, stating that the telecoms sector has accounted for around 35 per cent of that amount, with operators using capital to acquire licenses, acquire or prop up local operations and expanding their networks.

    On employment generation, Ogunsanya said: “The contribution to employment has been visible in the volume of new job opportunities created and in the variety of required skill set. Nigerian operators have created close to 10,000 direct jobs since liberalisation, a pace of nearly 1,000 direct, full time equivalent (FTE) positions created each year. On an indirect basis, the total number of jobs created by the telecoms operators hover between one million and three million, depending on the estimates.”

    He said the nation’s patchy power infrastructure remains an obstacle to telecoms operators, adding that in a country with about 25,000 BTS and a need for around twice that number over the next 10 years, the power infrastructure challenge is especially nagging.

    “The power costs of a site connected to the power grid are only about 1/6th those of a fuel-powered site, but only about 10 per cent to 15 per cent of BTS are connected to the electric power grid. The implications of such absence of reliable power infrastructure, are far-reaching. Nigerian operators spend around N8billion to N10billion a year in diesel costs to power their base stations. Such costs account for about 60 per centg of operators’ network costs. Primarily because of such fuel costs, average network costs in Nigeria are twice to thrice higher than in a number of other African markets,” he lamented.

  • Poor service quality: Telcos get CPC’s Dec 31 deadline

    Poor service quality: Telcos get CPC’s Dec 31 deadline

    The Consumers Protection Council (CPC) has said that as from December 31st, any service provider that fails to upgrade it facilities so as to improve its service, will be stopped from further expansion and will be denied new subscribers.

    Speaking at a briefing with newsmen in Lagos, the Director General, CPC, Mrs Dupe Atoki said the agency has received many complaints from consumers, hence, the agency can no longer tolerate the abuse in the telecom industry.

    She said: ”There is no denying the fact that there is gross consumer abuse in the telecom sector and indeed in all the sectors. Upon assumption of office, in the last six months, I have amongst other activities done an analysis of the complaints that CPC has received. Such compalints are poor network service, lack of sustainability of calls, unsolicited text messages, unsolicited telemarketing calls, sales promotion in spite of poor networking services, non compensation to consumers for loss of airtime and poor service delivery, among others.

    ”Let me re-emphasise the fact that CPC has enforcement powers to implement all consumer protection laws in Nigeria and the council will strengthen this by collaborating with regulators across all sectors.

    “I want to emphasise that any service provider that does not meet with the quality, will as from December 31st, no longer be able to expand. Apart from paying fines, any defaulter will not be allowed to get new subscribers.”

  • Fed Govt to prosecute telcos over poor service quality

    Fed Govt to prosecute telcos over poor service quality

    The Federal Government yesterday threatened to institute legal action against any erring telecom operator in the country in a fresh move to address the vexed issue of poor service delivery(QoS) in the telecoms sector.

    The Minister of Communications Technology, Mrs Omobola Jonhson, who made this known yesterday in Lagos, said the Ministry of Communications Technology, the Consumer Protection of Nigeria (CPN) and the regulator, the Nigerian Communications Commission (NCC), are collaborating to sanction or prosecute erring telecoms operators that have been delivering poor quality service to Nigerians.

    She lamented that despite the fact that the ministry has been working relentlessly to provide an enabling environment for the deployment of ICT infrastructure, such as Base Transmission Stations (BTS) and Optic Fibre Cable (OFC), the poor service quality persisted, adding that the pains subscribers go through necessitated the collaboration with the NCC and CPC.

    She said henceforth, subscribers with genuine cases that seek redress, will promptly get reprieve in such cases as usage irregularities, inaccurate billing and opportunities to opt out of unsolicited SMS messages.

    She said subscribers are daily faced with poor network service delivery that makes it impossible for consumers to receive calls. The Minister listed drop calls and lack of sustainability of calls, unsolicited text messages at odd hours, unsolicited telemarketing calls, deceptive broadband speed adverts by some service providers and failure of service delivery without compensation to consumers, as other challenges faced by the subscribers.

