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Nigeria drives frontiers of $70bn telecoms industry

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With Nigeria’s outstanding participation and strategic engagement with global investment community at this year’s just-concluded International Telecommunications Union (ITU) Telecoms World held in South Korea, more Foreign Direct Investments (FDIs) inflow is expected to boost the growth of Nigeria’s $70 billion telecoms market. KUNLE AZEEZ reports

Liberalisation of Nigeria’s telecoms industry in 2001 has been described by stakeholders as a ‘magic wand’ that has propelled the sector into witnessing tremendous growth to date.
From a $500 million industry, the industry has grown in leaps and bounds in the last 16 years into becoming a $70 billion industry, a development that is easily traceable to the unhindered inflow of Foreign Direct Investment (FDIs) and some local investment into the sector.
Over the last years, the attention has been given to deepening access to telephony across the nooks and cranny of the country.
Already, official data obtained from the telecoms regulator, the Nigerian Communications Commission (NCC) show that active subscribers grew from 400,000 to over 155 million in January this year with teledensity jumping from less than 1 per cent to over 110 per cent in the last 16 years, though this notwithstanding the recent decline in subscriber base to 139 and teledensity to 99 per cent.

However, with telephony becoming saturated and technology convergence giving way to increasing use of over the top (OTT) platforms by subscribers to access general telecoms services including voice, video , text and, most especially data, Nigeria’s regulator is now paying greater attention to creating a more enabling environment for players to develop the broadband segment of the market.
In 2015, over $10 billion was estimated by KPMG to be needed over the next 10 five years for Nigeria to build a robust national broadband network.

Crux of Nigeria’s participation at ITU
It is, therefore, instructive that the Nigerian delegation led by the NCC to this year’s ITU Telecoms World held at the Republic of South Korea between August 26 and 28 has also raised its voice calling on global investment community to come to Nigeria to invest at a Global Investment Forum held by the NCC for the country.
Speaking at the conference, Executive Vice Chairman of NCC, Prof. Umar Danbatta, provided the foundation for Nigeria’s participation at the conference.
According to him, “in 16 years since the Digital Mobile Licences (DML) were issued, investment in the sector has hit about $70 billion from a mere $50 million in 2001. Most of these investments are Foreign Direct Investments (FDIs).

“Although, we have made very modest progress in the sector, we still need to deepen investments to make broadband pervasive in the country. We are at 21 percent now and our target is to hit 30 percent by 2018, consistent with the National Broadband Plan (NBP).”
He noted that Nigeria comes to the ITU Telecom World every year to tell her story, share her experiences and borrow a leaf from global best practices to address her concerns, engage and collaborate with the global community to strengthen the growth and impact of the Nigerian telecoms industry.
“We, therefore, come to enlist the support of other players, governments, regulators and the global community from whom there is always a basket of ideas to take back home to Nigeria,” Danbatta said stressing that the implementation of these ideas will ensure a better regulatory environment, even though ours has been seen as a very robust and consultative regulatory agency right from 2001.

Investment potentials/telecoms initiatives
NCC, as a foremost regulator, has put in place measures and guidelines to licence wholesale broadband service providers consistent with the Open Access Model for broadband deployment.

According to him, “of the seven infrastructure companies (Infracos) earmarked for licensing, only two have so far been licensed for Lagos, which is commercial hub of Nigeria and Abuja including the North Central zone of the country leaving five more licences for the South West, South East, South South, North East and North West zones of the country. The process of licensing of infracos for these five remaining zones is about to be concluded.”
He also told the investment community that in the country’s firm resolve to strengthen institutions of corporate governance for telcos, woo investors and guarantee returns on their investments, the NCC, in consultation with industry stakeholders introduced a mandatory Code of Corporate Governance as guide to managers and boards of telecommunications companies.

