State of emergency threatens Telcos’ N17trn revenue projection

The state-of-emergency declared by government in three northern states, Borno,Yobe and Taraba, is causing revenue losses for telecommunication operators there.

Following the declaration of state of emergency in the said states, telecom operators were asked to turn off their networks to allow security operatives deal with the security situation more effectively. Revenues then stopped streaming in since no services were being offered.

Industry revenues have been projected by Research firm, Pyramid, to gross N1.7 trillion by the end of fiscal 2013. That projection is being threatened by this new development.

Analysts say telcos are not likely to meet their revenue targets for this year, when this obstacle joins with the fallouts of stiff competition, expected flooding in some states and the spate of attacks on telecoms installations.

Last year, operators were over exuberant, giving away lots of free minutes, which analyst says have taken away a lot of value from the industry. Telcos are now faced with a new challenge that threatens the bottom-line, they say.

Heavy military build-ups and curfews as is the case with emergency rule, would hinder telcos from conducting routine maintenance on equipments.

“During periods of unrest or insecurity or restricted movement a,s is the case during a state of emergency, routine maintenance of base transceiver stations (BTS) and roll out of network infrastructure will be a challenge. “This will have a negative impact on qualiity of service (QoS) and revenue generation in the area in question until normalcy is restored”, Funmi Omagbenigun, general manager, corporate affairs, MTN Nigeria told BusinessDay in an interview.

This development, according to analysts, has implications on QoS as telcos can no longer guarantee service availability. “With the state-of-emergency rule, it has been pretty difficult to conduct maintenance on our equipments.

“Most of our engineers are very reluctant to go into these areas to work. Who wouldn’t be? Many banks depend on us for connectivity. How can they function effectively without internet connectivity. The implications on revenue for operators in those areas and other ancillary businesses are huge”, Vernon Van Rooyen, executive head, network operations, Vodacom Business, told BusinessDay in an interview.

A large number of sites belonging to operators were directly affected during last year’s bomb attacks in the north east.

The cost associated with restoring the destroyed sites was not anticipated by operators when drawing up budget for network upgrades and expansion initiatives. Some of these telecoms sites are still down, with its attendant consequence on revenue generation in these areas.

“If the network is down and people in these areas cannot not make calls, operators cannot generate revenue. More importantly, it has direct consequences on Nigerians whose lives and livelihoods increasingly depend on the availability of telecoms networks”, Kenneth Omeruo, managing director, TechTrends told BusinessDay, in a phone interview.

The military has continued massive incursions into the north-east region, as it looks to rid the country of insurgents. Last week, the state- of- emergency rule assumed a new dimension, as reports indicated that communications services in Maiduguri, Yola and Damaturu were shut down.

Many people in Yola, expressed their frustration over the cutting off of telephone services in the state. Adamawa, which along with Borno and Yobe states, is under the state of emergency, had its telephone services turned off. People in the area woke up to find that all the service providers had turned off their services, and no explanation was given.

Many people believe that communications services were cut off by the Nigerian authorities for military operations in the state, as part of the state of emergency rule.

According to them, it has disrupted their social lives, stifled business activities and increased their hardship. Similarly, Ahmed Bibi, who resides in Yola, said that cutting off mobile phone services had negative consequences on the economic and daily lives of the people in the state.

“It has severely affected my contact with people, disrupted our office work and would damage businesses,” he said.

Over 30 base stations were destroyed during last years’ bomb attacks. A large number of them are yet to be restored due to access.