    Mrs. Johnson said insufficient customer care lines, unrelenting sales promotion, despite poor network service delivery, non-compensation to consumers for loss of airtime and poor service delivery, and network insecurities characterised by uncontrollable interruptions on networks by unidentifiable third parties, are additional hurdles consumers contend with.

    Operators have in the last few years listed challenges confronting and limiting their ability to deliver effective quality service, such as multiple regulation and taxation, Illegal access denials and site shut-outs, inadequate power supply, lack of incentives to drive service penetration to the remote and rural areas, rent seeking charges for permits and approvals necessary for deployment and security, among other issues, she said.

    But to address some of these obstacles, she said the ministry, in partnership with the Ministry of Works, developed new Right of Way (RoW) guidelines for Federal Government roads to enable operators have unencumbered means of laying OFC which is critical for infrastructure development and quality of service, and to remove arbitrary charges and eradicate multiple taxations that impede telecoms development across the nation.

    Mrs Johnson state Governors and relevant authorities both at the state and federal levels have agreed to address the issue of multiple taxation and adopt measures that will remove arbitrary charges and eradicate multiple taxations to enhance service delivery across the nation.

    She said an agreement has been reached with the Lagos State Governor, Babatunde Fashola to remove constraints to the installation, rollout and deployment of BTS and OFC in the state.

    She said Lagos State has agreed to reduce taxes, and levies in Lagos by over 40 per cent and RoW fees were reduced from N3000 to N500, adding that the Federal Government will no longer condone poor service delivery to subscribers.

    It’s no longer shall be business as usual, stressing that operators must rise up to redress the current poor state of quality service delivery

    She said: “We are concerned that the poor quality issues still abound. I am inundated with complaints about quality of service and the seemingly uncaring attitude of our telecoms’ operators to resolve these issues on a regular basis.

  • Waiting for telcos at stock market

    Waiting for telcos at stock market

    Over three years ago, the House of Representatives Committee on Capital Market resolved that telecommunications and oil firms should be listed on the Stock Exchange. The Federal Government is now pushing to actualise this dream. Will it succeed? LUCAS AJANAKU writes.

    When the Co-ordinating Minister of the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala and her Communications Technology counterpart, Mrs Omobola Johnson spoke during a visit to the Nigeria Stock Exchange (NSE), Lagos, they did not conceal their mission.

    “We are here today because we believe that this stock market needs to be deepened and broadened and one of the key ways to do that is to get more companies to list.

    “Our vision for this stock market is that it must become the premier stock exchange of Africa. We must overtake Johannesburg, even as our economy overtakes that of others and we are hoping that down the line this stock market will do the same,” Dr Okonjo-Iweala said.

    Mrs Johnson said the telecoms sector is the fastest growing sector of the economy, adding that it has taken the leadership position in the last five years, growing yearly at an average of between 22 and 23 per cent and contributing 8.5 per cent to the Gross Domestic Product (GDP) as at the second quarter of the year.

    “The main reason we are here is to bring more companies unto the stock exchange. The ICT industry contributes 8.5 per cent to GDP; it is the fastest growing sector of the economy and we need to ensure that companies in the sector are listed. It is therefore appropriate that many more Nigerians should benefit from this success through the increased public ownership of these companies. That will happen when they are listed on the stock exchange,” she said, stressing that efforts had gone beyond just calls for more companies to be listed to collaboration.

    The ministers pledged the government’s support to the NSE and the Securities and Exchange Commission (SEC) as it moves to deepen the market.

    Twelve years after the liberalisation of the telecoms sector, the subscriber base has crossed the 100 million mark while most of the telcos have been smiling to the banks, repatriating billions of dollars yearly as profit.

    Though some of the telcos have moved close to indigenising the brand by appointing Nigerians as chief executive officers, sector analysts argue that listing on the NSE will further strengthen the people’s confidence in the telcos.