The code, he said, outlines minimum global best practices covering processes, procedures and general corporate behaviour for telecommunications industry players.
Also, Dambatta said when the NCC rolled out the 8-point agenda in 2016, it was predicated on the change mantra of the new democratic government in Nigeria, which is premised on facilitating broadband penetration, improving quality of service, optimising usage and benefits of spectrum, promoting ICT investment and innovation, facilitating strategic partnership, promoting fair and inclusive growth and ensuring regulatory excellence and operational efficiency.
According to him, because “we recognise the importance of ICT to national development that is why growing this sector has been top on our agenda and despite our modest achievements, Nigeria ICT sector is work in progress.”

He noted that in the current era of Internet of Things (IoTs), where every sector of any nation’s economy will depend on telecoms infrastructure to maximally operate, “all sectors of every national economy have become dependent on the telecommunications sector and failure on the sector would have far reaching negative ramifications to other sectors hence the need to build capacity in the sector.”

Investors’ engagement at the forum
At the Nigerian Investment Forum with Broadband Nigeria as the theme, where experts and knowledgeable people about the Nigerian investment environment talked on the abundant investment opportunities in Africa’s largest economy, Dambatta expressly invite potentials investors to come to Nigeria to invest.
As usual, members of the Nigerian delegation were also on ground at the Nigerian Pavilion and investment forum to network with, give firsthand information about Nigeria to potential investors and held strategic engagement with global investors, who expressed their desire to come to Nigeria to invest, since they have been assured of better Return on Investment (RoI) and protection of their investment.

Those who spoke at the investment forum included, former Minister of Communications, Mrs. Omobola Johnson, the Executive Secretary of the Nigerian Investment Promotion Council (NIPC) Ms Yewande Sadiku and the ITU scribe, Mr. Houlin Zhao.

Accolades on sound regulatory regime, others
The sound regulatory environment engendered by the NCC, which has led to building a $70 billion industry, has been globally recognised by the International Telecommunication Union (ITU).
At the just-concluded ITU Telecom World 2017 in Busan, South Korea, the regulatory finesses of the Nigerian Communications Commission (NCC) and the entrepreneurial spirit of the Nigerian youths received recognition.
During the event, NCC, which was the toast of the global telecommunications umbrella body, was named the most Valuable Partner by the ITU for its commitment and participation in ITU Telecom World events over the years.

The NCC was also awarded a Certificate of Appreciation for the ITU Telecom World 2017 National Pavilion and thematic Pavilion as well as Loyal Participation and supporters of the yearly ITU Telecom World in a number of years.
Nigeria also won the ITU Telecom World Government Award for being the government with the most innovative Small and Medium Enterprises (SMEs) included in the nation’s pavilion.
Aside these, five Nigerian SMEs and start-ups qualified for the ITU Telecom World 2017 pitch for the Global SMEs Awards. Three of the SMEs, Miss Temitope Awosika of Medsaf, Mr. Valentine Ubalua of Ubenwa and Mr. Chizaram Ucheaga of Mavis Computel joined the ITU Global SME honours lists.

Last line
With Nigeria’s outstanding showcase at this year’s ITU Telecom World and given the impacts of previous years’ attendance by NCC on the nation’s telecoms growth to the tune of $70 billion having attracted significant FDIs, stakeholders under the auspices of the Association of Telecoms Companies of Nigeria (ATCON), the Association of Licensed Telecoms Operators of Nigeria (ALTON) and the National Association of Telecoms Subscribers (NATCOMS) have urged government to join in facilitating efforts at passing into law a bill pending in the National Assembly aimed at according National Economic and Security Infrastructure to telecoms.

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Ensuring telecoms’ growth via new MTR regime

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A new mobile termination rate (MTR) regime for voice services among telecoms companies in Nigeria is underway as part of regulatory measures aimed at creating a level-playing field for all operators and ensuring the continuous growth of the nation’s $70 billion telecoms industry. KUNLE AZEEZ reports

 

Globally, interconnection is critical to the growth and development of the telecommunications industry and without it, it would be difficult, if not impossible, for subscribers on one network to call other networks, according to experts.
Till date, a key component of the commercial aspect of interconnection is the determination of interconnection rates amongst network service providers.
Already, the telecommunication regulator, the Nigerian Communications Commission (NCC) has said a new mobile termination rate (MTR) would take effect from March 1.

