Business Hilights
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InfraCos prefer Executive Order to block states’ multiple taxation

…As NCC’s N65bn subsidies are for delivered jobs

Latest policy position of the telecoms regulator, the Nigerian Communications Commission (NCC), that the yet to be approved N65bn support subsidies for licensed telecoms Infrastructure Companies (InfraCos) can only be accessed on confirmation of ‘job well done’ had been received with mixed feelings by industry experts.

InfraCos and their zones are as follows: MainOne for Lagos; Zinox Technology Limited for South East, and Brinks Integrated Solutions Limited for North East. Others are O’dua Infraco Resources Limited for South-West, Fleek Networks Limited for North-West and Raeana Nigeria Limited for South-South zone.

For the North Central, NCC said efforts are on to complete the bidding process very soon and hinted that InfraCos that already have a zone can bid so far they can deliver.

However, NCC assured that the new InfraCos for the zone will be unveiled next month.Speaking in Lagos recently, the new Director, Public Affairs, Dr Henry Nkemadu, said though the N65bn is not captured in its 2019 budget, expectations are high that the presidency will graciously approve it based on the importance it attached to the scheme to wire the nation with broadband.

On how to access the facility by InfraCos, NCC listed terms and conditions that must be met by interested InfraCos to include having established the project which encompasses resumption of digging for metro fibre, pilling, cable installation on the field with equipment and all necessary approvals in the region of interest on ground.

But industry pundits who weighed the conditions said the major problem that had been delaying the readiness of InfraCos to begin operations across the zones, which is hard stand of governors on high cost of Right of Way (RoW) and multiple fees charged by several states agencies including local governments remain unresolved.

dANBATTA
Executive Vice Chairman of NCC, Prof Umar Danbatta

One of the stakeholders, who pleaded anonymity, told Business Hilights in a telephone interview that “No matter what NCC wants to call it, the fund is not attractive because the major crisis frustrating rollout of metro fibre by InfraCos was smartly avoided by the NCC. In fact, InfraCos prefer attractive RoW regime and streamlined tax system by states than the yet to be approved multibillion naira subsidy.

Continuing, the expert made it clear that InfraCos demand an Executive Order that will supersede the will of governors in levying harsh fees as RoW and the associated multiple taxation.

According to him, “The best NCC can do for InfraCos, if it wants speedy delivery of broadband across the federation in record time is to ask Mr President to prevail on states so that ROW and all forms of telecoms taxes will be attractive. If this is done, the so called N65bn subsidy can come later because InfraCos are ready to source funds from both local and international financial institutions to do their business rather than waiting on the subsidy.

Business Hilights recalls that during the May, 2019 telecoms leadership Summit held in Lagos, stakeholders had called for an Executive Order to compel states to soft-paddle on their harsh tax regime on telecoms industry.

However, giving further details on the way and manner the yet to be approved N65bn subsidy for InfraCos will be allocated to applying firms, Nkemadu averred that “The InfraCo project will be financed yearly, and this is subject to the operators meeting the required milestones”.

Road cutting for FOC
Labourers digging along a highway for laying of Fibre Optic Cables in Lagos. Photo: Business Hilights

Making it categorically blunt, he said “We are not going to pay them to do the job, but we are going to give them money for jobs well done. We shall soon conclude the signing of the subsidy agreement; that process is currently on. The period to get Nigeria connected through the InfraCos is four years; so to access the N65 billon subsidy, we divided the milestones into one year each.”

The Executive Vice Chairman of the Commission, Prof Umar Danbatta, had warned the InfraCos that failure to rollout broadband infrastructure within six months after confirmation licence, will lead to withdrawal of their licences, as they were given a time frame of one-year to commence country-wide rollout.

But indications showed that his inability to carry out the threat may have been based on the hostile approach of states in terms of RoW and unexplainable fees and levies imposed on telecom companies and mainly InfraCos across the states which are yet to be resolved upon efforts of several telecoms interest bodies including ATCON and ALTON.