    Chief Executive Officer (CEO), Teledon International Group, Dr Emmanuel Ekuwem, said the time had come for the telcos to list on the NSE. According to him, when he was national president of the Association of Telecoms Companies of Nigeria (ATCON), getting the telcos listed was one point he raised.

    “The big telcos, MTN, Etisalat, Glo and Airtel should be listed on the NSE. They are big enough. They are generating a lot of revenue. They should become proper Nigerian entities so that Nigerians, who desire can own shares in them. When their public offer is out, people can buy their shares. When they have annual general meetings, management will account for their stewardship. The move will popularise them rather than victimise them. It will make them open to Nigerians so that if there is any subscriber that has the financial muscle to participate, such a subscriber will buy shares and bring a lot of capital onboard. They keep talking about going abroad or going to banks to source $2 billion, $3 billion to expand their networks. When they do public offer, they will have a lot of capital because of the shares that people will buy. That will give them the financial muscle to expand their network and improve on the quality of service as well as popularise them as Nigerians will now have a sense of ownnership of these companies,” he said.

    He added that listing will also enhance the institutionalisation of corporate governance which will bring about transparency and accountability.

    The telcos, he said, would be reluctant to list, arguing that when the necessary regulatory framework is in place, the telcos will fall in line.

    President, National Association of Telecoms Subscribers (NATCOMS) Chief Adeolu Ogunbanjo, agrees with the former ATCON boss. According to him, if the telcos get listed, the issue of vandalism will become a thing of the past as the subscribers will see the infrastructure as their own. “The telcos will be able to raise money from the public to finance network expansion and improve services. People will be prepared to allow the erection of BTS in their homes and offices. There will be a sense of belonging by Nigerians who will jealously guard the infrastructure,” he said.

    All the operators except Glo are listed on the stock exchange of their home countries.

    MTN Nigeria

    Board Chairman: Dr Pascal Dozie

    CEO: Michael Ipkoki

    Subscribers: 55, 238,430 million

    MTN Group is a South Africa-based multinational mobile telecommunications company, operating in many African, European and Middle Eastern countries. Its head office is in Johannesburg and it is listed on Johannesburg Stock Exchange (JSE).

    Globacom Limited

    Board Chairman: Dr Mike Adenuga

    CEO: Jameel Mohammed

    Subscriber base: 25,019,862 million

    Globacom Limited is a Nigerian multinational telecommunications company headquartered in Lagos. The firm is a privately owned telecommunications carrier that started operations on August 29, 2003.

    Since then, there is no record of the telco going to source funds from any bank both onshore and offshore.

    About four years ago, the firm single-handedly funded a submarine cable, Glo 1, at $800million. It recently signed a network modernisation with two Chinese quipment vendors, ZTE and Huawei worth $1.25billion. It also operates in Ghana, Republic of Benin and Cote d’Ivoire.

    Airtel Nigeria

    Board Chairman: Oba Otudeko

    CEO: Segun Ogunsanya

    Subscriber: 21, 591,904 million

    Bharti Airtel Limited, popularly known as Airtel, is an Indian multinational telecoms services company with headquarters in New Delhi, India. It operates in 20 countries across South Asia, Africa, and the Channel Islands. Airtel has GSM network in all countries in which it operates, providing 2G, 3G, (3.75G in Nigeria) and 4G services depending upon the country of operation. It is reputed to be the world’s fourth largest mobile telecommunications company by subscribers with over 275 million subscribers across 20 countries as of July, this year. It is the largest cellular service provider in India, with 191.39 million subscribers as of last month. Airtel is the third largest in-country mobile operator by subscriber base, behind China Mobile and China Unicom.

    Airtel is credited with pioneering the business strategy of outsourcing all of its business operations except marketing, sales and finance and building the ‘minutes factory’ model of low cost and high volumes. The strategy has since been copied by several operators.

    Aside Nigeria, it operates in 16 other African countries, namely Burkina Faso, Chad, Democratic Republic of the Congo, Republic of the Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Rwanda, Seychelles, Sierra Leone, Tanzania, Uganda and Zambia.