Processor
Earlier on September 16, 2016, the NCC, had reviewed a somewhat lopsidedness in the voice termination rate for international inbound traffic, which has made telecoms companies in Nigeria to be net payers of higher interconnection to foreign companies.
To address this imbalance, the regulator reviewed the termination rate from N3.90/min to N24.40/min, for all telecoms companies licensed in Nigeria including the Global System for Mobile Communications (GSM), code division multiple access (CDMA) and fixed line networks, thus, representing over 700 per cent increase.
As at that time, the Commission took the decision as part of an ‘interim measure’ to address the lopsidedness in the termination rate for inbound international calls in the nation’s telecommunications sector. Also, the interim rate was designed to subsist pending the conclusion of a study of the determination of cost-based pricing for Mobile Voice Termination Rates (MTR).

Need for cost-based MTR regime
In a proactive move to ensure continuous growth of the industry, the NCC had recently held a stakeholders’ forum on the cost-based study in Lagos for the determination of mobile voice termination rate for the Nigerian telecommunications industry.
Speaking at the forum, the Executive Vice Chairman of the NCC, Prof. Umar Danbatta, who was represented by the Executive Commissioner, Stakeholder Management, Mr. Sunday Dare, noted that apart from the first interconnection rate, which was based on negotiation between the incumbent operator (NITEL) and other operators, all other determinations have been handled by the Commission due largely to two reasons.
One of the reasons, according to Dambatta, was the negotiated interconnection rate fraught with many controversies, secondly, and more importantly, was a need to ensure interconnection rates are cost-oriented in line with international best practice.

Previous MTR regimes
Till date, there have been four interconnect cost determination regimes in 2003, 2006 2009 and 2013.
According to Danbatta, the 2003 regime was determined via a benchmarking exercise, while the 2006, 2009 and 2013 regime were cost-based and a glide-path asymmetric regime was adopted in 2009 and 2013 respectively, with the 2013 regime expected to expire in 2016.
“However, economic factors such as the rapid devaluation of the Naira in 2016 and the fact that Nigerian network service providers became perpetual net payers to their overseas interconnecting partners, led to the commission setting an interim rate of N24.40 kobo per minute for inbound international traffic after carrying out a benchmarking exercise with other jurisdictions and this rate will subsist until a cost-oriented rate is determined by the commission,” Dambatta said.

The consultants
Meanwhile, Danbatta explained that further to the above and the expiration of the 2013 interconnect region in 2016, the commission engaged the services of the consultant PWC, United Kingdom (UK) to review and update the existing model taking into account the changes that have occurred over time and produce an interconnection cause model that is more in line with the current realities in Nigeria,” Dambatta stated.
The EVC disclosed that this project formerly kicked-off with the initial stakeholders’ forum held on February 15, 2017 with the primary aim of introducing the consultant to the industry, informing operators of the objectives of the study, and seeking their active participation by way of providing the requisite data and order Information for the study.
He explained that this was immediately followed by a one-on-one meeting with operators and subsequent visits to the offices of some operators for data collection and re-validation during the course of the study.
Danbatta reiterated that the commission has an obligation to create a level playing field for all operators and ensuring the continuous growth of the industry as such, NCC shall ensure the determination of a mobile voice termination rates that truly really relate the cause of deploying the service and interconnection of networks in Nigeria.
Review long-overdue
Speaking through the President, the Association of Telecoms Companies of Nigeria (ATCON), Mr. Olusola Teniola, the telecoms operators agreed with the Commission that the interim MTRs are long overdue for review and especially when the foreign exchange (forex) issue and the devaluation of the Naira against foreign currencies has created a significant disparity in situations when calls are placed off-net.
According to Teniola, “it appears that there isn’t any evidence to support the claims that the MTR is lopsided. In fact, the recent PwC findings indicated that asymmetrical or symmetrical structure hadn’t had any significant impact on the competitiveness of the Nigerian voice market over the period of the current MTR rates.
“So it suggests that the voice market is already saturated and maybe there are needs to be more incentives placed in the market for increased voice penetration in communities that are still yet to make a call that has already been taken for granted by more than 75 per cent of the population.”

