Telecoms Sector Bleeds One-year After
Since May 29, 2023 when President Bola Ahmed Tinubu announced the removal of fuel subsidy during his inaugural speech, prices of all commodities, including transportation cost and prices of petroleum products, which are used to power up telecoms’ cell sites, have skyrocketed. The development adversely affected telecoms operations in the last one-year because prices of telecoms service delivery have remained constantly unchanged, despite the continuous rise in the cost of telecoms equipment, writes Emma Okonji
Before the removal of fuel subsidy by the present administration, led by President Bola Ahmed Tinubu, telecoms operators had written to the Nigerian Communications Commission (NCC), asking for upward review of telecoms tariff across networks, but their request was turned down. The operators had asked for a 40 per cent increase in voice and data services delivery, in line with economic realities, insisting that all other sectors of the economy have severally increased cost, including cost of transportation and diesel, which they said are eating deep into telecoms’ revenue.
The economic situation of the country however worsened in the last one year of Tinubu’s administration, following the removal of fuel subsidy during his inaugural speech on May 29, 2023, without implementing the right policies that should cushion the effect of fuel subsidy removal.
In the last one-year since fuel subsidy was removed, all other sectors of the economy have severally reviewed the cost of their products upward, including cost of petrol, diesel and transportation, except the telecoms sector, which provides services to all other sectors of the Nigerian economy.
In order to remain in business and still offer quality telecoms services to subscribers, the operators, last month, wrote again to the NCC, asking for upward review of telecoms tariff, but their request was again resisted.
Each time the operators make attempt to push for increase in telecoms tariff, they are always faced with stiff opposition from the federal government and the NCC, who are of the view that their services are essential to the masses and may add to the burden of the masses, if tariffs are increased.
In the last one-year of Tinubu’s administration, telecoms operators have cried out, complaining that they are running the telecoms business at a great loss, following the rising cost of transportation, diesel and petrol, coupled with the high cost of purchasing telecoms equipment. They have warned that several operators may likely close business, if telecoms tariffs are not increased in tandem with the current economic realities.
Threat to Telecoms Business
Worried that the cost of telecommunications services is not in tandem with the rising cost of goods and services across all sectors of the Nigerian economy, the Association of Licensed Telecoms Operators of Nigeria (ALTON), has said telecoms operations will soon go into extinction like the Nigerian Telecommunications (NITEL) and the National Electric Power Authority (NEPA), if telecommunications investments are not sustained.
Chairman of ALTON, Gbenga Adebayo, who said this in a telephone interview with THISDAY, was reacting to comments made by the Minister of Communications, Innovation and Digital Economy, Dr. Bosun Tijani, who in his closing remarks at this year’s GSMA Forum in Abuja, played down on the ongoing agitations by telecoms operators for tariff hike in telecoms service offerings.
According to the Minister, “The call for tariff hike by telecoms operators will not address the challenges of the telecoms industry and such call is not necessary at this time as Nigeria has other micro-economic challenges to deal with.”
Adebayo however told THISDAY that telecoms operators were taking aback by the comments of the Minister and that the operators completely disagreed with the Minister on his comments on tariff hike, because there was need for cost reflective tariff in the telecoms sector.
According to Adebayo, “We agree that that there are other micro economic challenges in Nigeria that need to be addressed by government, but cost reflective tariff also needs to be addressed by government in order for telecoms operators to survive while bearing the burdens of the telecoms sector.
“What we are calling for is cost reflective tariff for the telecoms sector. If the industry refused to carry out cost reflective tariff, it will affect the sustainability of the industry, and it will be a deterrent to telecoms investors. The risk in all of these is that telecoms operations might go the way of NITEL and NEPA because investors will not invest in new infrastructure, they will not invest in new technologies and if those micro economic challenges are not addressed it will come to a time where it will be difficult to power telecoms cell sites, because there will be no investments in new technologies like alternative power to energise cell sites. If the challenges are not addressed, investors will not invest in telecoms, and it will spell high risk for the sustenance of telecoms operations in Nigeria. So we are worried about the long term challenges because the challenges will continue to pile up until a time when the telecoms industry can no longer support itself,” Adebayo said.
Threat to Telecoms Subscribers
In the last one year of Tinubu’s administration, telecoms subscribers have come under serious threat from the telecoms operators that threatened to disconnect telecoms subscribers, whose SIM cards were not properly linked to their National Identification Number (NIN).
NCC had last December, gave orders to telecoms operators to commence full barring of all unregistered and improperly registered SIM cards on their networks that have not been linked to the NIN of the SIM card holder.
The telecoms regulator had also insisted that the implementation exercise must be carried out in full by the telcos.
The threat from NCC, caused panic among millions of subscribers who had hitherto done their NIN-SIM linkage, but the exercise failed as a result of network issues that emanated from the National Identity Management Commission (NIMC).
After several warnings and threat messages to disconnect subscribers’ SIM cards that were not properly linked, NCC gave orders to telecoms operators to begin the disconnection exercise on February 28 this year, where 42 million Subscriber Identification Module (SIM) cards were disconnected in the first phase disconnection exercise that lasted for five days.
