‘Fall of naira affecting telecoms expansion’

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Mr. Olusola Teniola, President, Association of Telecommunications Companies, in an interview with Bukola Aroloye speaks on how the recession, especially the dwindling of the naira is threatening the $68 billion worth investment in the sector. Excerpts:

The rapid investment witnessed in the telecoms industry over 10 years ago no longer exists. Apart from the major telecoms operators, new ones are not coming into the industry. Even the existing ones no longer offer quality services. What could have been the cause of it?

The reason is because of the uncertainty surrounding the value of Naira which  has led to anxiety within the investment community and this has also meant that foreign direct investment (FDI) needed to fund network expansion and capacity upgrades under our members capital expenditure (CAPEX) programs have had to be put on ‘hold’.  Government need to provide enabling environment with clarity in policy formulation and execution that leads to transparency, which will encourage investors both domestic and foreign to bring funds to drive this expansion. Doubt, fear and uncertainty about the economy which has been the issues since last year till this year should be removed by the government otherwise there will be further contraction in the economy irrespective of crude oil prices on the global market.

So the devaluation of naira to the dollar which led to rise in inflation coupled with the delay in implementation of 2016 budget and loss of jobs is a testimony that more attention should be paid to the telecom industry as means of economy diversification of the economy which can contribute to the growth of our economy.

How about the issue of forex scarcity? What effect does it have on the telecoms sector?

There are no legal ways of working around the foreign exchange (forex) issue and as previously stated, until government allows telecommunication equipment to be on the preferred list of items that can access cheaper US dollars to the Naira, it is hard to see where the further growth will come from in 2017. Without telecoms expanding their networks and their capacity, they will not be able to sustain QoS or even improve on it which in turn will affect their revenue base.  Again, government needs to show strong leadership on this critical issue.

So how can government strengthen the telecoms industry?

This can be done by giving more attention to  local content in the industry and create a level-playing ground for operators to bring about increased employment for the growth in the skills set required to generate a digitally transformed industry.  The regulations must be such that will favour both the interests of these players and the investments already made by them. The investments required to fund the mobile broadband revolution must be addressed, so all incentives and an enabling environment must be put in place by the federal government, so that investors’ confidence is not eroded any further.

There were also concerns over the data price which the Nigerian Communications Commission (NCC) attempted to re-state last year. Do you think such policy is what we need at this period?

The policy is in order. It is the duty of the regulators to ensure a level- playing field exists in the industry and to curtail any monopolistic and unfair behaviour creeping into the industry irrespective of the noises being made by the masses.

The law does not allow for ‘anything must go’ approach to destroy market values and more importantly, investments made to create the market in the first place. This is why at ATCON, we represent both the large and smaller players, interests and also support fair competition that benefits the consumers and encourage the NCC to continue to do its work on the determination of whole pricing, seek wide stakeholder input and then, place mechanisms and instruments to safeguard the reputation of the Nigeria in the eyes of the international community.

The communication service tax bill is still in limbo.  What has become of the bill now?

I believe The Communication Services Tax (CST) bill is due for public hearing and we as an industry and consumer interest groups under: ATCON, Association of Licensed Telecoms Operators of Nigeria (ALTON), Alliance for Affordable Internet (A4AI) and National Association of Telecoms Subscribers (NATCOMS), strenuously stand against any attempt by government to destroy the growth of this industry by creating an additional tax on top of the already 26 taxes/levies that are imposed on the ICT industry. ATCON has provided alternatives for the government to consider, such as increase in value added tax (VAT) across the board (not just applied to this sector) at no more than one per cent alongside incentives that will encourage further much needed investments in addressing quality of service (QoS), broadband roll-out and sustaining job creation. Any excessive tax will stall and/or stifle further growth in the ICT sector.

How can government combat the issue of cybercrime?

