The inability of telecoms operators to access foreign exchange, coupled with the refusal by government to grant operators right of way, among other critical issues, stunted growth of the ICT sector in 2017, writes Emma Okonji
The year 2017 can be best described as a difficult business year for telecommunication operators and other stakeholders in the technology industry. Businesses were dull, operating environment was harsh and revenue generation shrank as operators struggled to grow the sector.
The contribution of the sector to Gross Domestic Product (GDP) dropped to 7.4 per cent in 2017, compared to 9.3 per cent contribution in 2016, according to the third quarter report of the Nigerian Bureau of Statistics (NBS).
Stakeholders in the information and communications technology (ICT) sector have attributed the challenges faced in the industry to the inability of operators to access forex, refusal by government to approve Right of Way(ROW) for telecoms expansion, multiple taxes, indiscriminate closure of telecoms base stations, theft and willful destruction of telecoms infrastructure, among others.
Listing some of the challenges that stalled telecoms growth in 2017, to include the inability to access forex, refusal to ROW, insufficient investment in broadband infrastructure, among others, the President of the Association of Telecoms Companies of Nigeria (ATCON), Mr. Olusola Teniola, said these challenges impacted negatively on telecoms growth.
According to him, operators witnessed difficult business environment in 2017 because of the scarcity of dollars, it’s high exchange rate and the inability of operators to access forex for the purchase of telecoms equipment for network expansion.
Teniola, who also blamed the situation on lack of investment in broadband infrastructure, said the combined broadband capacities of the five sub-marine cables that are lying fallow at the sea shores of the country, were under utilised in 2017. The under utilization, he said resulted from the inability of government to invest in broadband infrastructure, especially the national backbone infrastructure that should transmit broadband capacities from the sea shores to the hinterlands, where broadband internet services are in high demand.
Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON), Mr. Gbenga Adebayo, said growth in telecoms was slowed down in 2017 due to indiscriminate levies imposed on telecoms operators and the incessant closure of telecoms base stations by federal and state government officials.
He said such closure in some states of the federation due to the refusal of the telecoms operators to pay the huge levies, adversely affected telecoms growth and expansion. Adebayo equally attributed the sluggish growth to the refusal of some state governments to grant telecoms operators ROW to lay fibre optic cables for high speed data and voice connectivity, a situation, he said, still persists.
Another major challenge faced by telecoms subscribers in 2017 is the fast depletion of their data bundles as a result of their inability to control background apps that run on their mobile devices. In addressing this issue, Google, last month, introduced an app called Datally, designed for emerging markets, Nigeria inclusive, to help data users monitor and control their data usage.
Announcing the launch of Datally in Lagos Google Nigeria Country Director, Juliet Ehimuan-Chiazor, said the new app would help Android users understand and control their mobile data to get the most out of their data plans.
“For the last few years, our Next Billion Users team has been doing a lot of research on the ground in fast growing internet countries like Nigeria. We have found that data is a major constraint for the next billion users. Introducing Datally into the Nigerian smartphone market will help users understand how to control their mobile data better. Google tested Datally in the Philippines for most of 2017, and the user research showed that people testing the app saved up to 30 per cent of their mobile data, depending on the way they used Datally,” she said.
Datally works on all smartphones running Android 5.0 and higher, and is available for download on the Google Play Store globally.
Addressing the issue of service quality, Adebayo said although there was a remarkable improvement in service quality, he said unless government removes the hiccups like RoW, multiple taxes, incessant closure of base stations, and willful destruction of telecoms facilities, operators will not be able to provide the best of telecoms services that are hitch-free.
Subscribers have been faced with poor service quality, ranging from poor voice clarity to drop calls, inability to recharge, delay in delivery of text messages and indiscriminate billing. The situation, however, worsened this Yuletide season as in the case with other Yuletide seasons, that come with increased call and data usage.
Worried about the operations of Over the Top Technology (OTT), which eroded the traditional services of telecoms operators and their revenue generation in 2017, Adebayo said telecoms operators must devise new ways of providing quality and affordable services to subscribers and still remain in business.
The OTT players used the greater part of 2017 in providing free of charge telecoms services to subscribers through Skype, Imo, WhatsApp, among others, while riding on the network of the traditional telecoms operators to deliver Voice over Internet Protocol (VoIP) service. The disruption caused a shift from the usual purchase of airtime for voice and data as most subscribers now prefer to make free calls and send free text messages on the OTT platform, thus eroding the revenue generation of traditional telecoms operators.
The 9mobile saga
Commenting on the financial health situation of the telecoms sector in 2017, Adebayo said the sector suffered liquidity squeeze, which adversely affected its operations.
