Telecoms Industry in Four Years

0

As Nigeria begins a new political dispensation for another four years of governance, Emma Okonji examines the state of the telecoms sector in the last four years of President Muhammadu Buhari’s administration as well as expectations in the next four years

Four years ago, President Mohammadu Buhari and his ministerial team raised the hopes of Nigerians, with promises to address the country’s challenges in the areas of security, electricity, job creation, food production and improved telecoms infrastructure, among several other promises.
But four years down the line, majority of those promises were not kept and some targets were not met, while were some were however partially met, especially in the telecoms sector, which contributed significantly to the country’s Gross Domestic Products (GDP) in the last four years. For instance, telecommunications and information services, which is a sub-sector of the information and communications technology (ICT), contributed 77 per cent of the entire sector’s contribution to the GDP. Overall, the mobile telecommunications sub-sector contributed 7.4 per cent to the country’s total GDP in 2018, compared to 5.5 per cent in 2017, according to the 2019 Jumia Mobile Report that was released last week.
In the last four years, the telecoms sector grew its broadband penetration level, internet penetration, including its subscriber number and maintained a relatively fair quality of service. But these achievements did not come without some challenges, which of course slowed down the pace of development in the telecoms sector in the last four years.

eCommerce growth

eCommerce, which is an emerging market in Nigeria, picked in the last four years, especially in 2018, when Zinox Group bought over Konga and merged its operations with that of Yudala to form a bigger and stronger eCommerce platform, while retaining the brand name Konga. Since the emergence of the new Konga, it has heightened competition between it and Jumia to boost eCommerce business in Nigeria.
The latest Jumia Mobile Report 2019 showed improved growth in internet users and mobile device users, which according to the report, impacted positively on eCommerce business in Nigeria in 2018.

Across the globe in 2018, there were over five billion unique mobile subscribers, and 60 per cent of the connection was through smartphones. Internet users peaked at 3.6 billion, that is, almost half of the world population had mobile internet access. In Nigeria, there were over 172 million mobile subscribers, accounting for a penetration rate of 87 per cent of the population. This figure represented a 6.4 per cent growth increase, compared to 162 million subscribers in 2017, the report said.

Analysing the report, Head, Growth and Partnerships at Jumia Nigeria, Mr. Stanislaus Martins said: “Over 112 million Nigerians had access to the internet in 2018, representing 56 per cent of the population. This accounted for an increase of 14.32 per cent year-on-year from 2017. The availability of lower price point phones still remains the major driver of smartphone penetration. At the end of 2018, there were over 36 million smartphone users, representing a penetration of 18.37 per cent. While the number of smartphone users might have increased year-on-year, its penetration is still very insignificant.”

Analysing the rise in mobile phone penetration in Nigeria, which is a key factor for the growth in e-Commerce in Nigeria, Head, Vendor Operations and Experience, Jumia Nigeria, Omobola Onasanya, said lower price point smartphones contributed immensely in growing the eCommerce sector in 2018.
The report further added that Nigeria’s GDP growth leapfrogged from 0.8 per cent in 2017 to 1.9 per cent at the end of 2018, even though the growth was below the projected 2.3 per cent, majorly due to variations in prices of crude oil and its output.
“The country’s economic growth, for the first time, was hinged on non-oil sectors such as Agriculture, Information and Communications Technology, Manufacturing, and Transport Storage,” the report added.

Subscriber, teledensity growth

In the last for years of Buhari’s administration, the number of subscribers across networks grew from about 90 million in 2015 to 147.2 million in January 2018, with a further increase to 172.8 million in December 2018, and 173.7 million in March 2019. Just as the country experienced increase in subscriber growth, tele-density, which is the number of active telephone connections per 100 inhabitants living within an area, and is expressed in percentage figure, also grew, even though the telecoms regulatory body, the Nigerian Communications Commission (NCC), decided to rebase the country’s teledensity in line with the current population figure of 190 million, given by the National Population Commission (NPC).
Following the rebasing, which is also in line with the International Telecommunication Union (ITU)’s calculation of teledensity, the NCC arrived at a teledensity of 91 per cent by the end of March, 2019 as against 123 per cent teledensity recorded in December 2018. Hitherto, teledensity in Nigeria was calculated using the 140 million population official figure of 2006 against the prevailing monthly subscriber base.
According to the commission, as at February, 2019, when the 140 million population figure was last used and benchmarked against the active subscriber base of 173.6 million, the country’s teledensity stood at 124.05 per cent.
Explaining further, the Executive Vice Chairman of NCC, Prof. Umar Garba Danbatta, said the clarification on teledensity calculation became necessary to avoid misinterpretation of the re-alignment to mean a reduction in teledensity.
“Rather, the teledensity actually did not reduce because in March, active mobile subscriber base actually increased. So, what has happened is a re-alignment of the teledensity calculation with the rebased population figure of 190 million against the prevailing monthly subscriber base, which is a more realistic figure for the country in light of the latest population figure,” Danbatta said.

