• Monday, June 24, 2024
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InfraCo licences boost broadband outlook amid political uncertainty

InfraCo licences boost broadband outlook amid political uncertainty

The recent allocation of InfraCo (Infrastructure Companies) licences for Lagos, the commercial nerve centre of the nation, as well as the North Central zone by the Nigerian Communications Commission (NCC) is a major boost to broadband development, industry analysts at Business Monitor International (BMI) have said. This is largely because critical Information Communications Technology (ICT) projects will not be delayed until after the country recovers from its fiercely contested Presidential elections in March. The NCC  had earlier declared that MainOne, underwater cable operator, and IHS Towers as the respective winning bidders for InfraCo licences in the Lagos region and the North Central Zone, which surrounds Federal Capital Territory (FCT), Abuja.  By selecting experienced telecommunications operators whilst offering strong tax incentives for investors, the regulator has indeed laid the foundations for considerable improvement to broadband network rollout  in the two regions.

Industry analysts at BMI are optimistic that the allocation of these licences prior to the upcoming election, which regardless of the winner, is expected to be contested and could result in a period of increased violence and political instability. Another big positive is the NCC’s choice of Main One and IHS Towers, which both have vast experience in deploying and managing telecoms networks in Nigeria and across the wider region, as this has not always been the case with licence allocations in Nigeria. For example, Bitflux, a relatively inexperienced player, was awarded the 2.3GHz spectrum for the provision of wholesale wireless broadband services in February 2014. The company is yet to rollout service in the country. Some market observers, who spoke with BusinessDay on the condition of anonymity, weekend, are of the view that a PDP win would be the most beneficial for the  industry, with the highest chance of boosting policy continuity, as well as a greater regulatory certainty.

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Lanre Ajayi, president, Association of Telecommunications Companies of Nigeria (ATCON), however thinks otherwise. “Broadband internet deployment is not dependent on the party in power. The NCC is an agency of government that is independent as clearly outlined in the telecoms Act”. According to him, “They are immune from political vagaries”. It would however be recalled that the All Progressives Congress (APC) had earlier accused the NCC of scuttling an initiative aimed at raising funds for the party through the use SMS, ringtones, and scratch cards. Speaking on the selection of MainOne as the Lagos InfraCo, Funke Opeke, the firm’s chief executive, said the company is excited about the development and “looks forward to the transformation of Lagos.” Main One is one of the largest communications service providers in Nigeria, which deployed its own submarine cable linking Nigeria and Ghana to Portugal in 2010, and launched West Africa’s largest data centre in January 2015.

IHS Towers is the leading independent tower infrastructure company in Nigeria, also operates in Rwanda, Zambia, Côte d’Ivoire and Cameroon, and signed agreements for a capital raise of USD2.6bn in November 2014. Both companies therefore have the requisite experience and financial backing to successfully deploy regional and metro fibre networks.The selection of IHS Towers as one of the winning bidders also supports BMI’s recently articulated view that tower companies, which have emerged as critical players in Sub-Saharan Africa’s (SSA) telecoms industry since 2011, would be among those contributing to fibre roll outs across the region in the coming years. In order to ensure licensees can concentrate capital on deploying networks as quickly as possible, the government has promised to grant them between five and seven years of tax holidays. They will be offered further incentives, such as subsidies to the tune of a 30 percent mark up on capital expenditure and employee tax holidays, if they extend networks to less commercially attractive zones.

 Ben Uzor