Citing the case of 9mobile that was compelled to change its brand identity from Etisalat Nigeria to 9mobile in 2017, following the near collapse of the telecoms company, occasioned by its weak financial status that forced it to go borrowing in 2013, Adebayo said such unhealthy financial situation, cuts across telecoms operators, who are still struggling to survive the harsh telecoms business environment in the country. He called on the federal government to consider bailout option for most telecoms operators or device a means that will attract fresh injection of funds from foreign direct investors.
It is on the basis of the weak financial situation in the telecoms sector that industry stakeholders are kicking against the planned idea muted by four local operators that are currently bidding to acquire 9mobile, to form an alliance that will help them create a formidable single platform to win the race. The stakeholders are clamouring for individual firm bidding process that will allow the foreign investor among them, have the opportunity of injecting fresh funds into the Nigerian telecoms sector.
9mobile had, in 2013, obtained a $1.2 billion loan from a consortium of 13 banks, but struggled to repay the loan, citing economic downturn of 2015-2016 and naira devaluation, which negatively impacted on the dollar-denominated component of the loan.
Its inability to repay the loan forced it to change its brand identity from Etisalat Nigeria to 9mobile, a move that gave it the opportunity to shop for new investors that will inject fresh funds into the telecoms business, following the withdrawal of Emirates Telecoms Group, and the resignation of every member of the former Etisalat Board, including its former chairman, Hakeem Bello-Osagie and its former management staff.
Barclays Africa, the financial advisers for the acquisition of 9mobile, is currently handling the bid process, with a mandate to complete the exercise and hand over 9mobile to its new investor or group of investors before December 31, 2017.
Adebayo called on government to speed up policy implementation as it affects the national broadband policy that targets 30 per cent broadband penetration in 2018, up from its current 21 per cent penetration.
On his part, Teniola stressed the need for government to either invest in broadband, or create the enabling business environment that will allow foreign investors to invest in the country’s broadband plan. According to him, if foreign investors are assured of repatriating their money outside the country, they will be glad to invest in the country’s broadband policy plan.
Although telecoms operators had a lot to contend with in 2017, Adebayo said the regulatory intervention of the Nigerian Communications Commission (NCC), the telecoms industry regulator, helped in shaping the telecoms industry during the year under review.
For the first time, NCC declared 2017 as telecoms consumer year, which seeks to empower the consumer and to protect their rights and privileges.
However, one major area that defied telecoms subscribers’ rights, is the unsolicited short message service (SMS) also known as unsolicited text messages, that were constantly being pushed out to subscribers’ mobile devices by Value Added Service (VAS) operators, for the purpose of telemarketing. It is against this backdrop that NCC introduced the Do Not Disturb (DND) Code 2442, which consumers can use to stop unsolicited text messages and the NCC’s toll free line – 622 – through which consumers can reach the commission in cases where service providers fail to resolve their complaints.
Appraising NCC’s intervention, Executive Vice Chairman, Prof. Umar Garba Danbatta, said several subscribers were able to subscribe to the DND platform and were able to control the type of text messages they received on their mobile devices.
FinTech, IoT and AI
Describing the disruptions in the technology space created by FinTech, Internet of Things (IoT) and Artificial Intelligence (AI) in 2017, Accenture Nigeria, a leading global professional services company with focus on digital technology, said the new technology capabilities would help Nigeria leverage the fourth industrial revolution, which is about knowledge economy.
The company, this month in Lagos, showcased its latest technology capabilities that will enable businesses across different sectors in the country, boost their productivity and efficiency through its recent innovations and investments in AI, Virtual Reality (VR), robotics and blockchain.
The Managing Director, Accenture Nigeria Mr. Niyi Tayo, said: “We want businesses in Nigeria, from banking to manufacturing, health, construction, education, retail, security, and other sectors to take advantage of the innovations we have created to improve their businesses. We believe as one of the biggest economy in Africa, the time to seize the future is now.”
Citing the rise in technology activities around FinTech and AI in 2017, technology experts have predicted that FinTech and AI would drive activities across all sectors of the global economy including Nigeria in 2018.
While FinTech has brought a whole lot of disruption to the financial services sector, using latest technology solutions to change the face of financial services delivery in the banking sector, the technology savvy experts are using AI to create robots that will deliver multi-tasking jobs in the future.
The Accenture Nigeria boss said AI and robotics would rule the world in 2018. He strongly advised organisations to act fast in developing their AI Journey for 2018.
Managing Director, Huawei Nigeria, Mr. Kevin Li, however, advised the federal government to begin aggressive investment in broadband in order to boost broadband penetration across the nooks and crannies of the country, since FinTech and AI largely depend on broadband accessibility.
PricewaterhouseCoopers (PwC), one of the biggest professional services companies in the world, predicted that Nigerian businesses would soon begin to incorporate robotic automation into their operations, which is driven by AI and IoTs.
The prediction is based on a recent research findings conducted by PwC on Shared Service Centres (SSCs) and Centralised Processing Centres (CPCs) across industries in Nigeria.