Creating further growth in Nigeria’s telecoms sector
August 8, 2001 marked the commercial launch of GSM operations in Nigeria. It is now 15 years of telecommunications revolution in the country.
Though, the journey actually started in January of the same year, with the Digital Mobile License (DML) auctions, conducted by the Nigerian Communications Commission (NCC) and adjudged globally as very transparent during the regime of President Olusegun Obasanjo, and tenure of Dr. Ernest Ndukwe, as the chief regulator. The auction produced Econet, now Airtel and MTN, after they successfully paid $285 million each for the license.
Prior to the liberalisation 15 years ago, the country was held hostage by the monopolistic tendencies of the old Nigeria Telecommunications Limited (NITEL), which only offered 450,000 telephone lines, with government owning 50 per cent.
Today, with investment nearing $40 billion, and more operators now on board, including Globacom, which came in 2003, and further revolutionalised the sector and Etisalat in 2009. There is also nTel, which began operation this year and promised to make a difference, there are now over 220 million connected lines out of which 148 million are active. The country has crossed the 100 per cent teledensity mark and can account for nearly 95 million Internet users and almost 20 million users of Facebook.
There is no gainsaying the fact that the country has witnessed tremendous growth as a result of the liberalisation of the telecommunications sector, which the Chairman of the Association of Licensed Telecommunication Operators of Nigeria (ALTON) Gbenga Adebayo, described as the only surviving sector of the country’s economy.
Indeed, while these achievements and growth speak volumes of the progress and success the sector has garnered in the last 15 years, subscribers, who pay the bills, are still demanding for improved services and further cut in tariffs and a favourable regulatory environment devoid of regulator and operators constant rancour.
Speaking to The Guardian recently, Joke Jolaosho, a subscriber, while commending the operators for their steadfastness and believe in the Nigerian economy, rued that issue of drop calls, unsolicited SMS, airtime deductions, among others still pervade various service offerings by the service providers.
Jolaosho, a banker with one of the new generation banks, noted that operators still needed to work on the connections, “though better than where we started, but I believe we can achieve 95 if not 100 per cent call success rate. For now, it is very appalling.”
Borno based, Zarkariyau Biu, called on operators to increase investments in the North East, stressing that peace has returned to the region relatively.
From his base in the United Kingdom, Kehinde Aluko, in an email chart with The Guardian, commended the operators for their foresight in coming to Nigeria.
He however, urged the quartet of MTN, Globacom, Airtel and Etisalat, to improve service delivery by increasing their collective investments.
Adebayo, speaking to The Guardian, said the GSM/telecommunications sector has been the best managed, organised and developed of all other sectors in the history of the country.
The ALTON Chairman said the best of the country’s infrastructure remains telecoms, which has contributed significantly to the country’s Gross Domestic Products (GDP).
He emphasised the need for better protection of the sector from the various levels of governments and their agencies, “telecoms has become part of our live. I can say it is the only sector that has sustained itself over the years. Where are the other sectors—textile, manufacturing, banking and even oil and gas, the telecommunications industry has sustained itself over the years.”
According to him, though there are challenges including drop calls; unsolicited SMS, incomplete calls, “these are not peculiar to Nigeria alone, these still occur even in advanced economies. There is need to understand that technology is evolving daily. We must also note that this sector has enabled virtually all others industries’ growth. So there is need to protect and pamper it.”
He advised government to offer operators and their investments first layer protection for further growth of the sector.
Indeed, in getting to this stage of the revolution, majority of the operators have suffered several challenges, which impacted on their performances negatively.
For instance, Bharti Airtel recently reported a 30.8 per cent fall in first-quarter net profit, blaming an adverse foreign exchange impact in Nigeria, although it beat analysts’ estimates.
It’s consolidated net profit fell to 14.62 billion rupees ($218 million) in the quarter ended June 30, from 21.13 billion rupees last year, the company said.
In its 22 years of operation as a group, MTN suffered its first loss of about $357 million, especially as a result of massive disconnection of unregistered phone lines, unconducive operating environments and depressed economies at home and in its largest market, which are South Africa and Nigeria.
