Excise duty tax on telecoms sector will spell disaster for Nigerians – NATCOMS President

Adeolu Ogunbanjo, president, National Association of Telecommunications Subscribers (NATCOMS), in this interview speaks about some of the critical challenges facing telecoms operators in Nigeria, and what government can do to protect the sector. Excerpts by Seyi John Salau:

Recently, the telecoms industry ecosystem was disrupted by media reports that the MTN Group was in negotiations with Emerging Market Telecommunications Services (EMTS) – owners of the nation’s fourth GSM operator- to acquire 9mobile’s spectrum. What’s your view on this?

We’ve been back and forth on this and I have had the course to put my mouth on the issue. Unfortunately, with just about 6% of the market share, they (9mobile) are not doing that well. For me, I really do not know why they could not recapitalise and why they want another network to acquire them and that another operator will now become the dominant service provider. It’s not going to be tidy for the telecoms sector. And in my opinion it should be discouraged. However, even if the merger and acquisition should be done, the regulator should keep it open. Again, you may want to ask, Why can’t, Glo and Airtel buy it (9mobile) at least they are about, I think one is 20 something percent and the other about 30 something percent market share and the regulator should encourage those ones to come to terms with building their network as well.

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Considering 9mobile’s debt history, do you think the other MNOs that you made mention of, have the liquidity to acquire 9mobile?

They will and they can. Don’t forget that there are some funds from multilateral finance organisations. If they apply, it will be granted, because it’s telecoms and we have the market, we’ve got the subscribers base, we’ve got everything. But for 9mobile, they should at least go to town and recapitalise and then come up again and increase their market shares rather than just having a single digit market share which is too low to play and dominate in the Nigerian Telecoms sector, and perhaps that might be the driving force for the board members to say, look we are still single digit market penetration, so why shouldn’t we just sell out. But, in my honest opinion, I oppose selling out, they should rather recapitalize, they shouldn’t sell out. But if they are going to sell out, it should be thrown open back to the NCC and I expect the NCC to do the needful.

Some stakeholders believe that, should MTN acquire 9mobile, it will make them more powerful. Do you share in the sentiment?

Very well, Yes. They will be too powerful. They will have bigger control of the market and dictate the direction of things in the sector. In their (MTN) early days they had a lot of funds to play with at a very low interest rate in the 2000-2001 days. They’ve been favored in a way, because the South African government is ready to assist them as well, plus the fact that multilateral financial organisations are also ready to fund them because of their success stories. But nonetheless, others should not die or go into extinction because of one particular network operator. They should be encouraged to compete and thrive. The moment MTN acquires that (9mobile) with their 43 or 44 percent market share, that means they will have a minimum of about 50 something percent, and that is half of the Nigerian telecoms market. They’ll have so much power and control over the sector and that means they will be dictating the pace. While I agree it’s a free market, nonetheless we can’t afford to have one dominant force in this space. Our President is marketing the country’s economic potential to attract more foreign direct investments, so it will be wise not to kill the ones available here. We should encourage others to be major players in the sector. Airtel is there also, they have about 20 whatever percent, the other one (Glo) is also about 20 something percent. Encourage these ones as well to be major players in the sector, they shouldn’t allow only one player to overtake the entire industry, which is going to be a disadvantage to the benefits of the other players. Aside from that, if you look at Multichoice, I’m sorry, I don’t know if I can talk about that, they have dominated the pay TV sector in the country, and they have made three increases this year alone to their subscription rate. We don’t want to see that happen in the telecoms sector. No! we don’t. They will be dictating the pace because they have the volume and they control more than 50 per cent market share. And that won’t be tidy for the Nigerian telecoms industry.

What is your advice to the NCC, in terms of strengthening the operations of the Nigerian telecoms industry?

