Tier II operators identify threats to meeting national broadband target
Core investors in Nigeria’s Tier II telecoms segments have drawn attention of the federal government to the difficulties threatening their operations, saying if not resolved as soon as possible, the multiplier effect will include derailing of the broadband plan of the Federal Government.
The Tier II operators made up of notable broadband companies in Nigeria therefore asked the Nigerian Communications Commission (NCC), as the industry regulator, to take immediate and decisive steps to avert the looming threat of strangulation, which its members currently face. The leaders of the Tier II telecoms operators made the call during a visit to the Executive Vice Chairman of the Nigerian Communications Commission (NCC), Prof. Umar Garba Danbatta in his office at Abuja.
Represented by a high-powered delegation made up of Mr. Godfrey Efeurhobo, Managing Director of Smile Communications, David Venn, Managing Director of Spectranet, Mr. Osondu Nwokoro, Director Regulatory and External Affairs of nTel and Mr. Chuma Okoye, Chief Commercial Officer of Swift Networks, they warned of a SYSTEMIC INDUSTRY FAILURE THREAT WITH LIKELY NEGATIVE COLLATERAL and great NATIONAL SOCIO-ECONOMIC IMPLICATIONS is in the offing. According to them, the industry is in a situation where all operators are finding it difficult to justify the required investment case for additional CAPEX for network capacity expansion to improve quality of service to customers.
They further noted that the Network OPEX of Telecommunication Operations has sky rocketed in the last 15months by over 85% with Revenues remaining relatively flat. Most Operators, they observed, are currently struggling with meeting obligations to their suppliers particularly Network Vendors, TowerCos and servicing Loan obligations. This worrying trend, they noted, includes even some of the Tier I Operators. According to them, a perfect storm is brewing and if not headed off will result in the collapse of key players in the industry. This is because the domino effect of bankruptcy of any of the Tier I or Tier II Operators on the entire ecosystem particularly, Banking, Employment, Corporate and SMEs businesses constitutes a major threat to the Economic Recovery and Growth Plan of the current Administration. Such bankruptcy and consequent collapse will also substantially lessen competition with its attendant deleterious impact on consumer choice and attainment of the Broadband objectives of the country.
The MDs stated that the NCC’s declaration of 2017 as the Year of the Telecoms Consumer can be derailed by failure of Operators to deliver on the expected quality of service particularly on Data Throughput and Experience due to the weak investment case to support additional CAPEX as a result of deteriorating market conditions.
Symptoms of the declining fortunes of Operators, they stated, are already evident in the market as debts continue to grow and overall service quality continues a downward trend. As is, there is a grave threat to the Broadband Agenda of the Government and expected dividend from growth in Broadband penetration envisaged in the Economic Recovery and Growth plan 2020. This threat, they warn, will materialize if the market is not sanitized and the Tier II Operators are not protected to encourage and justify the Capital Investment required to continue to invest and improve Broadband penetration in the Country.
The Tier II operators also bemoaned their deteriorating fortunes due to predatory pricing and cross subsidy of data using voice by Tier I Operators who possess significant market power. This they said is a challenge the NCC must intervene to stop.
They nonetheless concluded by applauding the various interventions of the NCC in engaging other Stakeholders in ameliorating the difficulties that Operators face. They expressed their gratitude to Danbatta for intervening with the CBN to reduce the burden of Forex liquidity. They also commended him for his role in leading the campaign to educate the populace that base stations do not cause cancer. They however implored him to protect the Tier II Operators so that their operations will not collapse.