    It is listed on the floor of both the National Stock Exchange of India Limited and Bombay Stock Exchange Limited.

    Emirates Telecommunications Corporation (Etisalat Nigeria)

    Board Chairman: Hakeem Belo-Osagie

    CEO: Steven Evans

    Subscribers: 15,303,647million

    Emirates Telecommunications Corporation, branded trade name Etisalat is a United Arab Emirates (UAE) – based telecommunications services provider, operating in 18 countries across Asia, the Middle East and Africa. As of February, last year, Etisalat was the 15th largest mobile network operator in the world, with a total customer base of more than 135 million and was named the most powerful company in the UAE by Forbes Middle East last year.

    Etisalat International Investments is the business unit of Etisalat that operates outside the UAE and manages the firm’s stakes in telecommunications carriers in Nigeria, Afghanistan, Benin, Burkina Faso, the Central African Republic, Gabon, India, Indonesia, Iran, the Ivory Coast, Egypt, Niger, Saudi Arabia, Sudan, Tanzania, Togo, Sri Lanka and Pakistan.

    The International Investments unit also manages Etisalat’s minor stakes in other telecommunications services providers, such as Sudatel (a mobile, fixed and Internet services provider in Sudan), and Qtel (Qatar-based telecoms services provider).

    It is listed in the UAE Stock Exchange.

    “Any of these telcos that braves the odds and be the first to get listed on NSE will attract the attention of subscribers who will naturally see it as truly a Nigerian brand,” Ogunbanjo said.

  • Telcos pay N200b taxes yearly

    Telcos pay N200b taxes yearly

    Telecommunications firms operating in Nigeria pay an average of N200 billion in taxes yearly, the founder, Agusto & Co, Bode Agusto, has said.

    Speaking at EPIC Learning & Development Limited forum in Lagos, Agusto said the sector has been attracting billions of dollars, adding that its contribution to Gross Domestic Product (GDP) has risen from less than one per cent in 2001 to about six per cent in 2011.

    Also, in nominal terms, sales rose from about N30 billion in 2001 to N1.5 trillion in 2011 while job creation moved from hundreds to thousands.

    He said the telecoms sector “paid tax of over N200 billion to federal and state governments in 2012.”

    According to him, investment in infrastructure and entrenchment of sound corporate governance in the execution of Public-Private Partnership (PPP) are two critical factors needed to be achieved to boost the economy.

    He said though economic development is expected to improve in Nigeria in the next decade, an investment in infrastructure and proper implementation of PPP projects in Nigeria will place her ahead of other African countries.

    “There is need for significant investment in infrastructure. There is a lot of work to be done in infrastructure investment to enable Nigeria to realise its potential,” he said, adding that the government has no business in business, except acting as a regulator to the system.

    Agusto said PPP projects involve the delivery of infrastructure to the people and needs regular budgetary allocations for repairs and maintenance after completion.

    He said because political considerations outweigh economic considerations when planning and executing these projects, competitive users’ fees are not charged and used for the maintenance of these assets.

    He insisted that the key to improving the governance of major projects in Nigeria’s public sector lies in reforming the operating model for the executing, managing and delivering these projects.

    He advised that when executing major projects, particularly infrastructure projects, government should partner with the private sector because by doing so, economic and social considerations will outweigh political considerations.

    It also makes funds available to the project to improve while reporting will be more open and transparent. “There is also tendency that projects will be subject to timely independent audits annually while government will be able to act as a truly independent regulator,” he said.

     

     

     

  • Telcos bogged down by multiple taxes

    Telcos bogged down by multiple taxes

    For telecoms firms and other stakeholders in the Information Technology (IT) sector, multiple taxation and regulation is a real threat. The problem, they say, is affecting business and may force some to relocate to more conducive environment.
    LUCAS AJANAKU
    examines the issue, urging operators and authorities to close ranks for subscribers’ benefit.