As a regulator that they are, they should regulate and ensure that every Mobile Network Operators (MNOs) competes pretty well within the space and also ensures that the competition is healthy. They should regulate the entire telecoms sector without giving any form of preferential treatment to another at the detriment to the growth and development of others. Let NCC keep its operations open and be fair to all parties concerned by ensuring that they are transparent in whatsoever spectrum that they want to sell or return or give back to the NCC, so that other MNOs can take advantage of the potential in the market and if possible acquire this spectrum. For instance, I know that some of them have now started deploying the 5G, though China is already looking at the 6th Generation already, but let’s get ours right first. So, it’s good, let them keep exploring other things, but to acquire another MNOs spectrum is unacceptable. But, if the likes of Airtel and Glo say, look we don’t have the money oo, then it is good and fine for a takeover. But, it has to be through the right channel and not the backdoor. Now, ALTON, the Association of Licensed Telecom Operators of Nigeria is now saying if the government decides to introduce any other taxes, we are going to pass it on. Well on the part of the consumers we will stop the government from going ahead to introduce any taxes, because already the sector is faced with multiple taxes. Anambra is a fantastic state, they have made a law that makes it free with no tax on laying the Right of Way (RoW) cables. All states should be like Anambra. Governor Charles Soludo, wonderful governor, with what he has done, he is encouraging telecom sector to come to the state and invest by giving them economic friendly terms. And I want other governors to emulate that too.

What is your call to action for the Federal Government, NCC and other stakeholders in resolving this spectrum trade off issue?

Thank you very much for that question. First, let them stop harnessing too many taxes in the telecoms industry. Let the government now expand their tax net, not just by increasing tax policies, but by getting more people into paying taxes. For instance, if we have about 20 percent of people paying tax now, they should extend it to about 40, 50, or even 60 percent of people to pay tax and they can get more money from there. The telecoms industry is really suffering, so to help them gain a good balance, let them declare telecoms infrastructure as a critical national asset. Maybe it is because NEPA mast is dangerous to their health, that’s why they are critical national assets, so why shouldn’t all telecom base stations be included as critical national assets. They should do that to avoid poor services and loss to the operators. Each time, we (NATCOMS) make noise about poor services, ALTON, will say they have burgled our base stations, they have removed this generator, they have killed this and they have killed that. We hear that story all the time, so, the moment they become key critical assets, then it will be protected and service quality of the network operators will be improved upon and will now be enjoyed by the subscribers.

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What is your assessment of the general state of the Nigerian economy since this administration came onboard?

May 29, 2023 saw the emergence of subsidy removal, that’s fine. Sincerely few individuals, like powerful individuals, you know were cornering the resources of the petroleum sector in the country and it needed to be stopped, which was done by President Bola Tinubu. However, the unification of the naira was the mistake the current President did. Those two things shouldn’t have come in the immediate succession. Subsidy removal, yes, but the unification of the naira was the big blow that actually scattered Nigeria’s economy. Subsidy removal will have its effect, yes we do appreciate that, but to now unify the naira plus subsidy removal that i think in my mind was the mistake the President made. That is now giving rise to a situation where you now have to drive taxes to make more money for the government. That will lead me to the excise duty of 5 percent on the telecom sector.

Finally, what is your reaction to the 5% excise duty on the telecom sector?

Yes, we are currently in court and we will still continue to pursue that, because, recently somebody hinted me that they (the government) may revisit the excise duty tax, which again will spell disaster for the citizenry. I must say that if you remove telecoms and ICT, a lot of people’s business will suffer – that is the only thing we are now leveraging on to showcase ourselves and businesses on social media platforms like Facebook, Instagram, X which was formerly Twitter and WhatsApp that we are enjoying today. However, on taxes, they (the federal government) should leave telecoms alone, because there are over 40 different types of taxes that are killing the industry. Unfortunately, the banks are not helping matters in the telecoms industry as they are still owing the Mobile Network Operators (MNOs) over N200 billion as we speak. A huge amount that the telcos would have spent on network expansion, quality of equipment to deploy their services and all that. Well unfortunately that’s the economy as I see it.