Employs 813 as 10.8m Nigerians subscribe to service
Despite recording appreciable subscriptions to its various offerings, value-added service (VAS), a major segment of the telecoms market saw its revenue drop by 64.2 per cent.
Acting on available data, the Nigerian Communications Commission (NCC) informed that the total number of active subscriptions to the various VAS by the end of year 2023 stood at 10,845,134, signifying a 94.16 per cent increase from 5,585,650, a year earlier.
In the 2023 Subscriber/Network Performance Report, recently released, the VAS market segment consisted of licensees providing auxiliary telecoms services such as aggregators, content services using short code numbers, mobile, electricity service, unstructured supplementary service data (USSD), SMS service, mobile banking, enterprise bulk messaging, transactional service, electronic airtime distribution, call ring back tone/entertainment and special numbering.
NCC, which said 36 licensees across the country submitted their Network/Subscriber Information, noted that the domestic investment (CAPEX) figure reported was N1,811,785,472 as of 2023, while the total operating cost (OPEX) incurred by the licensees N 53.63 billion.
The market recorded N53.6 billion OPEX during the period under review as against N14.9 billion recorded in the previous year, signifying a 259.59 per cent increment in operating cost.
According to the telecomS regulator, the revenues generated during the period in view stood at N14.5 billion as against N40.7 billion earned in 2022, signifying a 64.26 per cent decline in revenue reported by operators within the year.
In terms of workforce, as of December 2023, the total staff strength of the VAS market segment stood at 813 staff. In record, Nigerian staff members were 807 comprising 564 males and 243 females while the expatriate staff base reported five male and one female record.
The Guardian had reported in mid-2024, how millions of VAS funds were trapped with the mobile network operators (MNOs), which also impacted their operations.
Findings showed that apart from the battle it had with the introduction of the Do-Not-Disturb (DND) in 2017, which was introduced by the NCC, other challenges including trapped funds, impacted the growth of the sub-sector significantly.
About three years ago, the NCC disclosed that over 30 million Nigerians have activated the DND, using the code 2442, which allowed subscribers to stop all unwanted messages that usually come from VAS providers in the industry.
Wireless Application Service Providers of Nigeria (WASPAN), the umbrella body for VAS operators, claimed that the sub-sector generated about N330 billion yearly shortly before the introduction of DND, but that had since been eroded as the figure fell to less than N100 billion thereafter.
Checks showed that the sharing formula between MNOs and VAS operators is 60 per cent to 40 per cent respectively, which before now, had been a major issue with the telcos wanting to increase their share to about 75 per cent.
The VAS sector consists of four broad segments with the following corresponding market players including the MNOs, Aggregators, content and application service providers and developers of content, applications and platforms.
The aggregators, which are highly essential to the operations, provide simplified, direct and secure connections to content and application providers for access to all network operators that have the capability to transmit VAS to end users.
The VAS sector is widely regarded as a subsector of the telecommunications industry and is regulated by the NCC, pursuant to the Nigerian Communications Act (NCA) and the Wireless Telegraphy Act of 1990 (WTA). The NCA and WTA empower the NCC to regulate VAS providers and operators in Nigeria.
Further to the NCA and WTA, the NCC, issued the Value-Added Services and Aggregators Framework (VASAF) and the License Framework for value-added services (LFVAS).
A major VAS aggregator, who preferred anonymity for fear of victimisation, had told The Guardian that the sub-sector is currently challenged as “VAS operators’ funds are trapped with some of the mobile network operators and other service providers. The funds we are talking about run into hundreds of millions of naira. I may not be able to put a direct figure to it because virtually all the aggregators are suffering from this issue. You can ask other players within the sub-sector; you will be alarmed by more revelations.”
According to this VAS operator, two of the leading MNOs have owed money for the past 20 months. He said they have written letters to the debtor service providers “All they have been saying is that payments will come. Some affected aggregators have equally lettered NCC for intervention, but nothing has come thus far”.
National Coordinator, Wireless Application Service Providers of Nigeria (WASPAN), the umbrella body for VAS operators, Chijioke Eze, had maintained that the health of the sub-sector remained stable.
On trapped funds, Eze said there could be instances where an MNO may experience cash flow deficiencies and notify their partners on new payment terms, “but also in some cases, this idea of payment discrepancy could stem from unrealistic expectations of some VAS players as you mentioned. However, some MNOs have owed some VAS companies for extended periods.”
On the true value of the sub-sector, put at about $500 million, industry analyst, Leo Abulu, said the value was significantly huge but that came with certain displeasures and complaints against the mode of operations of some VAS companies from the general public, which required the commission to step in.
Abulu had said this intervention, however, has streamlined the operation of the industry “but we have noticed a steady growth in getting back to those types of numbers we saw seven years ago.”
On the challenges VAS players are facing, Abulu urged the NCC to have a complete open door policy with the VAS players to improve the speed of approvals and the updated terms and conditions of such approvals with the cooperative input from the VAS players so as to reflect the business realities, which will ensure the growth of the industry and guard against collapse, which can easily happen.