     

    When Osondu Nwokoro, Regulatory Affairs Director, Airtel Nigeria, took the floor to address the gathering at the 2012 edition of the West African Information and Communications Congress (WAFICT), everyone listened to him.

    Nwokoro, who represented his boss, Rajan Swaroop, spoke on the twin-evil of multiple taxation and regulation, lamenting that operators were groaning under the yoke of heavy financial demands by ministries, departments and agencies (MDAs).

    According to him, independent tax consultants, working for the federal and some local and state governments, have been making life unbearable for telecoms firms through outrageous levies and taxes.

    “It is important that we understand that multiple taxation and regulation are two different issues. For instance, if a particular operator has a base station in a particular community, he is faced with the challenge of paying all manner of levies and taxes to different governmental agencies for just that base station. Also, he is faced with the challenge of multiple regulations from different government agencies.

    “At the end of the day, the customer is made to suffer for this as some of these agencies usually shut down base stations, thereby preventing engineers from performing routine maintenance work. Just imagine an operator with more than 2,000 base stations. Indeed, the impact is huge and customers are made to suffer unjustly,” he said.

    Osondu, like his colleague in MTN, Mrs Oyeronke Oyetunde, general manager, Regulatory Affairs, is also worried by this development. She identified multiple taxation and regulation as the twin-factor that impeded telecoms growth in the past.

    According to her, a situation where a local government area requires telecoms firms to pay about N10 million for the erection of base transmission station (BTS) besides other levies is not healthy for the industry.

    Mrs Oyetunde, who is also the vice chairman, Industry Working Group (IWG) on multiple taxation and regulation, a body comprising representatives of operators, regulators and subscribers, noted that because of delays in BTS roll-out, operators have been able to deploy only 20,000 BTS across the country. She argued that over 70,000 BTS would be required to provide acceptable levels of services.

    “If you have a local government demanding N10 million from an operator and you now multiply that by the number of local government areas we have in the country, you will see that this is unsustainable in the long run for operators.

    “It is either you kick them out of business or the operators are forced to pass the cost accrued to them through such illegal taxations to their customers in form of high tariff,” she said.

    For Mr Okey Itanyi, Executive Commissioner, Nigerian Communications Commission (NCC) and chairman, IWG, the matter is threatening to operators and foreign direct investment (FDI). Investors may also be compelled to seek a more conducive environment elsewhere.

    “The country may lose the gains and confidence achieved so far in the last couple of years. The industry still requires investment in network infrastructure to ensure full access across the country, and to guarantee good and acceptable quality of service, which has become a major challenge,” he warned.

    The IWG is working towards stopping the imposition of illegal taxes and levies on telecoms operators because of their perceived grave socio-economic implications. The group comprises the regulation agencies, operators and subscribers.

    Analysts argue that direct and indirect taxes are veritable sources of revenue to governments all over the world. They believe that there is nothing abnormal in the imposition of taxes on businesses to generate revenue. To them, tax imposition is a standard practice but a situation where there is a litany of indiscriminate charges from different quarters, both legal and illegal, is deplorable and constitutes a disincentive to business growth and expansion.

    No fewer than 12 states and the Federal Capital Territory (FCT), Abuja, impose multiple taxations on telecoms operators running into billions of naira.

     

    Outrageous taxes

    According to reports, the Abia State Infrastructural Development Fund Board is demanding N19 million from Airtel as infrastructure development levy. The Abia State Environmental Protection Agency/Yagazie Nigeria Limited is demanding from each mobile operator N300, 000 per new site as environmental support fee and Environmental Impact Assessment (EIA), registration the State Town Planning Authority is demanding N650, 000 per site as permit/processing fees.

    There is a new dimension to the problem in Imo State, where the Environmental Transformation Commission (Entraco) and the Town Planning Authority are demanding N262.4 million, pest/vector control fees and fumigation charges for 2008-2011 and N720,000 per site as permit fees.

    In Anambra, the Ministry of Environment and the state’s signage and Adverting Agency are demanding N500, 000 per site as EIA fees and N4.5million as outdoor advertising for BTS.