The cybercrime bill must be fully implemented and executed to the law. The Police, National Security Advisers to the President and other security agents need to be involved so as to assist the industry in the protection of Critical National Infrastructure (CNI) that ICT infrastructure is now under. This will help reduce the costs of repairs in the industry to a nominal level. The infrastructure that is rolled out for support broadband services needs to be fully protected from vandalism, theft and destruction and therefore the enforcement of the CNI under the Cybercrime bill needs to be enacted without any further delay.

There have been complaints concerning the quality of services rendered by the operators. How do we bridge this infrastructure deficit?

Without the tall buildings that exist in other climes in USA, Tokyo, Hong Kong and London (for instance); it is only through more towers housing more BTS that will cover the many black spots present in the network coverage across the diverse terrain that makes up Nigeria that we can reasonably expect to fully resolve ‘drop calls’ for examples and other environmental issues that are an inhibitor to the improvement of QoS. In addition to the 60,000 BTS(s), we also need the infrastructure to be protected from closures, destructions and sabotage.

Of what significant is the introduction of national mobile roaming initiative which NCC is planning?

National roaming is a fundamental part of the idea behind sharing active infrastructure and though a new concept in Nigeria, is widely practiced in the UK and other climes where ‘calls are handed over to another network’s cell’ where the signal level doesn’t meet a certain criteria or thresholds. This should aid in ensuring that calls previously dropped are now given a higher percentage of probability of not being dropped if the call is allowed to roam onto another network. We await the final report from NCC to establish the modus of operandi before we can be certain that a level of improvement can be assured by the networks to the consumers in areas where a high level of intermittent issues have been reported.

Nigeria market is very competitive, how does an operator survive in this type of market?

Adopting a business model that focuses on cost efficiency and creating opportunities for increased differentiation in the services and products that are offered to the target markets.

What impact will the launching of 4G LTE have on the economy?

The launch of 4G LTE networks in Nigeria, signifies the beginning of high speed internet with speeds over 4Mbps being typical. This opens up further opportunities for more sophisticated services and applications to be developed and utilised by consumers on the move. It also provides a platform for Internet of Things (IoT) and SMART city type devices to be adopted in areas of security, water metering, farming and many other utility applications. This will in effect create new jobs in the economy.

 In the past years, many licensees have closed shops and incidentally, the affected ones have been indigenous companies.

Is this not a source of worry to ATCON and how do you think we can reverse the trend?

Yes, it is, indeed, a great concern. However, we have also witnessed a trend of new age telecoms and e-commerce businesses being launched into the eco-system alongside software companies focusing on knowledge-based technologies. Also, those companies that have adapted their business models to include true partnerships are the ones that are able to survive in the future.

 The NCC has yet to license the remaining INFRACOS. Is ATCON worried and why?

Any further delay in awarding the remaining INFRACO licences as well as the hurdles faced by the INFRACO(s) awarded in 2015 in rolling out in 2016 and still not being addressed will seriously hamper the accessibility, affordability and availability of high-speed internet and broadband services across Nigeria. In the area of licensing of INFRACOs, therefore, I will suggest that for the realisation of a National Backbone Network (NBN) the Open Access Model needs to be fully implemented to the ‘letter’ and hence the remaining licences need to be given out within the firsQ1 of 2017. Also, issues surrounding the project execution in each geo-political region will need speedy intervention by Federal and State Government’s collaboration to avoid experiences observed in 2016 with the INFRACOs that were awarded licences to cover Lagos and North Central regions – we must avoid the mistakes already made to ensure the success of the overall intent.

Interconnectivity debt is a major issue in the industry. How do we address this issue?

Trust is an important factor when dealing with sensitive transactions such as interconnection billing. The arbitration of these outstanding debts is, in my opinion, the best way to go and applied as best practice in other climes. The major issue is that settlement of debts must be done in a timely manner to not accumulate into a dire situation where an operator is not able to pay down or net off the outstanding to another operator – in these cases, only arbitration can resolve an effective way forward as an alternative to an operator denying the debtor termination access. Without this sort of scheme in place, it becomes difficult to continue to establish trust by the debtor operator in the industry.

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