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‘Regulations key to streamlining taxes, encouraging investment’

By Adeyemi Adepetun
13 May 2022   |   4:08 am
When it comes to financing Infrastructure, I will say multiple taxation and fees pose a huge threat to the growth of the Nigerian telecoms market. There should be a uniform tax system, and the same should apply to fees.

Amida

With the telecoms sector confronted with close to 40 different forms of taxes and levies from all the tiers of government, the Chief Executive Officer of Pan African Towers, Azeez Amida, in this interview with ADEYEMI ADEPETUN, believes there should be regulation to streamline the disparate taxes. Amidst this call, he rallied the industry to adequately prepare for 5G-network rollout, which he noted would improve the economy.

What is your assessment of the Nigerian telecoms infrastructure market vis-à-vis challenges such as multiple taxation and theft?
When it comes to financing Infrastructure, I will say multiple taxation and fees pose a huge threat to the growth of the Nigerian telecoms market. There should be a uniform tax system, and the same should apply to fees. Taxes are essential to providing funding for infrastructure; it is important for the growth of any society. But taxing and levying businesses multiple times inhibits growth.  This is where regulation is needed to streamline the tax system and other fees for tower companies.

Theft is a huge threat to the growth of the telecoms market because there is already an infrastructure deficit capped at $136 billion and we need an additional 40,000 towers to be able to close that gap. Stealing and vandalising telecoms equipment is very detrimental to the growth of the telecoms industry in Nigeria. In fact, according to a report published by The Guardian in August 2019, the Nigerian Communications Commission (NCC) reported that there were 33,000 cases of vandalism and outright theft between June 2017 and August 2018, which resulted in a 35 per cent rate of vandalism, and theft of telecom infrastructure in a year. Another report published by The Punch stated that as a result of the incessant vandalism and theft of telecoms equipment, broadband subscriptions had dropped by 9.8 million subscribers between December 2020 and October 2o21. Theft is a huge challenge affecting the growth of the Nigerian telecoms industry.  Despite these challenges, I will say the growth of the market has been rapid, even though a lot of this growth came through acquisitions and not organic growth strategies.

Can you put some light on the 5G network, especially in terms of its infrastructure demand?
5G is a broad concept. For me, I think we should stick to the passive end of it, which is what we can do at Pan African Towers. The passive end of it is introducing a lot more towers to support its deployment. You know in the days of 2G, we had very tall towers like 70 meters or more. When 3G came, the height came down because the better the frequency, the closer you need to get to the ground until you get to the fibre line and that is the way to think about it.

2G was up in the air, 3G became shorter, 4G followed the same trend and now 5G is coming further down. The reason for that is that you are reducing the line of sight. In 2G, there is a line of sight to ensure that a tower is tall enough to see the next one. Now, you are connecting sites through shorter waves.

So, it is a bit easier to get them to speak to each other. The connection becomes faster and the potential to build a smart city becomes a lot broader. Yes! 5G is something we are looking into and we do not just want to wait for the time it kicks off, we want to start looking at scenarios where we can say we are leading the industry in that area. 5G changes everything, and as a digital infrastructure provider, we are seriously looking into that space.

Telcos have always complained about the issue of electricity in powering base stations and this contributes to downtime several times. Are there innovative ways to overcome this challenge?
Yes, that is very correct. But we have a specific model called the ESCO model and it is a scenario where we use a lot of green energy to generate power. We have done a lot of testing around it and we are now confident that we can roll it out fully. Now we are looking at going green on all our sites. Our current target is to have up to a 50 per cent reduction in our carbon usage by the end of this year or towards the middle of next year. That is one of the key priorities that we have. We had our first gas site go live about a week ago. The aim is to ensure that we are not burning fossil fuels like every other operator in the market. We want to bring all our sites to green energy and that is one of our key focuses.

Apart from power, theft is another challenge tower companies face while running their sites. I think theft is always one of those problems you have to deal with. It is like you cannot run away from it, but you can minimise it. So, we are weighing our options in terms of security to ensure that we raise the safety standard of the sites. From ensuring that the security on site is held accountable, to making sure that the people responsible for the operations are also held accountable. From there, going hard on any form of theft will go a long way to fostering growth in the telecoms business in Nigeria. In one of the communications to the team, I was very clear that we have zero tolerance for theft. So, all cases of theft are being taken seriously.

Having overseen tower operations in other African countries, what have you observed as disparity between those countries and Nigeria?
Well, I will say there is very little difference, except that perhaps some of them have more electricity than others. The real thing is that all of them have similar problems. For instance, you still need to have proper regulations in all the countries. Things may even be harder in other African countries. However, there is a lot of correlation. They all face downtime here and there and some agencies are there to freeze the sites overnight and all that. It is a lot of work on all the sites. But at the same time, all you can do is to ensure that you provide an environment where your sites can continue to run so that you will not end up providing horrible services to your customers. To do that, we are equipping our engineers more to be able to get to sites on time to tend to all the issues at hand. So, the same issues will always be applicable to tower companies no matter which market you are in.

In western countries like the United States or United Kingdom, the challenges here may not be practically applicable there, but in Africa, I think the issues are always the same.

Which policy areas would you say the government should intensify efforts to further propel development in the market?
To start with, the passage of the Critical National Infrastructure (CNI) bill is still a paramount one. I think it is still important that you have it in place to protect telecoms infrastructure in the country. Vandals, thieves and other social situations could render a site not viable for business and as such you may be required to relocate your sites. Relocating a site takes a lot of time and other resources. We cannot continue to have cases where perhaps because of social issues like community protests, vandalism and theft prevent you from having access to your sites. We need to operate as much as possible in an environment where government’s laws and policies are adhered to and people could feel that telecoms infrastructures are very important for their survival. The CNI would reduce the rate of vandalism and theft. Therefore, the passage of the pending CNI bill is extremely important for the growth of the telecom market in Nigeria.

Secondly, in this kind of industry where you have very large and very small companies, it is important that regulations focus on not discouraging the growth of the small companies but providing equal opportunities for growth. I like healthy competition. I adore competition but it is important that it is regulated so we do not really witch-hunt each other. I particularly believe these two policies are critical to improving the sector. I will not call the second concern a policy but a call to regulation on the way business is done in the industry so equal opportunities are available for both big and small companies.