Year of mixed blessings for Nigeria

TELECOMS

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Image: By BiztechAfrica
Year of mixed blessings for Nigeria

To players in the telecoms sector of Nigeria, year 2012 was a bag filled with  mixed blessings. Kokumo Goodie reports.

Subscriber base growth

In spite of the economic vicissitude that characterised global economy, the information communication technology (ICT) sector appeared unbuffetted. Particularly the telecoms sub-sector recorded tremendous improvement in terms of contribution to the gross domestic product (GDP) and growth in subscriber base as Nigeria gained another 2 million mobile users in three months, giving it 109.4 million by the end of October this year.

According to data released by the regulator, the Nigerian Communications Commission (NCC), active telephone subscriptions increased from 107.3 million active lines in September to reach 109.4 million at the end of October.

Most of the subscriber gains were in the mobile space while the code division multiple access (CDMA) and fixed wired and wireless network operators recorded declines in already-small user bases.

NCC figures indicate that Nigeria now has a teledensity of 78.21%.

According to the National Bureau of Statistics as at the first quarter of 2012, the ICT sector contributed 5.83% to GDP, making it the fourth highest contributor to GDP, and was growing at just over 30 per cent making it the fastest growing sector in the Nigerian economy that employed over two million people.

Multiple Taxation/Regulation

Growth and development of the sector continued to be impeded by the high incidence of multiple taxation and regulation. These, operators say, has not only impacted on their returns, it has also impeded capacity expansion. For instance, the grant of right of way (RoW) to lay intra-city and inter-state fiber optic cables has become Herculean as all the three tiers of government are now interested in squeezing out whatever they could from the operators before approvals are given.

Tied to this is also the grant of approval to build base transceiver stations (BTS). Street urchins called ‘Area Boys’, officials of local government councils, task forces and all manners of agencies employ extra-judicial means to frustrate operators efforts at building BTS in their communities, thereby constraining quality of service.

Minister of Communications Technology, Omobola Johnson, acknowledges the impact of this development on the sector and has assured that the issue would be settled very soon as Vice President Namadi Sambo has also shown interest at getting the problem solved expeditiously.

Quality of Telecoms Services

Perhaps the most topical issue in the ICT sector through the year was the vexed issue of the ever declining issue of telecoms quality of service (QoS). While the regulator and operators have engaged in the “blame game’, the average subscriber has been at the receiving end.

The issue assumed a frightening dimension during the year, forcing the regulator to slam the fine of N1.17 billion on Airtel, MTN, Etsalat and Globacom. Though analysts faulted the payment of the fine to the coffers of the government because, they argue that the subscribers ought to have been directly compensated, the fine was paid to the government through the NCC.

QoS issue continues to generate interest among the citizens, especially against the background that all the operators were engaged in one promo/lottery or the other that promised fabulous rewards like aircraft, luxury buses and more than 500 per cent air time bonuses. The integrity of the network became highly compromised, compelling the NCC to once again, step by stopping promos/lotteries on the network. This action too elicited mixed reaction as a section of the subscribers say they were denied their daily means of livelihood through the action of the NCC, especially when no drastic improvement has been noticed on the QoS.Lanre Ajayi

The President of the Association of Telecoms Companies of Nigeria (ATCON), Lanre Ajayi, says the QoS issue goes beyond the control of the operators as external factors such grant of RoW, approval to build BTS, premeditated vandalism of telecoms infrastructure and security all fell within the ambit of government.

Broadband

Dearth of broadband remained an issue in the sector throughout the year. Indigenous submarine cable firms, MainOne Cable Company and Glo 1, with additional capacities from the West African Cable System (WACS) which MNT substantially invested in, and the already existing South Atlantic 3 (SAT 3) which moribund state-run telco, NITEL, substantially funded, were to provide the requisite bandwidth to drive e-commerce, telemedicine, e-government, mobile money and other services.

But these capacities remained on the shores because of the absence of what Funke Opeke, MainOne boss, described as ‘middle and last mile infrastructure’ to take the excess bandwidth to the end users.   Added to this is the capacity of the NigComSat-1 R launched at the twilight of the year before. Managing Director and Chief Executive Officer, Mr. Timasaniyu Ahmed-Rufai, says the satellite has capacity to deploy internet services to all the public schools in the country but is constrained by the structural artifice of the firm to deliver optimally to the nation.

