Why Tier II Telecom Operators Want NCC to Rescue Them

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Umar Danbatta, CEO, NCC
Umar Danbatta

Tier II telecom operators appeals to the Nigerian Communications Commission to save the industry from collapse

By Anayo Ezugwu  |  Jun 12, 2017 @ 01:00 GMT  |

TIER II telecoms operators in Nigeria have drawn attention to the difficulties that are threatening to cripple their operations and derail the broadband plan of the federal government. The operators made up of notable broadband companies in Nigeria are asking the Nigerian Communications Commission, NCC, to take immediate and decisive steps to avert the looming threat of strangulation, which they currently face.

The leaders of the Tier II telecoms operators made the call during a visit to Umar Danbatta, executive vice chairman, NCC, in his office at Abuja. The high-powered delegation was made up of Godfrey Efeurhobo, managing director, Smile Communications; David Venn, managing director, Spectranet; Osondu Nwokoro, director regulatory and external affairs, nTel and Chuma Okoye, chief commercial officer, Swift Networks.

They complained of systemic industry failure which would likely have a negative collateral and great national socio-economic implications.

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 15 months by over 85 percent 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, affects even some of the Tier I Operators.

According to them, a perfect storm is brewing and if not resolved 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 telecom leaders 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 it is, there is a grave threat to the broadband agenda of the government and the expected dividend from growth in broadband penetration envisaged in the Economic Recovery and Growth plan 2020. This threat will materialise if the market is not sanitised 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 applauded 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 Central Bank of Nigeria, 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.

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