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Harmonisation of telecoms taxes critical to operators survival, says Teniola

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Olusola Teniola, president of ATCON


• 39 Different Taxes, Fees, Levies Too Heavy On Operations
• Nigeria Would Have Earned N3t From Implementation Of National Broadband Plan In 2018

President, Association of Telecommunications Companies of Nigeria (ATCON), Olusola Teniola, told ADEYEMI ADEPETUN that hefty taxes imposed on telecoms operators’ need to be harmonised if the players must stay afloat.

Nigerians are still contending with poor quality service 17 years after telecoms revolution, when will consumers enjoy uninterrupted services?
Poor quality of service is as a result of many factors, but the major one is that with 150 million active subscriptions and numerous e-type services being rendered on the mobile networks (that’s where a majority of voice and data activities occur) on a daily basis, and in the absence of any fixed line network to share the burden of the inherent capacity challenge, it is only through further targeted investments in network capacity and expansion that incidences of dropped calls, among others will be addressed.

Secondly, the numerous government agencies need to be more careful when they go about shutting and sealing off premises that host telecommunication equipment. We have several reports that our members’ offices and sub-stations are being closed arbitrarily, mostly in connection with payment disputes. This is of great concern when viewed against the background that the disputes are not being resolved properly through the courts. In the course of this, equipment servicing the nation is either switched off, destroyed or vandalised outright. This has a negative impact on QoS.

Finally, optic fibre networks are now randomly cut many times during the day and this also results in poor quality of services. The Federal Government needs to accelerate and execute the Critical National Infrastructure (CNI) Bill into law to ensure the full protection of all telecoms and ICT equipment to reverse the QoS trend.

Generally, what is your assessment of the sector thus far?
We are fortunate to witness a boom in the revolution of how we play, work and carry out our daily lives using mobile telephony services. It is with this in mind that ATCON recently celebrated and recognised the top 100 ICT personalities that are active in the industry, despite the enormous challenges persisting within the operating environment. The networks have been built from small beginnings from the liberalisation in early 2001, with the surefootedness of a regulator that sought expansionary growth, to the current era where data is now the new black gold. Data centres have now been built on the back of five undersea cables sitting at the shores of Lagos.

A broadband plan was introduced to address the bottlenecks in ensuring the availability of widespread Internet services for all Nigerians. On the back of 150 million subscriptions for mobile and the potential to drive Internet penetration to about 70 per cent by 2025, a lot more work needs to be done to restructure the industry to address the much required improvements in consumer experience within the advent of big data/predictive analytics, artificial intelligence, machine learning and robotics. All these trending thematics will require pervasive 4G technology roll-out over and above data bundling tariffs. This is where the Over the Top (OTT) players are now entering the space to address the next one billion untapped Internet users. The industry is yet to fully push the envelope in the data-centric and digital transformative platform arena, therefore the next five years will see a very interesting competitive landscape unfold.

To all intents and purposes, the collapse of NITEL has seen government hands off the running of any telecommunications business and this has enabled the private sector to take the lead in terms of the growth, direction and to a great degree, the policy direction that government should take in achieving FDI to the tune of $70b over many years.

However, this has meant that the market now needs further government intervention to aid in more Foreign Direct Investment (FDI) and other capital to flow back into the sector to realise its full potential. QoS equates to the need for increased network capacity right from the foundation to the consumer. The services rendered by telecoms now encompass gaming (lottery), financial services (mobile banking, Fintech and payments), commerce (e-commerce) and other miscellaneous services (albeit, digital in nature and consumption). This means that telecoms is now the most critical sector in driving any future growth in our economy, both in terms of improved and accelerated productivity and youth employment in the future.

Despite the level of investments, so many parts of the country are yet to be connected. What is responsible for this?
This is due to the prioritisation of capital allocated and returns on investment expectations from shareholders in the business of rendering telecommunication services. It is well known that no venture exists in rolling out capital intensive infrastructure into underserved and un-served parts of this vast country when the costs associated far exceed the income that will be realised. The Universal Service Provision Fund (USPF) under the NCC are responsible for ensuring that incentives and programmes are aligned with present day realities to address these gaps in line with service providers’ willingness to address these communities that are not being serviced. The government should treat these communities as a priority in ensuring universal service access, which is deemed a fundamental right and not viewed as a luxury.

Multiple taxation is believed to have contributed to the collapse of some operators. Is there merit in this claim?
Potentially, 39 different taxes, fees and levies are applicable and far too many to attract the much needed FDI and funds to continue to grow this sector in a serious manner. Harmonisation should reduce this to about 10 taxes paid at the federal level and distributed to the states wherever duplication exists.Taxes impact the collective bottom line of our industry and squeeze out all the margins, so prices are under threat. Also, unwarranted levies, fees and taxes are inhibitors to investments to be made, considering that over the past decade, no tax holidays or other Nigeria Investment Promotions Council (NIPC) initiatives have been targeted to address the funding gap in the industry.

Consolidation is a natural fact of doing business in any sector, especially in the ICT sector that is very dynamic and fast-paced. Most of the companies that have exited the market failed to adapt to changes in technology, in addition to failing to read consumers’ behaviour until it was far too late. The key to success in this business is to keep your eye on the ball.

What is the place of over regulation in some of the challenges confronting the sector?
In Africa, voice is heavily regulated and data isn’t. We in ATCON seek a balanced approach to the regulation of the industry by one and only one regulator (the NCC) and all other agencies should not meddle with the affairs of the regulator but should work with the regulator to improve the lives of the communities we all serve. Infrastructure regulation is one of the areas that is a bone of contention, so it is this area that needs particular focus and a multi-lateral approach to resolving how we build and implement technology to the maximum benefit on a long term basis. The dig once policy for building a national backbone network is one that should be addressed immediately.
In the case of OTT regulation, we only have to look at what is going on in the USA and Europe to see what the future holds in terms of data sovereignty, protection and rights. This is only going to become more complex and we need the right amount of regulation to create the right environment for all to thrive.

The implementation of the National Broadband Plan 2013-2018 has been very slow, what are the implications?
We are already late in the implementation of the NBP 2013-2018 plan and this is reflected in the slow down of the ICT sector’s contribution to the nation’s GDP. We should be contributing close to N3t per quarter in 2018 if the NBP had been fully implemented as envisioned, and at a minimum 30 per cent achieved. This is the power of broadband on any economy and Nigeria needs to key into this as the tool for diversification and to secure future generations’ livelihood. With government’s late rush and push to drive this, we should aim at achieving 30 per cent by 2020.


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ATCONOlusola Teniola
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