NigComSat Bill

Perhaps another issue that generated furore intellectual debate in the industry is the NigComSat Bill pending before the Senate. The bill had earlier scaled through the legislative crucible of the House of Representatives.

While arguments in support of the bill appear to remain unassailable in that it seeks autonomy to do business, debottle-neck its operations from bureaucratic behemoth, operate like an entity that could access funds locally and internationally, grow sectoral contribution to GDP and domesticate the security of Nigeria, opponents are of the view that grant of autonomy may be acting in contradiction of the Nigeria Communications Act 2003 and enthrone an era of multiple regulatory bodies in the sector.

Rebirth of Starcomms, MTS and Multilinks

Nigeria’s ailing code division multiple access (CDMA) operator, Starcomms, says it will redefine mobile broadband data services in the country with the injection of funds by Capcom, a special vehicle set up to buy the assets and liabilities of the firm and that of MTS and Multilinks. 

The Chief Executive Officer of Capcom International, Ademola Elesho, said the firm had concluded arrangements to inject a combination of cash and assets worth $210 million into Starcomms as part of efforts to buy controlling shares in the ailing telecom firm, adding that the firm has opportunities to bounce back and play significant role in the market.

According to him, the ailing telco will be made to attract more highly profitable data subscription in the short term through the launch of 4G mobile broadband or long term evolution (LTE) technology, adding that the availability of 20 MegaHertZ (MHZ) contiguous spectrum 1900MHz range, will allow the telco to do data very well.

Elesho said the firm is going to raise the funds through equity and assets to seal the transactions.

“The transaction will be effected through a Scheme of Arrangements to be followed by a Private Placement and a Rights Issue. The  scheme will involve the cancellation of  N3,448, 646, 872 in the company’s share capital comprising 6, 897, 293, 744 ordinary shares of 50kobo each, and the subsequent issuing of 662, 500,000 new, fully paid up ordinary shares to Capcom constituting 90.5 per cent of the post scheme-organized issue share capital,” he said.

The scheme is now approved by shareholders and awaits regulatory approval.

Also, the interim Managing Director, Starcomms Plc, Olusola Oladokun, said various litigations facing the company have been sorted out to enable the transactions scale through. Oladokun said Starcomms has suffered liquidity position in recent times, adding that the development has resulted in its current debt position of N15 billion.

“The company has defaulted in debt service with some of its creditors. We hope to continue to service the debt, if the Capcom deal scales through,” he said.

Innovation

NigComSat developed platform for electronic voting (e-voting) which was used by the Nigeria Society of Engineers (NSE) to conduct its yearly general elections online real-time through. The platform was manufactured locally by engineers at the satellite firm and was powered by mobile internet via Very Small Aperture Terminal (VSAT) for connectivity to broadcast events online real-time on the NigComSat-1R satellite.

Participants and contestants monitored the procedures online real-time as voting was updated on the dedicated website for the election as each voter cast his or her ballot while the elections were monitored by participants and voters online either on their laptops or smartphones that are internet enabled.

Premeditated Vandalism of Telecoms Infrastructure/Natural Disaster

Attacks on BTS assumed the dimension of war time Afghanistan as the notorious Islamic sect, Boko Haram, turned the heat on BTS, thus crippling services. This situation was worsened by the flooding that swept away several BTS in some parts of the country.

The Chairman of the Association Licensed Telecoms Companies of Nigeria (ALTON), Gbenga Adebayo, said that the natural disasters were caused by flooding in some southern parts of the country, while the man-made disasters were caused by spontaneous attacks on telecoms facilities in some northern parts of the country by gunmen in September this year.

“The impacts of the attacks had since limited the ability of millions of Nigerian subscribers to access telecommunications services, because the incidents affected over 250 telecoms sites that lost connection and many suffered significant damage beyond repairs,” Adebayo said in Lagos.

According to him, the flood in some parts of the country destroyed Base Transceiver Stations (BTS) along its path, leading to significant service disruption in the affected areas, with impact on service availability in some other parts that were not affected by the flood. “Other than disruption to services, our members have lost equipment worth several billions of naira to the flood disaster across the country, as over additional 300 BTS sites were affected by the flood,” he lamented.



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