Telecoms subscribers’ loss of access to Europe, U.S., others looms

• Foreign service providers threaten to disconnect local operators
• Stakeholders seek summit to save sector

A fresh crisis is looming in the telecommunications sector, as foreign service providers and equipment suppliers have threatened to disconnect their Nigerian counterparts over an alleged breach of agreement.

The foreign firms are lamenting the inability of some Nigerian telecommunications operators to honour their financial obligations in Foreign Exchange (FX) to them.If this is not timely and adequately addressed, the about 150 million active subscribers may encounter challenges putting a call through from Nigeria to Europe, America and other parts of the world. It is going to be equally difficult for the local firms to procure equipment for expansion of their services in Nigeria and that could further lower the quality of service in the country.

The Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), Gbenga Adebayo, who disclosed the threat, said some of the foreign vendors had issued a notice of disconnection of service to their Nigerian counterparts, which could disrupt service availability with attendant negative impact on customers’ experience any time soon.

In its reaction, the President of the National Association of Telecommunications Subscribers of Nigeria (NATCOMs), Chief Deolu Ogunbanjo, said the collapse of the telecoms sector would affect virtually all other sectors of the economy, including banking.

“I think it is time we have a core telecoms summit where there will be the Presidency, Central Bank of Nigeria (CBN), NCC and other stakeholders, to actually sort out this matter. Just imagine what Etisalat is currently battling with. We don’t want such things again. The sector should be supported to move the economy forward,” he stated.

Adebayo was silent on the identities of some of the operators who had issued the disconnection notice. But The Guardian learnt that the service providers include AT&T, T-Mobile, Orange Telecom, and some leading equipment vendors, such as Sony, Comat and Metracom.

“There appears to be accumulation of debts on the part of Nigerian operators, not their fault though, but their inability to access forex,” an industry source told The Guardian.

But when contacted on the matter, some of the Mobile Network Operators (MNOs) explained the challenges they face in terms of getting foreign exchange for their operations. They were, however, silent about the threat of disconnection from their foreign counterparts.

The industry source said the operators might not own up to this challenge “because it is going to be a great disservice to them as their subscribers may be panicking, and you know what that means for the industry. But the challenge and the threat are real,” she stated.

Explaining the situation to The Guardian, Adebayo said: “We have international interconnect system and some of those obligations. In this, there is a payment cycle, in some cases 30 days and some maximum of 90 days for services to be paid for. In most cases, due to the non-availability of foreign exchange, and due to circumstances beyond the control of the operators, some of them are not able to honour this within the 30 to 90 days and the implication is that if you don’t service your obligation within a cycle of 30 days up till the maximum of 90 days, there will be an interest element accruable and there is a risk of disconnection. Parties may not be willing to continue to provide you with services due to your inability to fulfil your own part of the agreement.”

He stressed that the exemption of telecommunications equipment and services from items to be accorded priority in the allocation of forex by the CBN has adversely impacted the industry in some major areas. The situation, according to him, has led to increase in operating cost, unfavourable credit terms, and delay in the implementation of network enhancement and improvement initiatives.

“In the absence of local substitutes for their plants and machinery, the telecommunications service providers are constrained to source forex from interbank market at higher rates.

“Owing to the prevailing economic situation in the country, ALTON members cannot transfer the increased cost burden to the consumers, thereby contracting profitability and ability to make further investment to drive growth in the industry.

“The situation has made it very challenging for operators to honour their obligations to foreign vendors as and when due. This has occasioned delayed payment to equipment suppliers and other foreign vendors, who have now resorted to imposing unfavourable payment terms on telecommunications service providers in Nigeria. Some of the foreign vendors have issued a notice of disconnection of service, which could disrupt service availability with attendant impact on customers’ experience.”

He said the Etisalat crisis could be traced to a lack of industry-friendly policy that is crucial to operational efficiency.On how this will impact the economy, Adebayo said: “It will affect the economy because when parties go to commercial dispute and you are being disconnected from live network, it leads to credibility problem, which is the first one. Second is that if the disconnection notices are enforced, there will be disconnection, congestion and poor quality of service and these result in poor customer experience. And this directly or indirectly affects the economy. The third part of this is the credibility issue, because when this happens, parties lose commercial credibility and when you sign obligation, people will start making reference that at a period, you didn’t honour this, you didn’t honour that.”

The Director of Public Affairs, NCC, Tony Ojobo, said he was not aware of any letter of threat. “But there have always been interventions. Recall that NCC has met with CBN and the industry is aware of this. The CBN has promised to prioritise forex allocations for telecoms sector. I am not in possession of such a letter, but I am aware that ALTON, ATCON wrote letters to the NCC for intervention, and it was these letters that led to NCC meeting with CBN over the issue.”

According to him, unless, those operators write to NCC officially, “we can’t respond to third party’s letter that was not written officially to the commission. When they are sending letters like that, they should write to NCC officially, they can even extend it by petitioning the government directly, because foreign exchange allocation is a national issue.”

Efforts to get the CBN to respond to the matter failed, as the Acting Director of Communications, Isaac Okorafor, did not pick repeated calls made to his line nor responded to text messages sent to his phones.