11 August 2017

Nigeria: Reforms, New Policies Required to Drive Telecoms Sector, Says Experts

The liberalisation of the Nigerian telecommunications sector almost two decades ago, catalysed and opened up the sector to local and foreign direct investment (FDI) estimated at over $68 billion as at November 2016.

The sector is currently considered a key contributor to economic growth and one that can help lift Nigeria out of recession; created approximately over 2.5 million jobs over the past 10 years, with its impact reaching across all industries.

Until June 2016, the telecoms sector was growing rapidly and comprised 9.8% of Nigeria's GDP but this growth has now stalled, with the sector at a strategic crossroads.

However, experts in the industry believe that several factors have converged simultaneously, which could materially impact the industry and undermine its potential to drive economic growth and stimulate the Nigerian economy as a whole hence reforms and new policy directions are needed.

The weak Naira, the experts pointed out, has made the importation of much needed telecom equipment into the country difficult, and the upgrading of towers and service capacity expansion too expensive to conduct on a large scale.

Operators are now either deferring or delaying upgrades or expansion of their networks and customers are starting to feel the impact.Lending his voice to the calls for the review of certain policies in the industry, Engineer Gbenga Adeabyo, chairman of the Association of Licensed Telecommunications of Nigeria (ALTON), cited the Abuja masterplan as not giving room for deployment of telecommunications base stations.

He said the situation is capable of impacting signal quality, increase in incidences of dropped calls, and overall customer service quality decline.Engr. Adeabyo holds the view Nigerian consumers have every right to demand more and should never have to settle for poor network quality or services.

Mr Olusola Teniola, president of the Association of Telecommunications Companies of Nigeria (ATCON), told Nigeria CommunicationsWeek, "A drastic change is required in the manner the industry is regulated by NCC and as the CJN recently noted, the Nigerian Communications Act 2003 is now outdated and needs immediate review to encompass latest regulatory thinking on matters that properly addresses the data centric world that we find ourselves in and propagates a converged regulatory environment focused on latest technological themes and not just on how voice calls are meant to be regulated".

To further compound matters for operators, consumers continue to move away from legacy voice services and are switching to data bundle packs, which allows them use over the top (OTT) service providers such as WhatsApp, Skype and Facebook to make phone calls inexpensively over broadband connectivity not minding the often poor quality of these services.

While it's clear that the simple solution to addressing this trend is massive investment into telecom tower network densification, as new 3G and 4G technologies are rolled out, these network upgrades can only be done if there is adequate financing and a suitable business case.

The recent default status of Etisalat Nigeria, is a prime example of how it can all go wrong. Etisalat is/was the fourth largest telecom operator in the country, but as a direct result of the company's razor thin margins on its current service offerings, and against the backdrop of the devaluation of the Naira, the company has failed to meet its obligations to its lenders.

Speaking on issues concerning the telecommunications sector, Fatai Folarin, Tax & Regulatory Services Lead Partner at Deloitte noted that, "The telecommunications industry in Nigeria is one that can currently be described as self-aware and steadily adapting to the stark realities of business - changing trends, intense rivalry, regulatory uncertainties etc.

"There is a general understanding that to remain sustainable, there is a need to recreate existing products, diversify into new areas for which the capabilities and resources are near, improve on general business processes and navigate through the regulatory landscape."

To Mr. Teniola, the enabling environment is what the industry needs to thrive under any government in power "and this current administration is attempting to ensure that this environment is put in place to allow the private sector to contribute the innovative solutions and economic growth that will allow the citizens of the country to benefit from ICT advancements, the efficiency and productivity that this brings to the growth.

"On the flip side most the growth in ICT has always been driven by innovation from experts and products and services has always been ahead of policy decision making and will always lead the way as long as we are a nation of consumers of technology," he said.

As the ATCON President pointed out, reforms should be all encompassing and address competition, markets and converged Services - finance, media, technology and telecoms are heavily intertwined and areas such as Fintech, mobile money, block-chain and Artificial Intelligence (AI) are disruptive in nature and impact business models across all verticals and therefore reform needs to be proactive as opposed to reactive in nature.

What are the expectations from telecom subscribers to drive quest for better policy and service delivery; again, Mr. Teniola said, "Subscribers are important, however, the Customer is King. Customers should demand that there are right choices that meets there every day needs and requirements.

"Getting a product cheap doesn't mean that it is the best or gives the User Experience expected - so the Customer needs to continuously challenge the offerings that they are presented with and promote the services or products that provides their best Customer Experience based on quality and not just on being the lowest price.

"This way innovation is promoted and the industry becomes healthy in the long run and the Customer ultimately benefits through wider choice.

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