Telcos Raise the Alarm over Threat to Telecoms Business, Broadband Plan

Emma Okonji
Tier II telecoms operators (Telcos) have raised the alarm over lingering threats that could cripple the operations of telecommunications in the country with the attendant effect of derailing the broadband plan of the federal government.

The Tier II operators, made up of notable broadband companies, , said the threat, if not nipped in the bud, could collapse telecoms operations and truncate the national broadband plan that seeks to achieve 30 per cent broadband penetration by 2018.

The operators therefore asked the Nigerian Communications Commission (NCC), the telecoms industry regulator, to take immediate and decisive steps to avert the looming threat of strangulation, which its members currently face.
The leaders of the Tier II telecoms operators made the call during a visit to the Executive Vice Chairman of the NCC, Prof. Umar Garba Danbatta, in his office in Abuja recently.

The delegation was made up of the Managing Director of Smile Communications, Mr. Godfrey Efeurhobo; Managing Director of Spectranet, David Venn; Director Regulatory and External Affairs of ntel, Mr. Osondu Nwokoro, and the Chief Commercial Officer of Swift Networks, Mr. Chuma Okoye.

They warned that a systemic industry failure threat with likely negative collateral and great national socio-economic implications is in the offing.
According to them, the industry is in a situation where all operators are finding it difficult to justify the required investment case for additional capital expenditure (CAPEX) for network capacity expansion to improve quality of service to customers.
They further noted that the network operating expenditure (OPEX) of telecommunications operations has skyrocketed in the last 15 months by over 85 per cent with revenues remaining relatively flat.

Most operators, they observed, are currently struggling with meeting obligations to their suppliers particularly Network Vendors, TowerCos and servicing loan obligations. This worrying trend, they noted, included even some of the Tier I operators. According to them, a perfect storm is brewing and if not headed off, would result in the collapse of key players in the industry. This is because the domino effect of bankruptcy of any of the Tier I or Tier II Operators on the entire ecosystem particularly, banking, employment, corporate and SMEs businesses, constitutes a major threat to the economic recovery and growth plan of the current administration.

Such bankruptcy and consequent collapse will also substantially lessen competition with its attendant deleterious impact on consumer choice and attainment of the broadband objectives of the country, the group warned.

The delegates stated that the NCC’s declaration of 2017 as the Year of the Telecoms Consumer can be derailed by failure of operators to deliver on the expected quality of service particularly on data experience due to the weak investment case to support additional CAPEX as a result of deteriorating market conditions.

Symptoms of the declining fortunes of operators, they stated, were already evident in the market as debts continue to grow and overall service quality continues a downward trend. “As it is, there is a grave threat to the broadband agenda of the federal government and expected dividend from growth in broadband penetration envisaged in the economic recovery and growth plan 2020,” the group said.

This threat, they warned, would materialise if the market is not sanitsed and the Tier II operators are not protected to encourage and justify the capital investment required to continue to invest and improve broadband penetration in the country.
The Tier II operators also bemoaned their deteriorating fortunes due to predatory pricing and cross subsidy of data using voice by Tier I Operators who possess significant market power. This they said remained a challenge the NCC must intervene to stop.

The group however applauded the various interventions of the NCC in engaging other stakeholders in ameliorating the difficulties that operators face.
They expressed their gratitude to Danbatta for intervening with the Central Bank of Nigeria (CBN) to reduce the burden of forex liquidity. They also commended him for his role in leading the campaign to educate the populace that base stations emissions do not cause cancer as erroneously thought. They however implored him to protect the Tier II operators and save their operations from total collapse.