Broadband/internet penetration

In the last four years, broadband penetration also increased.
The federal government, in 2013, issued the National Broadband Plan (2013-2018), which sets penetration targets for both fixed and mobile broadband throughout Nigeria. Of the many targets set by the document, the most prominent one was the projection that Nigeria must reach 30 per cent broadband penetration by December 2018.
But in 2014, after the introduction and implementation of the National Broadband Plan, the penetration level increased from 10 per cent in 2014 to 12 per cent and by 2016, it rose to 20 per cent and by 2017, it reached 21 per cent.
There was, however, a large dose of pessimism about the country’s ability to reach its broadband target of 30 per cent before the December 31, 2018 deadline. But few months before the deadline, Nigeria narrowly reached and surpassed the 30 per cent broadband target by a margin of 0.9 per cent, to attain 30.9 per cent broadband penetration as at November 2018.
As at February 2019, Nigeria attained 33 per cent broadband penetration.
The growth in broadband penetration became visible in 2015, when Danbatta, was appointed by President Muhammadu Buhari as the Executive Vice Chairman/CEO of NCC. Within a space of three years, the efforts of Dantatta’s 8-Point Agenda, which centered around broadband penetration, in conjunction with that of industry players, pushed broadband penetration to 30.9 per cent in November 2018, 31.48 per cent in December 2018 and 33 per cent in February 2019.
The NCC revealed recently that internet access has also increased to 116 million users in Nigeria as at March 2019.

Challenges

Despite the achievements recorded in the telecoms sector in the last four years, the industry also faced some major challenges that also reduced its speed of development. The issue of multiple taxes, where state governments and federal government agencies imposed arbitrary levies was one of the major challenges that affected the telecoms industry in the last four years.
Worried about the negative impact of multiple taxes on telecoms operations in the country, the Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON), Mr. Gbenga Adebayo, told THISDAY that multiple taxes and the incessant closure of telecoms sites by state governments and federal government agencies, as a result of the refusal of telecoms operators to pay some of the outrageous taxes, which in most cases were double-imposed on the telecoms operators, negatively impacted on the growth of telecoms, especially in the areas of network expansion and infrastructure rollout.
Citing the recent closure of several telecoms sites in Kogi State, on the orders of the state government as a result of the refusal of telecoms operators to pay huge sums of money to the state government as telecoms taxes, Adebayo said some of the taxes were irrelevant to the operators, like Ecological Tax, Generator Emission Tax, Waste Management Tax, among others.

Poor telecoms infrastructure

Another major challenge that negatively impacted the telecoms industry was the poor state of telecoms infrastructure, which to a greater extent, affected the cost and quality of services rendered by telecoms operators. For lack of adequate telecoms infrastructure, especially of the national backbone infrastructure for the transmission of broadband capacity from the shores of the country to the hinterlands, telecoms operators were compelled to invest their revenue in infrastructure development, in order to transmit the huge volume of broadband capacity to the hinterlands where the demand is high. They were equally investing in telecoms masts that were built and managed by private telecoms mast operators.
Globacom, for instance, embarked on the rollout of its Glo2 submarine cable outside of Lagos, that would take connectivity to offshore oil communities in the South-south region.
The Group Chief Technical Officer at Globacom, Mr. Sanjib Roy, had said the Glo2 rollout would boost telecommunication service delivery in the country by providing economic and social empowerment for communities in oil producing regions, as well as provide high speed internet connectivity in the region that will support 5G rollout. Globacom is working with Huawei Technologies to build and roll out its Glo2 submarine cable.
Roy said the planned rollout of Glo2 would be an extension of Glo1 submarine cable from Lagos to Akwa-Ibom, connecting major oil fields and providing high speed internet to the South-south region.

MTN Fine

The N1.04 trillion fine slammed on MTN Nigeria Communications Plc in 2015 by the NCC over SIM card infractions, sent wrong signals to local and foreign investors who were jittered by the huge fine, which some of them said, was capable of crumbling any telecoms operator, irrespective of its strong financial status. Although NCC stood its grounds over the fine, some industry analysts commended NCC for using the fine to address the act of impunity and disregard for constituted authority displayed by the telecoms operator.
NCC on October 20, 2015, imposed a fine of N1.04 trillion on MTN for infraction of the provision of the NCC Telephone Subscribers Registration Regulations 2011, for failure to disconnect 5.2 million improperly-registered Subscriber Identification Modules (SIM) lines within the prescribed deadline. Danbatta said NCC had to do so because of the security implications of improperly registered SIM cards in the country.

After six months of negotiation and re-negotiation over the fine, which led to a reduction to N330 billion, it was agreed that MTN would pay a balance of N280 billion in six tranches in a staggered payment arrangement. This was in addition to the ‘goodwill’ payment of N50 billion earlier made by MTN to the government.
Danbatta recently said MTN had so far paid N275 billion, and would complete the balance N55 billion at the end of this month.

“Following a negotiated reduction of the N1.04 trillion fine on MTN Nigeria to N330 billion and in line with the staggered payment arrangement, MTN has so far paid N275 billion to the Federal Government with a balance of N55 billion that is due for payment by the end of this month,” Danbatta said.
According to him, “MTN began the payment structure with the payment of N30 billion into NCC’s Treasury Single Account (TSA) with the Central Bank of Nigeria (CBN) 30 days from the date of the agreement dated June 10 2016. Subsequently, MTN paid N30 billion on March 31, 2017; N55 billion on March 31, 2018; N55 billion on December 31, 2018 and on March 31, 2019, it paid N55 billion. The balance and final tranche of the payment will be paid by May 31, 2019, in line with the staggered payments structure agreed by MTN and Nigerian government.”

Industry expectations
The President, Association of Telecoms Companies of Nigeria (ATCON), Mr. Olusola Teniola, called for the creation of a digital strategy for the country that would protect telecoms infrastructure in the next four years. Teniola called for an Executive Order that will make it a criminal offence for anyone to tamper with telecoms infrastructure across the country. According to him, “Telecoms infrastructure is capital intensive and must be protected to enhance expansion plan and to maintain good service quality across networks.”
Adebayo, also called on President Buhari to consider ICT infrastructure as critical national infrastructure that must be guarded in the next four years of his administration. The ICT, sector, he said, remained the most critical sector of the Nigerian economy, that is contributing so much to the country’s GDP and must be protected as such.