Reviving Telecoms Sector 60yrs after Independence

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Gbenga Adebayo
Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo

Emma Okonji writes on the evolution of the Nigerian telecoms sector since the country gained Independence

Since 1960 when Nigeria attained Independence the telecoms sector has been fraught with challenges.

Telecoms experts are, however, of the view that although the sector suffered several setbacks in the past, the situation began to change for the better in the last 10 years till date, where the sector has gained all that it lost in 50 years.

Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), Mr. Gbenga Adebayo, said that in the last 10 years till date, the telecoms sector has regained all that it lost in 50 years, hence telecoms contribution to the gross domestic product (GDP) has been growing year-on-year. In second quarter (Q2) of 2020, it grew by 18.10 per cent according to the National Bureau of Statistics, helping the ICT sector to contribute 17.83 per cent to Nigeria’s GDP.

Adebayo said: “What we lost in 50 years as a country in the telecoms sector, we have gained it in the last 10 years. In essence, we have cause to be happy as we celebrate Nigeria at 60 years of Independence, having gained what was lost in the past decades in terms of telecoms infrastructure and development. We have caught up rapidly with telecoms development.

“For vision 2020, only the telecoms sector surpassed the target. 10 years ago, the Vision 2020 target was that by 2020, we should have 50 million lines, but today we have surpassed the 100 million mark in telecoms subscriptions in terms of the number of registered subscribers and number of lines across all networks. Today telecoms sector can boost of 199 million registered lines. There were doubt 10 years ago that Nigeria cannot register 50 million lines by 2020, but we have surpassed that.
At 60 years of Independence, I think players in the telecoms sector have done very well in terms of telecoms growth and development.”

Agusto & Co., Nigeria’s research house and rating institution, recently released its 2020 Telecommunications Industry Report, which focused on voice, data, auxiliary services as well as the impact of COVID-19 pandemic on the quality and affordability of telecoms service in Nigeria.

According to the report, the entire telecoms market in Nigeria was estimated at approximately N2.5 trillion in 2019 with MTN accounting for nearly half of the industry’s revenue in the same period.

The Agusto & Co report, however, expects Nigeria’s telecommunications industry revenue to maintain an upward trajectory in 2020 increasing by at least 15 per cent to around N2.9 trillion on the back of the exponential voice and data traffic witnessed in April 2020 during the five-week long restrictions on movement to curb the spread of the pandemic.

Telecoms’ evolution

Before Nigeria gained independence, communication was mainly through the telegraphic wire, initiated by the colonial masters, but after independence in 1960, the Nigeria Telecommunications Limited (NITEL), was established in 1985, following the separation of postal services from telecommunication services. As at that time, telecommunication was the exclusive right of the affluent in the society as only few people had access to telephony. People had to queue for hours and days, just to make international calls and sometimes local calls with the 090 NITEL line.

However, the advent of GSM in 2001 eventually demystified telecommunications, and gave every Nigerian the access and right to communicate. The introduction of GSM in 2001, increased the number of registered lines from less than 400,000 in 41 years, to over one million lines in less than one year.

After 2001, Nigerians could sit at the comfort of their homes and offices to make instant calls within and outside Nigeria, through their personal hand-held devices called the mobile phones. Banking activities are now transacted on the mobile phones, without the bank customer visiting the banks.

The most eventful period was between 2001 and 2015, when the telecoms sector was liberalised.
In 2001, the first set of Global System for Mobile Communication (GSM) operators were licensed. They included Econet Wireless (now Airtel), MTN and NITEL. In 2003, Globacom was licensed and in 2008, Etisalat, now 9mobile, was licensed, while ntel was licensed in 2014, but rolled out services in 2016, after its successful privatisation process through a guided liquidation exercise.

Following the inability of NITEL to cope with competition from GSM operators, it folded up its operations and was eventually sold to NATCOM in 2014, which currently trades as ntel.

In all of these, the sector was fraught with challenges ranging from multiple taxation, poor telecoms infrastructure rollout, vandalism and harsh government policies that retarded growth of the sector. The challenges led to several setbacks, but in the last 10 years, experts are of the view that the sector has regained all that it lost in 50 years.

Challenges

Since Independence in 1960, the Nigerian telecoms sector had been a mixture of challenges and growth, a situation that affected its quality of service delivery, growth and development.

Multiple taxes

Governments across the country continually imposed various taxes on telecoms operations, a development that affected telecoms growth.

In an attempt to enforce payment of the taxes, government agencies across states, were in the habit of sealing up telecoms sites and disrupt telecoms operations in and around the state.

The Kogi State Internal Revenue Service, for instance, in 2018 and 2019, shutdown several Base Transceiver Stations (BTS), commonly known as Base Stations belonging to telecoms operators in the state for alleged refusal to pay imposed levies.

