• Thursday, February 29, 2024
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Telcos in intense lobby to stop ban on SIM sale

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An intense lobby by telecommunications companies in Nigeria to halt government’s plan to temporarily ban them from selling new SIM (Subscriber Identity Module) cards has begun, industry insiders say.

The move by government is one in a series of regulatory interventions specifically geared towards compelling Mobile Network Operators (MNOs) to make greater investment in network quality by putting a temporary hold on subscriber acquisition. As at October 2013, the country had about 121.8 million active mobile subscriptions.

Omobola Johnson, minister of communication technology, had also earlier declared that when MTN and Airtel’s licences come up for renewal in 2017, government would push to have enhancing service and infrastructure clearly engraved into their contracts. This is a clear indication of government’s position on telcos’ abysmal showing in the area of Quality of Service (QoS).

“Government’s plan to ban the sale of new SIM cards is not sitting well with many operators. They have already begun to put machinery in motion to convince government at the ministerial level not to move in this direction,” our source said.

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Last year, mobile operators earmarked N979 billion for network expansion initiatives. But subscribers are yet to feel the impact of such investment in terms of the quality and efficiency of communications services. Poor service characterised by drop calls and incoherent transmission is still prevalent in the country.

The Nigerian Communications Commission (NCC) had earlier threatened to impose stiffer sanctions on telcos facing QoS issues in the new year.

In 2012, four service providers – MTN Nigeria, Etisalat, Airtel, and national carrier, Globacom – were asked to pay a cumulative sum of N1.17 billion by the regulator as penalty for the poor QoS rendered to subscribers on their respective networks in the months of March and April.

But a senior executive at one of the big GSM networks told BusinessDay in an interview, Thursday, that these sanctions would not solve the problem at hand, saying that Nigeria still required 10 solid years of continuous investment in network expansion to fully address the QoS issue.

“We expect government at all levels and the telecoms regulator to place more priority on creating a conducive and friendly operating environment to further sustain investments in network upgrade and expansion initiatives. There are still fundamental issues plaguing the telecoms industry which have not been addressed. The telecoms industry is faced with epileptic electricity supply, acute delays in right of way (RoW) approvals, multiple taxes and regulation and vandalism,” he added.

Industry analysts have also said that sanctions are a disincentive to further investments in the telecoms industry.

“If you restrict supply because you want the QoS to increase, you’re actually killing the business model of the telcos. If you stop them from doing that, then you’re actually destroying the demand that will justify their investment. It’s counter-productive,” Bismarck Rewane, chief executive officer, Financial Derivatives Company, a risk advisory firm, told Bloomberg.

Kamar Abass, managing director, Ericsson Nigeria, said in an interview that it was not in the best interest of telcos to deliver shabby QoS, adding that they lose revenue when calls cannot be completed. He also said the lack of power supply was a fundamental drawback to achieving superior QoS.

“If you think about Nigeria, 100 percent of cell sites need an alternative power source. In fact, most of them need an alternative for the alternative. This implies having two diesel generators plus battery per cell site. It just adds complexities to the point where this thing is not just expensive but frankly, it’s a miracle that QoS is at the level it is today,” Abass said.

Analysts have also said that such aggressive stance from government was negative for the growth outlook of the industry, adding that such a clampdown could send negative signals to investors hoping to explore new revenue opportunities in the country’s emerging broadband market. It is estimated that the implementation of the telecoms regulator’s new broadband market structure could contribute about N190 billion to the country’s GDP.

Andrian Wood, a former chief executive officer of MTN Nigeria, who advised the Federal Government to avoid creating disincentive to investments in the telecoms sector, said: “MTN has paid sizeable dividends in the last three years. Don’t also forget that they have invested $10 billion. I think it’s already in the public domain that investment in the industry is about $25 billion up till now and MTN has invested half of that. So, if you take stiff measures against the most successful of the operators, including Globacom, Airtel Nigeria, all that will do is to discourage investors from the broadband generation.”

Only recently, the telecoms regulator called on holders of Nigeria’s 120 million mobile lines to take telecoms companies to court for delivering poor QoS, a declaration that has already drawn the indignation of many stakeholders in the industry.

Gbenga Adebayo, chairman, Association of Licensed Telecommunications Operators of Nigeria (ALTON), in a recent report, said the commission was well aware of all the issues responsible for poor QoS.

“It is easy to apportion blames. The question I would like to ask is: What is the NCC doing or what have they done to deal with the issues we put before them?” he said.

By: Ben Uzor Jr