Operators foresee merger, acquisition for telecoms survival
The Association of Telecommunications Operators of Nigeria (ATCON), said mergers and acquisitions (M&A) in the telecoms sector have become necessary for the purpose of business continuity.
Speaking in an interview on the sideline of ATCON’s yearly general meeting in Lagos, the President, Olusola Teniola, said M&As will come in various ways.
According to him, some will be mergers between two financially strong telecoms operators to present a formidable force in the telecoms sector, while some will be outright acquisition of financially-weak telecoms companies by the stronger ones to avoid business extinction.
Teniola said whichever form it takes does not really matter, “because the end result is about consolidation for better telecoms services delivery. Consolidation is necessary because the telecoms sector is currently passing through a transition phase; with technology disruptors emerging, and riding on the networks of others to achieve success in their business models. So the bottom line is that telecoms operators must consolidate, innovate, and come up with new business models in order to survive the current transition phase.”
He noted that data-centric is gradually overtaking voice services, and operators, which initially depended heavily on voice-centric service deliveries, must begin to innovate in the areas of data, and data analytics in order to remain in business, and mergers and acquisition are sure ways to achieve this.”
On whether the sector is shrinking and therefore required M&As, Teniola insisted that the market is intact, and remains attractive. “But the truth is that technology is evolving, and disruptive solutions are equally emerging, which calls for innovative thinking about survivability and business continuity. Consolidation will help the telecoms industry to grow in line with technology transformation and to create more jobs for the country.”
With regard to the 70 per cent broadband target set 2023, he revealed that operators are already investing in 4G network rollout, which offers higher broadband speed than the 3G network.
He disclosed that most parts of the country have been covered by 4G networks, and when this is completed nationwide, it will bring online activities to speed, and also access to the Internet will be cheaper, thus enabling more Nigerians to become digitally-inclusive, an evidence of further growth in broadband penetration.
While calling on the Federal Government to provide the enabling business environment through infrastructure development that will further boost broadband penetration and access, the ATCON President said operators are already playing their roles well. According to him, the key thing that will drive broadband penetration is investment in the technologies, and government needs to do the needful that will enhance the ease of doing business in the sector.
Earlier at the AGM, some indigenous operators frowned at the incessant calls for investment in the country, and urged the government to give local operators the opportunity to demonstrate their capability.
In response, Teniola noted that government believes in the power of foreign direct investments (FDIs) to grow the economy, adding that historically, Nigeria has been known for trading nation because the British colonial masters wanted it that way, and imports virtually everything even after 59 years of independence.
“But our members are saying that we have local players that can invest in the country if given the enabling environment. We have the capability, and if given the right playing field, we can actually contribute to GDP of the country for national development.
“Today, India is the leading country in software engineering because their government invested in ICT, and provided the enabling environment for rapid growth in software development. So the idea of government getting money from foreign investment to grow the Nigerian economy must stop, and government must begin to look inwards to invest in Information and Communications Technology (ICT), and support local investments in ICT in order to grow the Nigerian economy,” he stated.