Ratification of MTR categories
He, however, noted that NCC hasn’t decided or made any decisions yet about what new rates will apply from 1st March 2018,” he said.
“It appears that the PwC study recommended categories of MTRs depending on the size and shape of the operator and this, as I write, still needs to be fully ratified and agreed by each operator that this makes business sense.
“Again, it appears that if the MTR rates are reviewed more frequently and the retail voice price in the market reflects a reasonable margin for each operator then this exercise is worthwhile, otherwise, it appears that any further retail price decrease, which is inevitable, will further erode some of the players’ business models unless a significant ramp-up in call volumes is witnessed.”

PWC’s tested model
Asked operators expectations from the study, Teniola said, the PwC study was very empirical and evidence-based and “their model is tried and tested against other jurisdictions and they pointed out that this model had been tailored to our unique environment.”
According to him, “ATCON is not privy to the model and as long as our members have provided full and valid cost data (especially national transmission costs and multiple tax charges) to the consultants, then, there are no reasons to doubt the outcome of the study. It appears that the long-term trend is for eventual convergence of the MTR and that each operator may have to negotiate favorable International Terminating Rates (ITR) with their counterparts outside the country – this makes for some interesting scenario developments playing out in the market going forward.

Last line
Meanwhile, as the industry awaits the outcome of the new MTR regime taking off in March, it is believed that the regulator’s effort demonstrates the long-term international benchmarking trends that all operators in the industry will need to take on board going forward towards ensuring a sustainable growth in the industry.

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Tackling insecurity to safeguard investment

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At the 2018 edition of the Lagos Chamber of Commerce and Industry (LCCI) security meet business dialogue in Lagos, the stakeholders admitted that on-going insecurity challenges in the country posed threat to the growth and developmentt of Nigeria’s business environment. Taiwo Hassan reports.

 

Business is any commercial or economic activity that tends towards making profit. The primary objective of organisations is to make profit, grow and survive in the environment in which they operate.
The environment being complex and multi-focus has a far reaching effect on any investment.
Ideally, the environment tends to shape the outlook and goal of organisations by placing constraints on them.
The stability of any environment guarantees conducive enabling environment for businesses to grow optimally.
In Nigeria, lately, the business environment where private sector firms operates has been compromised.
Particularly, Nigeria’s business environment has been undergoing lots of challenges bordering on economic and security risks, which have adversely affected growth and development as operators groan over the safety of their investments.

LCCI’s stance on insecurity
However, at the LCCI summit on impact of security risk on Nigeria’s business environment in Lagos recently, private sector operators believed that no meaningful business can take place in an environment that is insecure.
Particularly, they noted that security of life and property was a very clear factor in the investment environment and a major consideration in investment decisions.
Speaking at the event, President, Lagos Chamber of Commerce and Industry, Babatunde Ruwase, said that the event was a platform for discussions and exchange of ideas between the private sector, diplomatic corps and the security agencies on the security situation in the country.
He said the essence of the security summit was to deliberate on how the chamber could collaborate to make the environment more secure for business to thrive at a time the country is passing through concomitant security challenges.
The LCCI president said that security of life and property was a very critical, and a major consideration in investment decisions.
“In recent years, the country has been grappling with serious challenges bothering on terrorism, religious and ethnic crisis, attacks on oil installations, kidnapping, armed robbery and attacks by herdsmen,” he said.
“The impact of these security challenges on business and investors confidence is phenomenal.
“Not much investment activities are taking place in the northeastern part of the country, for instance. The same is true, perhaps to a lesser degree, in some other parts of the country. Nigeria’s position in the Transparency International Security Ranking has plunged to 143 out of 169 countries.”

