Before the end of 2020, the Nigerian Communications Commission is most likely to publish the financial statements of the top six telecommunication companies including MTN Nigeria, Airtel, Globacom, EMTS (9Mobile), MainOne, in Nigeria for the first time.
The move could usher in a new era of unprecedented transparency in the telecommunication sector. For consumers, this could mean more clarity around the cost of data and access to more quality service. While the NCC may likely not be publishing the financial reports for 2020 first, it has already started the process for submitting the 2019 financial statement from July.
The mandate known as the Accounting Separation Framework (ASF) is a comprehensive set of policies and guidelines for generating detailed Regulatory Financial Statements employed across different businesses, products, and licenses of Operators.
The NCC framework was developed through a consultative process in 2015 and it is also a practice followed by national telecom regulators across the world. Countries like the UK, UAE, and Ireland have all developed ASF. It is considered to be an effective, least invasive, and less costly solution to implement to meet regulatory objectives. Regulators across several jurisdictions have made it mandatory for one or more licensees in Fixed and/or Mobile markets to submit RFS.
Olusola Teniola, President of Association of Telecommunications Companies of Nigeria (ATCON) describes the framework as “long overdue” and one of the recommendations of the National Broadband Plan 2020-2025.
“It is what we need now and it is for separation of services so that there is no cross-subsidy,” Teniola told BusinessDay. “Therefore, the consumers are aware of what they are paying and competition is also strengthened and the wholesale market is now neutral and at the same price which is very important for having a growing industry.”
Specifically, the publication of accounts that are transparent helps other smaller operators to understand how the powerful telcos like MTN Nigeria’s revenues relate to costs. The availability of information gives operators the confidence that the interconnection arrangements are equitable, in that it should demonstrate that there is no over or under-recovery of the big operator’s network. Also, the publication of detailed cost statements showing the average cost build of products and services provided by a big telco will increase and raise the confidence of competitors that there are no anti-competitive subsidizations.
The NCC has had to address complaints in the past of playing favorites to bit networks like MTN. For instance, in 2018 the commission was forced to suspend MTN’s bid to acquire Visafone, the only surviving Code Division Multiple Access (CDMA) operator because competitors such as Airtel and 9Mobile had protested that it would give the South-African telecom giant an undue advantage. The acquisition would have meant MTN also becomes the owner of the 800MHz Spectrum from Visafone Communications Limited. Although Visafone was finally sold to MTN, the spectrum licence was not part of the deal.
According to the NCC’s guideline on the framework, the ASF is to be provided by the licensees every accounting year beginning from the accounting year on 31 December 2019. The process of submission includes first reporting which will end by 31 July 2020 for the financial year January 2019 to December 2019.
The 2020 financial year report is to be submitted the latest 31 March 2021 and the one for 2021 will be submitted by March 2022.
Adedeji Olowe, CEO of Trium Networks said the impact of the framework on consumers may not be immediate.
“But it forces telecoms to show their numbers and they find it difficult to subsidize their bad products,” he said.