Poor operating environment stifles N1.9trn investment in telecoms

 As telecommunications operators in the country step up efforts to improve quality of service in the new business year, delays in approval of right-of-way and site building proposals constitute a major hindrance to the N1.95 trillion investment required for network expansion initiatives across Nigeria.

“The delays in Right-of-Way (RoW) and the inconsistency of approach and fees levied across the different states in the Federation are currently delaying the roll out of infrastructure, which have direct consequences for Quality of Service,” Funmi Omogbenigun, general manager, corporate affairs, MTN Nigeria, told BusinessDay in an interview.

“The same applies to approvals for site building. These are all issues that continue to pose challenges for the telecoms industry”, she added.

The telecoms company has already disclosed plans to spend about $1.3 billion on network expansion in 2013. Etisalat Nigeria has also announced plans to spend over $400 million on network expansion across the country by the end of 2013. Globacom and Airtel are yet to make any announcement on network expansion plans for the new year.

Usen Udoh, senior director, high communications at Accenture Nigeria, told BusinessDay in an interview that further investment in network expansion is critical for sustaining the growth of the telecoms industry. He added that the disincentives to investing in this area outweigh the incentives. “Rural network expansion is necessary, considering that the urban centres are already saturated and telecoms operators are looking for new sources of revenue. However, I don’t foresee a lot of that happening in 2013 simply because the incentives to making such investment are just not strong enough.

“Issues of insecurity, power, multiple taxation and operational challenges will continue to stifle investment in network expansion”, he added. Expectations are that telecoms operators will have to deploy 50,000 additional Base Transceiver Station (BTS) ,a critical network component, to improve service quality, according to the Association of Licensed Telecommunications Operators of Nigeria (ALTON). BusinessDay gathered that there are little over 22, 000 BTS in the country for a population of 167 million. This is in sharp contrast to the United Kingdom (UK).

As at the end of 2011, there were approximately 55,000 base station sites in the UK serving a population of just over 60 million people. “Multiple taxation and regulation by myriad of Ministries, Departments and Agencies of the Federal, State and Local Governments increase considerably the lead time to roll out, and costs of deploying network infrastructure.

BEN UZOR JR