Cost of doing business
The LCCI revealed that there was now a sharp increase of 10 per cent in insurance premium on security-related risks over the last one year on private sector investment.
Ruwase explained that private firms were spending billions of naira on security to protect their investment and that this had added to their operating cost in recent times.
He said that there was an increase in the cost of providing additional security by some key sectors in the economy, including oil and gas and banking.
According to him, these additional security measures include private security guards, convoy operations, additional air transportation by oil sector workers, instead of land and marine transportation for security reasons.
Ruwase said that there were also additional costs in the protection of facilities and equipment of oil producing companies operating in Nigeria.
According to him, the cost of firm’s protection of their facilities locally is becoming worrisome to their parent companies in abroad.
The LCCI boss noted that the oil and gas sector was facing fresh threats of attacks on oil installations, adding that attacks by herdsmen on farming communities across the country was not abating, resulting in increased loss of lives.
He revealed that an estimated N78 billion was spent by ICT/telecoms companies in replacing stolen or vandalised equipment in the last one year.
This, he said, disrupted the effective communication gadgets of telecoms operators, which consequently affected mobile phone communication in the country.
He said: “Let me acknowledge the efforts of security agencies and government towards addressing the problem of insecurity in the country. Some progress has been made in restoring peace and normalcy to the North East, but a great deal stills to be done.”

Diplomatic concerns
The United States (US) Consul-General, Lagos, Mr. John Bray, said that investment by US citizens in Nigeria was now $8.1 billion.
He urged the Federal Government to speedily tackle the ongoing menace of insecurity in the country to avoid exodus of foreign investors.
He said that the President Donald Trump-led administration was concerned with the spate of insecurity going on nationwide in Nigeria, adding that it was not good for foreign direct investment (FDI) into Nigeria.
According to him, the safety of US investments in Nigeria is critical to the survival of Nigeria’s economy, adding that taming the ongoing security risk in the country will guarantee investors’ confidence in Nigerian economy.

Nigerian Army’s submission
In his remarks, the Chief of Army Staff, Lt Gen TY Buratai, admitted that no doubt, insecurity had posed threat to Nigeria’s business environment, which if not handled properly, could degenerate into economic war.
He noted that in time past, development and security constituted separate discourses.
However, in the contemporary world, matters of security and development are increasingly being discussed in concert, both in relation to discourse and policy, giving rise to what is commonly referred to as the security-development nexus.
He said it was in consonance with this reality that the former Secretary-General to the United Nations, Dr Koffi Anan, asserted that security and development are inextricably linked.
According to him, “In the spirit of the security-development nexus, contemporary intra-state conflicts and threats such as we have in Nigeria cannot be prevented, resolved, or managed exclusively through preventive diplomacy, political negotiations and the use of force.
“This is so because they have complex causes ranging from social inequality, unemployment and under-employment, illiteracy, poverty, hunger and deprivation, environmental issues, amongst others, which require holistic correlated approaches to resolving them.”
The Chief of Army Staff acknowledged the fact that security and development were interdependent.
His words: “It is my pleasure to once again learn my voice to the avowed efficacy of this platform especially in providing a suitable avenue for discussing security issues, challenges, and their impact on the economy as well as the way forward with a view to developing appropriate strategies to be employed by the various instruments of national power.
“There is no gainsaying the fact that this discourse is equally judicious, coming at a time when our country’s security and development continue to be troubled by a plethora of threats namely, Boko Haram insurgency mainly in the North East, armed banditry, cattle rustling, armed robbery, sea robbery/piracy, militancy, cultism/cult-related violence, kidnapping among others.”