    In Edo State, Egor and Oredo local government areas see telecom operators as goldmine. They are demanding the payment of N24.75 million as tenement rate for 11 BTS, N16.25 million as operational/inspection fee for five BTS, while the Edo State Town Planning and Ministry of Commerce want the payment of N750, 000 and N650, 000 as site permit and business premise fees respectively.

    In the FCT, the Abuja Municipal Management Council has given a notice to MTN for the payment of over N257million as annual charge for BTS, the Bauchi State Signage and Advertising Management Agency has asked Airtel to pay N755 million as signage, branding and advert levy.

    In Cross River State, the Internal Revenue Service (IRS) and Town Planning Authority are demanding the payment of N510 million purportedly for BTS revenue from 2005-2010, N1.2 million as site permit per operator. The Katsina State Urban Development Authority is asking for N755, 000 as building permit and EIA fee.

    If the operators bow to the threats and pressures of the MDAs, they will be contending with multiple charges. They pay Annual Operating Levy (AOL) of certain percentage of earnings to the NCC and are required in addition to pay various rates and charges to Federal Government agencies, such as the Consumer Protection Council (CPC), Nigeria Lottery Commission (NLC), federal and state ministries of environment including authorities in every state and local government in which they operate.

     

    Stakeholders’ grouse

     

    Akinwale Goodluck, Corporate Services Executive, MTN, said in 2010 MTN has paid N43 billion as income tax to the government, contributed N15 billion to the NCC and paid N6 billion as education tax. It also contributed another N2 billion to National Information Technology Development Agency (NITDA) in spite of the existence of those spurious taxes and levies.

    Udemba Hyacinth, chief executive officer, Prostar Global Energy, said the burden of spurious taxes, levies and charges on goods and services are, ultimately, passed onto the final consumers and in this case, the subscribers who have to pay through the nose for low quality services. “The effects of multiple taxation and regulation on telecom industry appear to have overwhelming influence on every facet of our lives and transactions. The first is on the delivery of telecommunications services. The second is that it will discourage investors from investing in the industry,” Udemba told The Nation.

    Dr Sheidu Olanrewaju, lectruer, Economics Department, University of Lagos, agrees no less with Udemba. According to him, multiple taxation will discourage investment and make call tariff go up. “This will affect the entire business including the profit margin. Gross domestic product (GDP) will inevitably go down because instead of promoting business, it will discourage it.

    He said the Federal Government should regularise taxes while the National Assembly should promulgate laws that will harmonise and spell out the taxes that should be paid by telecom operators. “Taxes should be fair, just and ensure equity and should not discourage investment. It should not affect production and inevitably lead to unemployment,” he said.

    Omobola Johnson, Minister of Communications Technology, also acknowledges the crippling effects of the development. “The Ministry has put in motion collaboration with the Ministry of Environment and all indications are that we can, within a fairly short time, reduce the time it takes to obtain approval to erect a base station. There is an industry working committee on illegal taxes and levies that is putting together appropriate recommendations to curb illegal, punitive and unfair taxes on telecoms companies,” she said.

    According to IWG Position Paper on Hazards and Further Implications of Multiple Taxation and Regulation of the Communications Industry in Nigeria, in a brief provided by the sub-Committee on Legal and Judicial Reviews of the IWG on Multiple Taxation and Regulation, the challenges of multiple regulation and taxation faced by the communications industry has existed and been ventilated several times over the years. It added that the phenomenon inhibits the ability of telecommunications as an economic enabler and social overhead capital to impact positively on the attainment of the country’s developmental goals.

    According to the IWG, the successes recorded in the telecommunications industry in the last 10 years have reinforced the internationally acknowledged perception that communication is a powerful, progressive tool of socio-economic development with continued boost to socio-economic development in job creation, security and social cohesion while the impact upon culture and quality of life and the contribution to GDP are gains, which have been recorded by the industry as a direct result of the advent of mobile telephony in Nigeria.