Telecoms operators have contested the taxes and described them as multiple and overlapping in nature, yet state governments and federal government agencies are still bent at collecting the levy to boost their Internal Generated Revenue (IGR). Some of the taxes include Company Income Tax, NITDA Levy, Education Tax, Annual Operating Levy on Net Revenue and VAT on consumption of services, Carbon Emission Tax, Utility Tax, among others.

Apart from Kogi State, several other states have also compelled telecoms operators to pay such levies and taxes and they have gone as far as stopping telecoms expansion work in their various states.

Right of Way charges

The Right of Way (RoW) charges imposed by different state governors on telecoms operations in their various states, was another challenge that affected telecoms growth and development.

The federal government in 2013, had an agreement with telecoms operators to implement a new flat rate of N145 per linear metre on RoW charges, but since 2013, no state implemented it, which prompted the Minister of Communications and Digital Economy, Dr. Isa Pantami, to meet with the governors in January this year, where he reminded them of the 2013 agreement on RoW charges and its benefits on the growth of telecoms infrastructure across states.

Four months after Pantami met with the Nigeria Governors’ Forum (NGF) on RoW charges, Ekiti State Governor, Dr. Kayode Fayemi, who is the Chairman of NGF, in May this year, signed an Executive Order reducing RoW charges relating to laying of broadband cable or any other telecoms infrastructure in the state from N4,500 to N145 per linear metre in line with the agreement. This was after Katsina State had earlier implemented the agreement. Since then, only seven state governors have reversed to N145 per linear metre charge, while two other states are currently reviewing the process for the reduction of RoW charges.

Aside the seven states, the other 29 states were still charging at random between N500 and N6,000, before the outbreak of COVID-19.

Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON), Mr. Gbenga Adebayo, who confirmed that only seven states were currently charging the N145 per liner metre for RoW, however, said RoW charges in the remaining 29 states had been put on hold since the outbreak of COVID-19 pandemic and the subsequent lockdown of the economy since March this year.

Masts/towers deployment

The deployment of telecoms masts and towers in different states of the federation, was another challenge that bedeviled telecoms growth and development across states. The sector was either faced with social miscreants destroying telecoms masts and equipment, or the refusal by government authority to install telecoms masts. In Abuja for instance, the Federal Capital Authority (FCTA), at a time, had to suspend all processes leading to the approval of masts installation in the Abuja metropolis, a development that stalled telecoms infrastructure expansion in Abuja metropolis.

Service quality

Since independence, Nigeria has been battling with service quality, but it became more prominent after the licensing of GSM operators in 2001.

Since the rollout of GSM services in 2001, subscribers have been battling with service quality offerings across networks. It is either subscribers are unable to effect calls, unable to recharge their phones or they are burdened with intermittent drop calls and non-delivery of text messages, as well as unsolicited text messages and advertisements.

President, Association of Telecoms Companies of Nigeria (ATCON), Olusola Teniola, however blamed the issue of poor service quality across telecoms network on lack of investments, which he said, degenerated the quality of service since 2015.

While this was going on, Over The Top (OTT) players like WhatsApp, Skype, and Instagram made serious incursion into telecoms network by offering free telecoms voice service, while riding on telecoms infrastructure. The situation affected voice calls, and there is a paradigm shift from voice calls to data communication.

Effect of COVID-19

According to Adebayo, “COVID-19 pandemic has helped the telecoms sector increase consumption and it has helped in the increase of infrastructure rollout. This is true because more services have moved online and more people are transacting online because of the new normal brought about by COVID-19, and most of the services rely greatly on telecoms infrastructure, which goes to show that telecoms services are essential services cutting across all sectors of the Nigerian economy.”

Teniola, however, explained that COVID-19 highlighted the dependency that society has on connectivity and digital systems in all aspects of our lives.

“The pandemic has been a catalyst in bringing to the front the reality of a divided online world. With remote access to virtual tools that are a significant part of our lives in terms of education, health, public awareness, security and economic growth, it is obvious that we are on a long journey to fully utilise the potential and power of technology in improving the quality and standard of our lives,” Teniola said.

Regulatory intervention

To address the challenges, especially in the area of poor service quality, the Nigerian Communications Commission (NCC), the telecoms industry regulator, came up with several measures, which included the introduction of Key Performance Indicators (KPIs) and fines, as well as ban on telecoms promos.

The Executive Vice Chairman of NCC, Prof. Umar Danbatta, apart from implementing several regulatory policies that brought growth and stability in the telecoms sector, especially in broadband penetration, also led several delegations to state governors, before a repeated appeal and visit by the Minister of Communications and Digital Economy, Pantami, which led to few state governors accepting to reduce RoW charges.