The nation’s telecom sector has witnessed giant strides with the number of connected lines (mobile GSM, CDMA and fixed wired/wireless) growing from 151,714,650 in December 2012 to 154,562,024 lines in January 2013, according to Nigerian Communications Commission (NCC) data.
While the number of active lines have grown from 113,195,951 in December 2012 to 114,492,384 in January 2013, mobile phone users have continued to experience an unprecedented decline in Quality of Service (QoS) provided by telecommunication operators since 2012 till date.
The unsatisfactory quality of service provided by telecom operators compelled the regulator to begin strict enforcement of operators’ compliance to Key Performance Indicators (KPI) on QoS set for the telecoms firms by the NCC in 2011.
Besides the N1.17 billion fine slammed on MTN, Airtel, Etisalat and Globacom for poor services by the Commission last year, the Commission banned all promos and lotteries being run by the operators, a directive it has since stopped.
With over $5.750 billion investment ploughed into network expansion projects by telecom operators, Nigerians are yet to feel the impact in terms of improvements in network quality with drop calls, unsolicited text messages, sudden tariff deductions and incoherent voice transmission still prevalent in the industry.
This current situation, according to analysts, has huge negative cost implication on businesses and individuals that depend on telecoms services.
Reacting to this development, Nwankwo Uche, a banker lamented that the rate of drop calls and poor voice quality have continued to increase.
“What we are experiencing is very disturbing. I think there is need for the network operators to improve the situation as telecoms services have become central to our daily lives as consistent decline in quality of service may result in economic losses for individuals and businesses,” Uche said.
Rasheed Adebayo, a student at Lagos State University, (LASU), stated that when calls get connected sometimes, the line is fuzzy causing both the caller and the receiver not to hear each other clearly.
“I tried to call my colleague in school to give me an update on happenings in my department but the phone kept showing call disconnected. After trying for several minutes and getting the same response, I got frustrated. You could imagine how frustrating the service problem could be,” Adebayo explained.
For Collins Okonkwo, an Information Technology (IT) expert, the services of service providers has not been impressive.
“They bombard one’s phone with series of text messages and lots of promos that sometimes get one confused. They will tell you there is a free call to this call at ‘so-and-so’ time and you might bump into the wrong hours. One will think that you are making a free call but before you know it, your credit will go,” Okonkwo said.
Analysts’ views
Industry operators believe that the issues of quality of service borders on insufficient capacity, insecurity, unstable power supply and continued availability of capacity. In an interview with BusinessDay, Wale Goodluck, corporate service executive, MTN said that the issue of capacity essentially lies in the hands of the operators.
Goodluck stated that it behooves operators to get a good understanding of the demand and put in the capacity to meet that demand.
“The good news is that operators have the resources to install the required capacity but the reality is that it is extremely difficult to put infrastructure on the ground in our environment. The same infrastructure challenges that have bedeviled the power industry also affect the telecommunications industry,” Goodluck explained.
Goodluck pointed out that telecoms infrastructure cannot exist in vacuum as there has to be parallel growth in other sectors for the full realisation of the benefit of increased roll-out.
“Beyond that, when we are even able to put the infrastructure in the ground, the challenge then becomes making it available to carry traffic. The litmus test is then to ask if that additional capacity is available to relieve the congestion in the network,” Goodluck added.
Lending his view, Kamar Abass, managing director, Ericsson Nigeria explained that telecoms operators in other parts of the world have regular power supply, do not necessarily have all of the security issues, infrastructure issues, and access issues that is in existent in the country.
“What the operators need is more help rather than punishment, and one thing that may help is facilitating an environment where operators can actively share their networks. Not limited to passive sharing where you have more people on a single mast, but active sharing where you have one single set of infrastructure which is shared by multiple operators,” Abass argued.
Abass continued “You must consider that a downtime means lost revenue for the operator as well because every second costs them real money. That lost opportunity, I believe, is “punishment” enough!”
For Gbenga Adebayo, chairman, Association of Licensed Telecoms Operators of Nigeria, ALTON, “While the nose bleeds, the eyes should still be clear enough to look at the causes of the decline in quality of services.”
The ALTON boss added that challenges in the sector remained enormous, citing insecurity of telecoms infrastructures, a phenomenon that manifested prominently in the last year terror attacks on telecoms facilities in some parts of the country.
It was gathered that no fewer than 30 base stations were bombed and several others damaged in last year’s terror attacks on telecoms installations with some of the facilities yet to be rebuilt due to lack of access. Recent reports suggest telecoms firms recorded a minimum of 70 cases of vandalism of its infrastructure monthly in different parts of the country.
In a memorandum submitted by the Association of Telecommunications Companies of Nigeria (ATCON) to the Senate committee on Communications recently, it costs about N24,750,000 to install a single base station together with its tower, special antennas and two generators to power the station.
This equipment, they pointed out, are like the central nervous systems of communications as they allow subscribers make and receive calls but are now targets of vandals and thieves.
Industry observers see increasing terror attacks on telecoms installations as additional burden on operators in terms of extra investment required to fix the destruction, during which cases of congestion would be inevitable.
Teething challenges
A major challenge confronting QoS in the country is the problem of inadequate capacity in the system and inadequate network capacity both in terms of number of base stations, network switching capacity and transmission network capacity.
These, industry operators believe, contribute partly to the problem of poor call set up rates, high rate of call drop outs and poor call completion rates.
