NCC commences accounting separation for telecoms industry

• Begins with Airtel, MTN, Globacom, MainOne, two others
To ensure accountability and transparency in the telecoms sector, the Nigerian Communications Commissions (NCC), has approved the implementation of the Accounting Separation Framework (ASF) in the industry.

With the ASF, which became effective from July 15, the Commission hopes to prevent any anti-competitive behaviour, especially among telecoms operators.

As it is, the implementation cuts across six licensees: Airtel Nigeria, MTN Nigeria, Emerging Markets Telecommunications Services Limited (9Mobile), Globacom Nigeria, Main One Cable Company Limited, and IHS Nigeria.

The NCC Director of Public Affairs, Dr. Ikechukwu Adinde, in a statement, yesterday, said the “Determination on the Implementation of an Accounting Separation Framework for the Nigerian Telecoms Industry,” was developed via a consultative process in 2015, and had undergone a comprehensive review by the regulator in collaboration with licensees and other critical industry stakeholders.

The NCC said with the commencement of the implementation of the framework, telecoms licensees are, henceforth, obligated to submit their Regulatory Financial Statement (RFS) to the Commission in line with the new ASF, within seven months after the end of the licensees’ financial year.

Commenting, the NCC Executive Vice Chairman, Prof. Umar Danbatta, expressed optimism about the framework, as was quoted that “the new ASF will promote an industry environment that fosters open and transparent financial reporting, while ensuring that charges for telecom services are cost-based and non-discriminatory.”

The Commission, however, said the submission of RFS under the new framework, is currently limited to and mandatory for only the six telecom licensees for an initial period of two years, after which it may review the list to include other operators.

Explaining the rational limiting for restricting compliance to only the six operators, Danbatta said this is to ensure the necessary structure is in place for reviewing and analysing the accounts before applying the new framework to all other licensees in the industry.

He, however, conceded that any other licensee willing to prepare its financial statements in line with the new framework is allowed to voluntarily do so.

This is just as the Commission may exercise its discretion to demand that a licensee prepares and submits a separated account where it is determined that the activities of such a service provider are deemed critical to the overall wellbeing of the Nigerian telecoms industry.

“Therefore, for full and effective implementation of the Framework, every operator under the ambit of accounting separation is required to prepare an Operator-specific Accounting Separation Manual (OASM), containing policies, principles, methodologies and procedures for accounting and cost allocation, which must be submitted to the Commission on or before October 30, 2020, for regulatory approval.”

Licensees are also required to prepare their financial and non-financial reports in line with the guidelines for the ASF, while reports shall be furnished by the licensees for every accounting year beginning from the 2020 financial year end.

Also, as part of operators’ licensing conditions, the Commission requires licensees to prepare, in respect of each complete financial year or of such lesser periods as may be specified, separated accounting statements for all their activities.

Danbatta said the Accounting Separation Framework “as an effective, least invasive and less costly solution to implement to meet its regulatory objectives,” adding that its implementation is also a key deliverable for the Commission in the new National Broadband Plan (NBP) 2020-2025.

He further reiterated the commitment of the Commission towards continually developing policies, initiatives and programmes aimed at boosting healthy competition among telecoms operators in the country to ensure that consumers continue to enjoy efficient and affordable telecom services.