Last line
With the alarming rate of insecurity in the country, the future of Nigeria business environment looks bleak and this could deter FDI inflows if the situation is not checked by government.

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NCC: Nigeria to be among most digitised economies

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The Nigerian Communications Commission (NCC) has said its target at the Commission is to make Nigeria one of the most digital-driven economies in the world.
Currently rated as one of the fast-growing telecoms markets in the world, the Commission said it is more determined to drive policies an initiatives aimed to accelerating the ranking of Nigeria in the global digital ecosystem.
Chairman of the Commission, Senator Olabiyi Durojaiye stated this auspicious target in an interaction during his 85th birthday celebration in Lagos recently.
While thanking God for preserving him till date, with the assurance that he would deploy the rest of his life serving the cause of making Nigerian a great nation, Durojaiye said particularly, that at the NCC where he is currently serving the country as board chairman, his target is to see that “all Nigerian youths – employed and yet-to-be-employed leverage telecoms services and tools towards improving their standard of living.l
“I also target to ensure that, working with other board members and NCC management, we provide the policy and directions that would position Nigeria effectively on the global map as the world’s most digitised economy in the next few years,” he said.
He explained that the Commission has been consistently working to provide the enabling environment for inflows of foreign direct investments (FDIs) into the sector.
“As you may be aware, through deliberate policies, the Commission has been able to attract over $70 billion into the nation’s telecoms sector. We know we need more investment locally and from foreign investors and we are ensuring that we boost this in a way that will benefit the development of digital revolution,” he said.
The Executive Vice Chairman of NCC, Prof. Umar Danbatta, who spoke earlier at the event, described Senator Durojaiye as a good leader and a team leader, who has strengthened the Commission in having better direction in piloting the affairs of the nation’s telecoms industry.
“Senator Durojaiye is a good leader and a team leader. We have seen his attributes bringing greater harmony in NCC. We act together in harmony to ensure we drive the telecommunications sector in the right direction of growth and for the empowerment of Nigerians, who daily subscribe to telecommunications’ services to make a living,” he said.
At the birthday celebration, which was well attended by politicians, technocrats and civil servants, encomiums were rained on the Chairman, Board of Directors of the Commission.
Among them is President Muhammadu Buhari, who was represented by the Minister of State for Aviation, Hadi Sirika. He described Durojaye as a man of integrity who has deployed his intellectualism to benefit the business and political spaces in the country.
“Senator Durojaiye is one man who I must thank for his weighty contribution to the development of the Nigerian economy and we wish him more years and happiness,” he said.
Also speaking, Tinubu’s representative at the forum, Senator Demola Seriki, described the NCC chair as a ‘public-spirited and committed individual who has remained faithful to the drive for true democratic precepts and revolution till date.”
He recalled that Durojaiye has sacrificed his time and resources in all the endeavours he has found himself towards ensuring that Nigeria continues to thrive as a nation.
The Secretary to the State Government, Lagos State, Mr, Tunji Bello, who represented the state Governor, Mr. Akinwumi Ambode, said the celebrant was a role model to many Nigerian youths who wish to start from a humble background and deploy their energies to the service of the nation.
“As a public servant and civil servant, our father, Senator Durojaiye, has left indelible footprints in all cases where he had had to be called upon to serve the nation.
Goodwill messages from Ogun State Governor, Senator Ibikunle Amosun and Former Senate President, David Mark, were read to the large gathering of relatives and crem de la crem of the economy by former Minister of Health, Prince Adelusi Adeluyi, who also personally commended the “virtues and good characters” of the octogenarian.
Other signatories at the event included the Nigeria’s former Minister of Justice and Attorney General of the Federation, Prince Bola Ajibola; former Governor of Ogun State, Otunba Gbenga Daniel, among others.
The event also featured the launch of a biographical book on the celebrant authored by the duo of Dare Babarinsa and Dele Fashomi.

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