Nigeria with a population of more than 160 million people had about 20,000 base stations at the end of 2010 while the United Kingdom with just about 60 million people had more than 50,000 base stations at the same period. However, Nigeria needs more than 100,000 base stations to service its huge population.
On the issue of transmission capacity, there is low availability of fibre backbone linking various parts of the country coupled with the slow pace of deployment of high capacity microwave backbone links, a memorandum submitted by ATCON to Senate committee on Communications stated.
The memorandum added that the telecommunications industry is saddled with challenges of multiple regulation and taxation as the federal, state and local governments all want to regulate the telecommunications industry.
“Heavy taxes imposed on telecom companies at the federal, state and local government levels have brought about major obstacles, which slow down network expansion thereby compromising quality of service. It is the federal government that has the exclusive right to regulate the industry which led to the establishment of the NCC backed with an Act to effectively perform that function.
“Events in the recent past suggest that other federal agencies as well as states and local governments are now making efforts to usurp NCC’s functions in the telecommunications industry. It has become a common practice for any government agency be it federal or state to solicit for one levy or the other from operators while some demand that operators secure approvals from them which come with very high fees before they can build infrastructure,” the memorandum stated.
Network expansion drive
MTN Nigeria last week obtained a medium-term loan facility of N470 billion ($3bn) from a consortium of 17 local and seven foreign banks. According to Brett Goschen, CEO of the telecoms company, the facility consists of $1.8 billion in additional facilities and $1.2 billion in restructuring and rollover of existing facilities.
The facility, arranged by the firm itself, had Guaranty Trust Bank as co-ordinating bank for the local lenders. The facility is meant to strengthen its capital base and re-align its operational and marketing strategies to meet the growing demands of its teeming subscribers, Goschen says.
The local banks are – GTBank, FirstBank, Zenith Bank, UBA, Access, Keystone, and FCMB. Others include Standard Chartered, Citibank, Diamond, Ecobank, FSDH, Rand Merchant Bank, Nigeria, Mainstreet, Union, and Fidelity.
The foreign banks are – KFW Bankengruppe (Europe), RMB – SA, EDC of Canada, Nedbank, ICBC, China Development Bank, and China Construction Bank.
Andrew Bing, chief financial officer of the company, says 70 percent of the total loan amount is in local currency – the naira, while the remaining 30 percent is denominated in the US dollar, saying though borrowing in local currency is more costly, but the company had to hedge against risk and volatility, as “we needed to manage our currency risk profile.”
The mobile network company also discloses at the loan-signing ceremony that it had reached the 50 million subscriber mark, controlling over 42 percent of Nigeria’s vibrant telecoms market, noting it will deploy the proceeds to various network expansion initiatives across Nigeria.
Globacom, Nigeria’s second national carrier, recently signed a $750 million (N119 billion) contract with Chinese telecommunications infrastructure provider, Huawei, as part of a new effort to strengthen the capacity of the network.
The Memorandum of Understanding (MoU), signed between the two technology companies will see Globacom embark on a complete network overhaul, with a view to providing better mobile services to its over 25 million telecoms subscribers.
Speaking at the signing ceremony, Mohammed Jameel, group chief operating officer (GCOO) of Globacom, said the optimisation project would be completed in the next six months. Jameel said the company had been searching the right vendor to actuaries its mordenisation project, and that Huawei was chosen as a preferred vendor for the contract.
Airtel Nigeria, another mobile operator said it had invested $1.5billion in network expansion in the last 30 months of its operations in Nigeria. According to reports, the company made the huge investment in a bid to expand and deepen network capacity and quality in Nigeria, in pursuance of QoS.
Another telecom operator, Etisalat Nigeria recently announced plans to invest $500 million to expand its network operations in the Nigerian market this year.
Wael Ammar, Etisalat commercial officer, told Reuters Africa Investment Summit that the firm aims to increase its existing 3,000 cell sites by an undisclosed number.
“This money will also finance potential network extensions and development in the forthcoming years. Our next growth is going to be through Nigerian banks… by giving us the required debt for expanding our operations,” Ammar told Reuters.
In December 2012, Etisalat signed an agreement with Alcatel-Lucent to increase its cell sites by an additional 1,000 in 2013. In September 2012, Etisalat Nigeria also signed an agreement with Huawei for the supply of equipment and services for the expansion of its network across the country.
Market share
Mobile networks in the country are gunning for more market share as they jostle to either lure new subscribers onto their respective networks or retain existing subscribers. As at the third quarter of 2012, according to Renaissance Capital, South Africa’s MTN still dominated the telecoms market with 42.5 percent market share.
India’s Airtel and Globacom have 19.7 percent and 20.7 percent market share, respectively, while UAE’s Etisalat has a 13.4 percent market share.
Market analysts envisage that there would either be an upward or downward movement in market share of mobile network operators. This is even as telecoms subscriber earnestly search for better quality of service, reduced phone tariffs and innovative products and services.
But industry analysts say that MTN, as the market leader, fully understands the implication of the mobile number portability. The telecoms company will however be looking at channelling significant portions of the medium-term loan facility toward innovative product development, improved customer contact centres, mobile data and broadband infrastructure deployment – all in an attempt to cement its position as the dominant player in the telecoms market.
BEN UZOR JR and ALEXANDER CHIEJINA