A second and third phase disconnection exercise was also announced by NCC for March 29 and April 15 respectively, but the dates were later postponed to July 31, 2024, to give more room for telecoms subscribers to link their SIM to their NIN.
THISDAY investigation into the anomalies in SIM registration and linkage, showed that there were massive duplications of SIM cards and NINS traced to single individuals, where a single individual could register as much as 10,000 SIM cards with multiple NINs, a development that negates the security architecture of the country.
Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), and spokesperson for Telcos, Gbenga Adebayo, told THISDAY shortly after the February 28 disconnection exercise that the next phase of disconnection would be massive. He therefore called on telecoms subscribers to properly link their SIM cards to their NIN, in order to avoid disconnection.
USSD Debt
Another challenge faced by telecoms operators in the last one year of Tinubu’s administration, is the challenge of accumulated Unstructured Supplementary Service Data (USSD) debt, owed telecoms operators by the Money Deposit Banks. As at November 2023, the telecoms operators said the accumulated debt reached over N200 billion, but as at April this year, it has reached over N220 billion.
Chairman of ALTON, Gbenga Adebayo who revealed this in Lagos, said some of the banks have started paying but a lot of the banks, who are the big players in the financial sector are not paying at all.
“Yes we have threatened to disconnect bank customers from the USSD platform, but the matter has now become a thing of public interest and the regulators are on top of the matter. The Central Bank of Nigeria (CBN) and NCC have stepped into the debt issue. For the sake of the growth of our digital economy, the banks and the CBN should take another look at the matter and address it amicably. The huge money being owed the Telcos by the banks will go a long way to improve the state of the telecoms sector if paid,” Adebayo said.
Fibre Cable Cut
On March 14 this year, there were major submarine cable cuts that affected 13 African countries, Nigeria inclusive, resulting in outage of internet connectivity, which grounded the operations of banks and other businesses that depend on internet.
The affected submarine cables came from Europe, and passed through the East Coast of Africa. The West African Submarine Cable (WASC), African Coast to Europe (ACE) submarine cable and MainOne submarine cable, that have landing ducts at the shores of Nigeria, were affected by the multiple cuts.
Although restoration work has been carried out and internet services restored, telecoms operators are afraid they may face another fibre cable cut on the Lekki axis of the Lagos-Calabar Coastal road that is currently being planned for construction.
They are worried that the cables could be damaged, and internet connectivity disrupted again when the Lagos-Calabar coastal road construction begins,
According to them, SAT-3 was poorly relocated during the Eko Atlantic project and up till this moment SAT-3 is still experiencing power failure and its efficiency has been seriously compromised because of the unprofessional re-routing of the fibre cables by the road workers.
Cybersecurity Levy
Another major challenge that faced the telecoms sector in the last one year of Tinubu’s administration, was the initial introduction of 0.5 per cent cybersecurity levy by the Central Bank of Nigeria (CBN), which was later removed by President Tinubu, after an outrage by telecoms subscribers and various interest groups in Nigeria, that condemned the proposed levy.
Two advocacy groups, Nigeria Internet Group (NIG), and the Nigeria Computer Society (NCS), joined other bodies to kick against the planned introduction of cybersecurity levy by the CBN, by highlighting its implications for both the Nigerian economy and businesses.
According to the groups, the cybersecurity levy, if introduced, would impact negatively on the Nigerian economy, businesses and consumers. They therefore urged CBN to consider alternative approaches to strengthening cybersecurity without unduly burdening the Nigerian populace.
The cybercrime levy of 0.5 per cent amounts to N50 levy for every N10,000.00 electronic transaction, with a plan to begin its implementation on May 20, 2024, before President Tinubu stopped its implementation.
5% Telecoms Tax
The 5 per cent excise duty isone of the 39 taxes imposed on telecoms operations across networks by the federal government in 2022, which was revisited in April 2023, few weeks before President Tinubu assumed office in May 2023. The initial introduction of the five per cent excise duty on telecoms operations was faced with serious agitations from telecoms industry stakeholders who rejected it because they considered it as an addition to the existing multiple taxes, which they said, would negatively impact on telecoms subscribers.
The federal government had said it would begin the implementation of the five per cent excise duty on all voice calls, SMS and data services, insisting that the five per cent excise duty has been in the Finance Act 2020 but has never been implemented.
However, President Tinubu, in July last year, announced the suspension of the 5 per cent excise duty tax on telecoms services, which brought the controversy about the implementation of the tax to an end.
Chairman of ALTON, Gbenga Adebayo, told THISDAY that the announcement by President Bola Ahmed Tinubu on the suspension of five per cent excise duty on telecoms would avert the planned hike in telecoms tariff and bring great relief to the sector.
“The suspension is a good development for telecoms subscribers and the telecoms industry. The Nigerian public should be grateful to the current government for being brave enough to suspend the five per cent excise duty on telecoms. As operators, we had been instructed to collect the tax from telecoms subscribers and remit it to the federal government, but with the suspension order, operators will no longer collect such tax and the subscribers will be free from the tax burden,” Adebayo said.
