Tax enforcements actions impact quality of telecom service, says Adebayo

Chairman, Association of Licensed Telecoms Companies of Nigeria (ALTON), Gbenga Adebayo, in this interview with ADEYEMI ADEPETUN, says multiple taxation that service providers are faced with contributes to the poor quality of service experienced in the industry.

Can you appraise claims that the country’s telecommunications sector has witnessed massive growth in the nearly 20 years of its existence.
The growth of the sector has been phenomenal because it has gone from a modest 5, 000 telephone lines with less than 100, 000 analogue mobile phones, less than 50, 000 fixed wireless CDMA and limited mobile telephone lines, to the over 160 million operational GSM lines within 17 years and over 20 per cent broadband penetration. We cannot but say that the industry has done extremely well, and has changed the dynamics of our socio-economic lives as a people.

All these notwithstanding, there are still about 200 communities, where over 35 million people reside still without any form of telecoms services. How can these people be covered?
Today, telecommunications is one of the major drivers of our economy providing very important support for services offered by several other sub-sectors of our economy. Indeed, the industry has faired well. And we must commend all the players for blazing the trail. However, there are a few communities that may not be covered, but I must say that everyone in Nigeria today has access to one form of communications services or another. Either by way of direct ownership, or joint ownership, everyone can be accessed and can access telecom services. If not within their community, it could be via one form of e-health or e-Government services, and or banking services.

Despite the over $70b investment, the country still battles poor quality of service. How soon can we get out of this?
That is indeed true, but the fact remains that the industry operates within the same limited available public service infrastruture as other sectors of the economy. It also has very limited access to public power supply and has had to generate its own local power per base station. In addition to the supply of critical network equipment, the systems are highly susceptible to vandalisation and willful damage, and community hostility in certain areas remains a major problem. Poor and limited road access is equally a problem in certain areas, just as issues of disruption of telecom services by agents of government due to issues of multiple taxation and regulation are part of factors hindering provision of good quality services.Hence, we are seeking classification as a critical socio-economic and security infrastructure and requesting for high level of protection for the sector by the Federal Government.

There is the tendency to believe that the sector is over regulated. Is it?
Other than issues of multiple taxation and multiple regulations by various state and Federal Government agencies, we are not over regulated by the industry regulator, except for issues of interference by other agencies of government.

The mortality rate in the sector appears quite high with at least 31 firms shutting down. Is the country’s business climate so harsh?
Indeed, it is, and that is why a number of the early players could not sustain the high cost of investment required due to the rapid changes in technology, as well as, high cost of funds. And since there was no deliberate attempt from government to assist the sector with access to low cost funds, it was just difficult for a number of the early legacy operators to survive. This was due to no fault of theirs.

Multiple taxation is a major issue in the sector, but what is your take on harmonised tax regime? Can it happen in Nigeria?
As I said, one of our major problems is multiple taxation and the states are taking advantage of what they call internally generated revenue drive to impose on telecom service providers, a number of taxes and levies, which are already paid to the Federal Government, and most of them do not have direct relationship to telecom operations. An example of such is effluent discharge tax, which is what applies to oil and gas operators, but, which has been transferred to telecom operators in some states. We also have the environmental sanitation and refuse collection levy, consumption tax and so on. By the last count, there were over 35 taxes and levies forced on telecom operations across the country. So, the need to harmonise taxes cannot be over emphasised.

What have been impact of these taxes on telcos’ revenue and expansion drive?
Quite significantly, the impact of enforcement actions most times lead to service disruption, which often affect quality of services

There are complaints in some quarters that spectrum sales is on the high side in the country. Is this peculiar to Nigeria?
Spectrum is quite an expensive resource and all over the world, the trend is to sell or lease to the highest bidder. Nigeria is no exception.

There have not been adequate compliance with the National Broadband Plan 2013-2018 by relevant government agencies and this has slowed down the process. How do we explain the lukewarm attitude on display here?
This is due in part to some of the issues I have highlighted, and in this regard, high cost of procuring right of way to lay inland fibre is a major impediment to broadband penetration. Again, it is cheaper to buy bandwidth between Lagos and London over the submarine cable, than it is between Lagos and Abuja because we have not been able to install enough terrestrial fibre. This is something that must be addressed if we are to meet and exceed the target penetration by 2018/19.

As it is, can the country meet the 30% broadband target by year-end?
We are doing the very best as an industry despite all external challenges beyond our control. Players are doing massive investments to roll out and archive more coverage. But we certainly need help from the Federal Government to remove all the factors militating against smooth access to telecom roll out.

Can fixed telephone lines still function in our economy?
Not very likely because factors militating against copper and fibre roll out are too many, and its not likely that economic players will be able to make the required return on investment as cost of funds demands.

The issue of pre-registered SIM cards is still prevalent. Can’t this be completely addressed?
We need to continue to ensure compliance and sanctions on established willful infractions.

What are the major issues that ALTON would want the government to address as fast as possible?
Classification of telecom as critical national security and economic infrastructure, and according the industry the highest level of protection by the Federal Government is a major issue that we want addressed as fast as possible. The industry should be insulated from all forms of interference by government agencies.Telecommunications today is one of the most important sectors of the economy and we are all critical stakeholders, therefore we must take ownership of the industry in our various capacities.