The Nigerian Telecommunications industry was once referred to as one of the fastest growing in the world. The situation is, however, different today as many operators are faced with the loss of revenue, largely due to the economic recession, over the top players, multiple taxation, insecurity and other issues.
I was with Olusola Teniola, President of the Association of Telecom Companies of Nigeria, ATCON. He spoke about the challenges faced in the Telecom industry and the way forward.
Olusola stated that the reason, investors are not investing in the Telecom industry in Nigeria, for now, can be looked at from both the macro and the micro economic environment within Nigeria. Having been in recession for more than two quarters, with a low growth rate of between 0.3% and 0.8%. A growth rate that sadly an investor won’t be interested investing in. “Investors will be looking for high single digit or double digit growth rate regime to invest in”, he maintained. He stated that Kenya and Ethiopia are the current leaders in the Telecom industry in Africa at the moment, with Nigeria and South Africa lagging behind. The recession, he declared, has made many capital projects to be on hold in the Telecom industry which is capital intensive.
Olusola indicates that the industry needs the government to create the enabling environment, as well as create a more stable foreign exchange regime. This is because, the multitude of forex windows we currently have, is not encouraging the investor. He also stated that the debt facility problem being faced by about two of the players in the industry.
Speaking on how these have impacted the quality of service provided by these Telecom companies, Olusola stated that, there are two aspects to the quality of service provided and this is where the micro economic environment comes in. He emphasised that one of them is the technical aspect of quality. The NCC, he said, focuses on the technical aspect of it in terms of the KPI’s set and are usually driven by the ITU standards. The other aspect, he stated, has to do with capacity management, which has to deal with investments in networks. “If you look at the actual composition of the industry to date, there has been an investment of about $68billion, right from the time the industry was liberalised in 2001 to date and that represents quite a significant amount of Dollars flowing in”, he observed.
He emphasised that about half of the $68billion investment, so far, came in through FDI. If it is broken down further, only one operator has contributed 50% of that, as about $16billion came from only one operator, where we have many operators. Olusola opined, that, the investments, so far, has not covered the whole of Nigeria, hence, the industry is still in need of the further injection of investment to grow. He said that there are about 150million subscribers where the networks have, so far, deployed in Nigeria.
Also, he made it known that services to these subscribers, is based on the infrastructure that we have, so far, which was built, predominantly, for voice, but which now also runs e-payments, mobile money, etc. “You can see that, the struggle to try and keep up with the congestion requires that more capacity has to be put in place and that means funding”, he observed.
When asked what he recommends as steps, going forward, Olusola stated that ATCON has always advocated that its members have their equipment and investments protected, which he reiterated, is significant. He observed that, while, ICT has now become critical to the success of the Nigerian economy, Telecom, however, is a key factor and an infrastructure player in Nigeria at the moment because, without the infrastructure, we cannot even use our smartphones for any other thing other than to using it for making the basic calls.
On the issue of security for Telecom infrastructures, there has been a liaison with NCC and other security outfits, like the Nigerian Police, to protect these infrastructures. The Association, he stated, also encourages the reporting of incidences of damages to infrastructures the more instead of just repairing the damages and keeping mum over the damages. The idea, he maintained, is to raise awareness about the negative impact on the quality of services rendered, caused by tampering with Telecom facilities
Olusola is of the opinion that, it is not about the flunctuation of floor prices, but it is about innovation, competition and the best consumer choice. The extinction of the CDMA’s, he observed, had to do with the management of the companies involved as well as operating on a regional basis and not on a national basis, rather than about pricing.
“The forces that dictate the market chose the GSM technology for many reasons, and one of the reasons is that the SIM card can be divorced from the device and the devices, in my opinion, are actually, smarter and lovelier in the GSM realm than in the CDMA”, he concluded.
