• Monday, June 17, 2024
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BusinessDay

As MTN crosses the 60m subscriber milestone (2)

MTN Nigeria issues N127bn commercial paper, largest in Nigeria

With electricity from the national power grid insufficient and unreliable, an inordinately high proportion of operational expenditure, by some estimates up to 60 percent, goes into fuelling generators which operators rely on to power their base stations and other infrastructure. The result is that compared with many other African markets, network costs as a component of operating expenses are disproportionately high in Nigeria.

Telecom infrastructure vandalism which could include malicious damage to cables and other infrastructure or outright theft of such infrastructure is another critical issue. Industry-wide, there is an average of 500 such incidents per month.

Multiple taxation is yet another albatross which the telecom industry shoulders. Multiple taxation itself is a simple term that, like AIDS, aggregates a complex syndrome whose manifestations are sundry. In a nutshell, similar taxes and levies are arbitrarily imposed on the same income by different levels of government, and at other times arbitrarily increased. In some instances taxes are created arbitrarily and expressly targeted at telecom companies

Of course, it is no news that telecom installations have been sporadically shut down by agents of government in the last few years for defaulting in some of these arbitrary payments. This worsens the issue of quality of service, the age-old complaint of the telecom subscriber and in addition to the inconvenience and disruptions it instigates in the economy, disrupts national security, creating avoidable problems for the government and citizens alike. Thankfully, the Nigerian Communications Commission has since issued a stern yet diplomatic warning to its peer government agencies and other agents of state on the dangers of indiscriminate and unwarranted forceful closure of telecom installations situated around the country.

In the midst of all of these Herculean challenges, and in the face of increasing competition not only from peer telecom companies but also other enterprises serving other basic needs of the people, it should indeed be a notable achievement to attain 60 million active subscribers.

Standing still, however, cannot be an option for MTN. The organization needs to aggressively gird its loins for the next stage of growth in the IT industry. Broadband will play a defining role in that next phase of growth. The various dimensions in which ecommerce is creatively manifesting – from the rapid emergence of mega online retail stores to the emergence of music streaming and an entire online music and entertainment ecosystem as well as advances in mobile payments – may be pointers to the fact that broadband is the future.

Read also: Time to declare telecom infrastructure as critical national infrastructure (2)

In fact, the Presidential Committee for a National Broadband Strategy and Roadmap has since determined that broadband is an essential right and a basic requirement for social transformation and in so doing, outlined a vision for Nigeria as a “society of connected communities with high-speed internet and broadband access”.

Capital requirements, however, remain huge, as are infrastructure demands. Though it currently operates in excess of 10,000 base stations, MTN will need to put several more thousands on the ground to sustain voice and data operations, especially in a future that will be increasingly data-driven. This implies a future of continuous investment.

Strategic policy formulation and implementation that is adequately cognizant of the bigger picture and longer-term view will be critical to ensuring that MTN and, by extension, other telcos are well positioned to remain major catalysts of the transformative power of ICT. As the industry enters this defining phase of growth, government must raise its game through policy action to ensure that the country is well positioned to benefit from the long-term gains of sound policy interventions.

Designating NITEL infrastructure as critical national infrastructure was a key policy approach of the military rulers of old, who sought to protect the then key national asset from the kind of arbitrary pressures to which today’s telecom companies are being subjected to by all arms of government. The Association of Licensed Telecom Companies of Nigeria (ALTON) has long advocated that in the current dispensation, telecom infrastructure should be designated as critical national infrastructure. While doing so may not necessarily automatically redress all of the problems with which the sector is beset, it will certainly help create a protective bulwark against the onslaught of multiple taxation and multiple regulatory regimes that the telecom industry currently faces to Nigeria’s detriment.

As MTN steps into the next phase of growth, it will have to increasingly contend with the problem of scarcity of spectrum, especially in light of growing demand for mobile broadband. Incidentally, the NCC has been pragmatic in seeking optimal allocation and deployment of spectrum. What needs to also happen is the enhanced monitoring of non-operational spectrum in order to perhaps re-allocate such spectrum to operators who have tangible need for such spectrum and have demonstrated capacity to optimize such.

Despite huge challenges including operational difficulties, MTN has clearly demonstrated to a hitherto cynical world the potential inherent in the Nigerian market. The course which it beat many years ago is now traversed by sundry investors, impressed with the successes which the relatively young multinational has attained.

While congratulations are in order, no doubt, there is clearly an imperative for broad policy action to help drive the optimization of the promise which MTN holds for wide-scale economic development. It is a challenge that our governments must urgently brace up to.