• Wednesday, May 29, 2024
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BusinessDay

Tax burden may slow N979bn investment in network expansion

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Huge financial burden imposed on telecommunications operators in Nigeria as a result of the raft of multiple taxes is a major disincentive to investment in network expansion, mobile operators have warned.

With operators in Nigeria’s highly competitive market expected to spend an estimated $6.2 billion (N979 billion) on network expansion initiatives this year, the industry seems determined to meet the quality of service (QoS) mandates of the Nigerian Communications Commission (NCC). But if taxes levied on operators are not harmonised and arbitrary right-of-way charges abolished, industry watchers say operators might hold back in terms of making necessary investment on network expansion in 2013.

“Multiple taxation is a huge threat to investment in network expansion”, Osondu Nwokoro, director, regulatory services, Airtel Nigeria, told BusinessDay in an interview.

“No matter how much operators invest, if the enabling environment is not in place, the output will not be seen. Telecom subscribers will feel mobile operators are not making any effort to address the issue of poor quality of service”. Telecoms operators are lining up big budgets and signing new contracts for network expansion with high optimism that the issue of multiple taxations will soon be resolved, he further explained. United Arab Emirates’ (UAE) Etisalat announced plans to spend $500 million in network expansion this year.

MTN Nigeria obtained a medium-term loan facility of $3 billion from a consortium of 17 local and seven foreign banks. National carrier, Globacom, signed contracts with two Chinese firms, Hauwei ($750 million) and ZTE ($500 million) totaling $1.2 billion for network optimisation and upgrades. In the last 30 months, Airtel Nigeria said it has invested $1.5 billion in network upgrades.

BEN UZOR JR