ADEYEMI ADEPETUN writes on some of the issues that might have led to the temporary suspension of the issuance of communications licences by the telecoms regulator.

On May 17, 2024, the telecoms industry woke up to the news that the Nigerian Communications Commission (NCC) had temporarily suspended the issuance of communications licences in three categories.

These categories, according to the public notice, signed by NCC Director of Public Affairs, Reuben Mouka, included the value-added services (VAS) aggregator licences, interconnect exchange service (IES) licences and mobile virtual network operator (MVNO) licences.

This development appeared to have unsettled the $76 billion telecoms sector, as some stakeholders see the move as one that would negatively impact investments in the sector.

The Nigeria Bureau of Statistics (NBS) capital importation data showed the telecoms sector attracted investments worth $134.75 million in 2023 compared to $456.83 million in 2022, a decline of 70.5 per cent year-on-year.

According to NBS, on quarter-on-quarter, foreign capital inflow into the telecoms sector decreased by 64.33 per cent to $22.84 million in Q4 2023 compared to the $64.05 million received in Q3 2023.

Speaking with The Guardian, a telecoms expert, Kehinde Aluko, who complained of a lull in the sector, said the trajectory of growth for the industry appears weak and bleak, owing to several issues, including a lack of major investments.

Aluko, who posited that so many things could have prompted the NCC’s temporary suspension of issuance of licenses in VAS, MVNO and interconnect exchange, however, called for caution.

According to him, some factors, including possible lack of traction in some of those licenses and maybe some underhand dealings have been discovered.

“Whatever it may be, the regulator needs to explain further, especially at a time when investments are waning,” he stated. Indeed, so many factors have been adduced for the suspension, according to the information gathered, coupled with the urgent need to set some records straight.

Why issuance was suspended
ACCORDING to findings, the need to ensure an effective ecosystem in the telecoms industry to enable the Commission to conduct a thorough review of several key areas within these categories and to enhance the competitiveness of the industry for growth was identified.

For emphasis, VAS aggregators serve as the links between VAS content providers and mobile network operators. VAS aggregators play a crucial role in the ecosystem by facilitating seamless connections to MNOs, thus streamlining the integration process of operations. These aggregators have the scale to ensure that all VAS Operators regardless of size can easily integrate into MNOs.

Checks showed that currently, the Commission has issued a significant number of licences in this category of service, and there has arisen the need to review the market dynamics of this sub-segment to ensure effective competition.

It was gathered that the Commission also carried out a benchmarking exercise with some jurisdictions across the world, and it was observed that there may be currently more VAS Aggregator Licensees than may be required. There are currently 49 VAS Aggregator Licensees in the country.

According to an insider, there is, thus, the concern of saturation, with not enough market for the aggregators due to “over-supply.” This has also led to an increase in several aggregators with difficulties interconnecting with the four MNOs.

For the IES, these licensees contribute to the transiting of voice calls between MNOs between MNOs and smaller licensees (providing voice services) e.g. local exchange operators and between one local exchange operator and private network links licensee to others.

Interconnect Exchange Licensees facilitate the interchange of voice calls among networks. The original goal of introducing this licence category was to encourage interconnection for smaller players and reduce interconnect indebtedness in the telecoms sector. While these IES licensees have positively contributed to the interconnectivity of smaller operators, the issue of interconnect indebtedness has persisted in the industry.

Besides, cases of SIM boxing and call refiling have also become a major issue impacting the licensees in this sub-segment as well as MNOs that serve as the major terminating points of voice traffic in Nigeria.

Reports showed that some of the licensees under this category also have other licensees to terminate traffic internationally. Some are suspected of abusing this for SIM boxing and call masking to terminate international traffic as local calls.

With this, they take away revenue that should ordinarily accrue to the operators. There are currently 37 Interconnect Exchange Service licensees transiting traffic mainly to and from four major MNOs in the country.

The case for MVNOs
IN 2023, the commission started the issuance of licences to MVNOs in the country.An MVNO is a company that does not own a mobile spectrum licence but sells mobile services under its brand name using the network of a licensed mobile operator. Already, a significant number of licensees (43) have been granted.

The Guardian had exclusively reported on May 14 how mistrust and greed had contributed significantly to the rather slow takeoff of the MNVO in the country, where about N8.6 billion had been paid for various categories of licences in the scheme.

But with the suspension of the issuance of this licence category, it was gathered that the NCC planned to assess the market again to see how it evolves and performs.

According to insider sources that NCC temporarily suspended these licenses doesn’t mean they failed.   Sources said a lot of them are providing services, particularly the aggregators, stressing that the prospects of the MVNOs are also there; the NCC has provided regulatory clarity on the relationship between MNOs and MVNOs, with progress expected to be seen soon.

Effect of suspension on telecoms sector growth
INSIDER sources at the Commission claimed there would be little or no effect of this suspension on the sector’s development. Findings showed that NCC already has enough licensees in each of these categories to take care of the needs of the industry, especially as it is a liberalised industry.

“When a segment is saturated, you must review it and tackle competition issues to reposition the licensees for better service delivery. As a Commission, our role is to ensure they can compete and provide better services to the industry,” a source said.

In terms of how long the suspension would be, the source said, “in line with our principle of participatory regulation, this length of the suspension would depend on the conclusion of a review that would be done in consultation with industry stakeholders.”

NCC’S licensing authority
THE Nigerian Communications Act of 2003 provided broad objectives for setting up the NCC, which principally is to facilitate the provision of communications facilities and access to communications services in Nigeria.

The Act further enumerates the functions of the commission, including among other things, the issuance of licences to private companies for the provision of telecommunications services.

This also implies that the commission has the power to revoke licences and suspend the issuance of new ones.

Potential threat to investments
The temporary suspension was to ensure the sustainability of the various players within the various segments. In other words, the suspension was carried out to enhance the industry’s vibrancy

As such, would there be any threat to potential investors and investments, insider sources said: “No, they shouldn’t. There is no cause for worry.

“The suspension of these licences should be seen from the perspective that it is meant to improve the sustainability of the various sub-segments in which these licensees operate. The Commission is on top of the industry and has undertaken this intervention to create a more conducive atmosphere for competition and ensures the survival of every player in the industry.”