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Telecoms equipment fall into plants/machinery category of CBN forex window— ALTON
After long period of failed efforts to get forex for the purchase critical telecoms equipment, indications have emerged that part of the reasons why Quality of Service (QoS) has continued to be on the downward trend.
Accordingly, leading umbrella body for telecoms operators, the Association of Licensed Telecommunications Operators of Nigeria (ALTON) has written to the telecoms regulator, Nigerian Communications Commission (NCC), requesting for priority allocation of Foreign Exchange to Telecommunications Industry by the Central Bank of Nigeria (CBN).
In the letter signed by the Chairman of ALTON, Engineer Gbenga Adebayo, the Association on behalf of its members is seeking the attention of the Executive Vice Chairman of NCC to the challenges faced by its members in purchasing forex from Interbank Market to fulfil obligations to Equipment Suppliers and Foreign Vendors.
The letter read in parts: “This situation is adversely impacting our members’ network operations and we would appreciate the Commission’s urgent assistance”.
“The prevailing scarcity of FX has occasioned a situation where the Banks are unable to obtain FX for an upward period of six months despite the submission of pre-requisite documentation for such transactions. ALTON respectfully seeks the indulgence of the NCC to provide background information resulting to the subsisting regime of exempting Telecommunications Industry from the Central Bank of Nigeria (CBN) intervention window:
ALTON further gave chilling instances on what its members had been facing in accessing forex over time, saying “In November 2014, the CBN excluded telecommunications equipment and invisibles from the Retail Dutch Auction System (RDAS), where the exchange rate was N155/$. ALTON members were mandated to purchase FX from Interbank at the rate of N199/$. The CBN subsequently introduced a floating FX regime at the interbank market and cleared 3 months backlogs at N280/$ and this technically moved the exchange rate from N199/$ to N280 levels”.
“The CBN subsequently issued another circular mandating Banks effective 22 August 2016 to sell 60% of all FX availability irrespective of source of inflows to the manufacturing sector and the balance (i.e. 40%) to other sectors. This directive tactically closed FX inflows even from Parent Companies of ALTON’s members, thereby exacerbating the impact of the Illiquid FX market on our members operations and the industry at large.
“The CBN further requested Banks on 14 October 2016 to submit all outstanding FX requests for Manufacturing, Agriculture and Airlines Sectors to enable it sell 2 months Forwards, whilst the equipment imported by the Telecommunications Industries either via Letters of Credit or Certificate of Capital Importation (based on deferred payment terms) were excluded from the intervention.
Adebayo argued further that “ALTON states that Telecommunications Service Providers are similar to manufacturing firms and deserve to be treated in the same manner. The core network equipment and other auxiliary equipment procured for providing Voice and Data Services are equivalent to plant and machinery acquired by the manufacturing firms for the production of goods and services in the country”.
“The underlisted items classified as plants and machinery are procured and imported into the country by the Telecommunications Service Providers: RF Coverage Equipment (BTS, BSC, Node B, RNC); Core Equipment (MSC, Media Gateway, RMC, CCN, EMM, Packet Core, MPLS Nodes, etc); Transmission Equipment (Microwave, Optical Fibre, RF Planning Tools); Customer Contact Equipment (SIM Cards); and Network Tools (Planning tools, Monitoring tools, etc).
He noted that the aforementioned equipment is subsequently integrated to form a network to provide services of Voice/Data/SMS/VAS/Enterprise solutions/leased lines – which are finished goods in the Telecommunications Sector.
“In addition, Telecommunications Sector is termed “infrastructure of infrastructures” and Social Overhead Capital which propels productivity in other sectors of the economy. The multiplier effects of efficient and reliable telecommunications services on other spheres of the economy, such as banking, aviation and hospitality cannot be overemphasized. ALTON is of the opinion that Telecommunications Sector deserves to be supported through direct FX allocation from the CBN interventions. This will facilitate the deployment of pervasive broadband network nationwide and ensure that the country retains its prime position, as the largest Telecommunications market in Africa ahead of South Africa in terms of subscriber base.