MTN, which was slammed with a fine of $5.2 billion fine, later slashed to N330 billion, after much negotiation with the Federal Government for contravening regulatory orders on SIM card registration, said this challenge impacted on the group’s bottom line for the half-year financial period.
According to MTN, “financial performance for the six months ended June 30, 2016, reflected the confluence of a number of material issues, which created the “perfect storm”. We have made strides towards resolving these challenges although many of these factors fall outside of its control.”
While it has not allowed this to pose a limitation for further growth in majority of its markets, which are 22 countries across Middle East and Africa, the South African firm hinted that it is investing in infrastructure rollouts, securing telecoms and cable broadcasting spectrum licenses in Nigeria, where its investment is well over $16 billion. It is also diversifying into digital financial services to restore investors’ confidence as well as eyeing new revenue stream for expansion, with plan to list part of MTN Nigeria shares on the Nigerian Stock Exchange (NSE), come 2017.
Corporate Services Executive, MTN Nigeria, Amina Oyagbola, said “the company is demonstrating commitment to the ICT industry in Nigeria through massive investments in infrastructure and commitment to growing the country’s gross domestic product (GDP) on an ongoing basis”.
From the half-year report, MTN Nigeria is spending $716 million to expand its network nationwide. It is extending third generation (3G) technology coverage to 90 per cent of Nigeria by 2017 and building fibre-network rollout in six cities in the country, which will see 3G coverage from 67.23 per cent in 2016 to about 90 per cent next year.
The Nigerian arm is also rolling out 1,500 LTE collocated sites, backhauled with fibre optics this year, as part of its Fourth Generation Long Term Evolution (4GLTE) broadband services using the 800MHz frequency acquired from Visafone Ltd early this year. Already, it has started testing the LTE network.
The network is also eyeing broadcasting service, after successfully paying N34 billion for the700 MHz spectrum licence acquired from the National Broadcasting Commission (NBC) to provide digital pay TV broadcasting services.
The firm explained that the Digital TV broadcasting offers many advantages over analogue systems for end-users, operators and regulators. Apart from increasing the number of programmes, it allows for interactive TV, electronic programme guides and mobile TV as well as transmits image and sound in high-definition (HDTV) and ultra-high definition (UHDTV).
In the report, the incoming CEO/President of MTN Group, Rob Shuter, who is to resume in 2017, would need to assuage investors and market analysts as he leads a company that is foraging into unchartered markets like mobile money, e-insurance, e-commerce, cloud business, web services, last mile banking and remittances.
His wealth of experience will be needed to revamp and engage more strategically to manage, in the short term, the revenue dip and in the long term stabilize the operations cum revenue drive.
Taking a look at its prospects, MTN said: “In Nigeria, following the reinstatement of regulatory services, we expect to improve our competitiveness in this market and anticipate an improved performance, for the remainder of the year. Data growth will also benefit from the increased investment in 3G and LTE networks in key cities and the utilisation of the recently acquired spectrum.
It said “it is in the process of undertaking, with external assistance, a deep and fundamental strategic review of its operations and processes to ensure it is operating far more optimally, given the pressure on voice revenues, evolving customer needs for high quality data and more complex and competitive market environments”.
“This will reset and position the business for future growth in a rapidly evolving sector. The Group will embark on a process of housing new revenue streams, particularly digital services, outside the core business. This will allow for more agility and greater flexibility to accelerate growth in these areas. New revenue streams are expected to increase their contribution to revenue over the next 12-18 months” it said.
According to the President, Association of Telecommunications Companies of Nigeria (ATCON), Olushola Teniola, for further growth, government, MNOs, private sector, must come together.
He pointed out that players in the industry needed to introduce latest innovation, saying that the country was to yet exploit to the fullest the potential of the technology world.
According to him, while government harmonises regulations; reduce Right of Way fees; stop multiple taxation, operators must improve on quality of service; invest more in base transceiver stations and broadband facilities.