    IWG regrets that while the sector has been a major catalyst for socio-economic development, it has become apparent that majority of the national stakeholders have failed to recognise the pivotal role played by mobile communications to the long-term socio-economic development of the nation by continuing to perceive the successes of the industry as opportunity to generate short-term and other immediate pecuniary benefits, a skewed perception that results in undue interference in the operations of communications networks by various strata of society, and particularly agencies of government.

    “These continued intervention in telecoms operations by MDAs results in disruption of services, degradation of service quality, major increase in operating expenses and the general cost of carrying on communications business in Nigeria. While we note that the untoward consequences of multiple and illegitimate levies/taxes is not born solely by the telecommunications industry, it is our cogent believe that the critical nature or services provided by the telecommunications sector requires urgent action to address these challenges before a total collapse of the telecommunications sectors is witnessed,” IWG noted.

    The situation is even so ridiculous as it is now common to have a telecommunications operator receive a ‘stop work order’ from a state or local MDA over a right of way (RoW) approval granted by a State or Federal MDA and to have state and local environmental MDAs reject an EIA certificate issued by the Federal Ministry Environment (FME) to insist instead on the telecommunication operator processing same with them. This occurrence is similar to the demands in Kaduna State by the Kaduna State Urban and Property Development Authority (KASUPDA) which insisted on conducting its own EIA.

    It noted that the associated setbacks and bureaucratic bottlenecks usually lead to project implementation delays that unduly increase the project cost, while occasioning network downtimes and quality of service issues among others. Besides multiple-taxation, which ultimately results, the situation presents significant regulatory discord that can ground telecommunications operations for months in severe cases with unsavoury implications for the national socio-economy.

    Udemba argues that the regime of taxes and levies ought to be ascertainable in order to assist planning and forecasting for business endeavours. “Taxes and levies form a veritable source of revenue for government, it is imperative that citizens should be able to determine or know in advance what taxes they are statutorily liable to pay. The computation of taxes and levies should therefore be based on clearly defined criteria, the absence of which negates regulatory propriety and certainty which negatively impact investors’ confidence and their subsequent investment decisions,” he argued. Udemba added that the phenomenon affects the perception of Nigeria as a preferred investment destination, with unfavourable consequences for the national economy.

    The IWG said that taxes and fees ought to be predicated on clearly defined criteria, stressing that where their collection presupposes that government is providing a public (regulatory or administrative) service, it is imperative that relevant MDAs provide that service. “Because the objective is typically to enhance internally generated revenues, the provision of the underlying regulatory or administrative service is usually relegated. For instance, state and local environmental authorities are quick to impose and collect fees for effluent discharge, fumigation, pest control and other environmental related services, without ever providing such services or only partially doing so,” IWG lamented.

    According to a GSMA Tax Study on sub-Saharan Africa, 2007, there is a negative correlation between tax and mobile penetration and as such, countries such as South Africa with low tax burden per connection (17.5 per cen) enjoy high penetration (97 per cent). The reverse is the case as countries such as Madagascar with high tax burden (23.5 per cent) have low penetration (9 per cent). From the report, it is clear that by removing mobile-specific taxes, mobile ownership and use will rise, stimulating wider economic growth; while the total tax receipt from the industry and indeed the wider economy will increase.

    The report revealed that tax receipts would increase by $930 million, rising from $28.9 billion to $29.9 billion, if the governments of some African countries including Nigeria, Kenya, Tanzania, Cameroon, Ghana, and Malawi removed all non-value added tax (VAT) mobile ownership taxes in 2007. It added that by 2012, Chad’s tax receipts would be approximately 30 per cent higher, Ghana’s 20 per cent and Nigeria’s 15 per cent higher. In the light of this, it is evident that multiple taxation of telecoms sector inhibits growth and penetration; stifles economic growth and constrains the creation of a value chain that is beneficial to socio-economic development.

    These, analysts say, invariably combine to limit tax revenues to government from direct and indirect value-addition as well as the wider economic impact of the sector on the economy.