Nigerian telecom sector in crises – FDI implications

In the last few months, the Nigerian telecommunications sector is embroiled in near crisis. Hardly any weeks have passed within the period of dispute between telecommunications operators and a government agency.

First it was the National environmental regulations Standards Enforcement Agency, NESREA, going to seal one of MTN Nigeria facilities in Abuja, once in April, over alleged non-compliance to set standards. Nigerian Communications Commission, NCC, NESREA felt went too far in exercising that function without recourse to it as the telecoms regulator in the country.

Based on that, the regulator, a few days after, unsealed the facility NESREA warning not to encroach on territory telecoms without explanation from here. However, two days after this, NESREA felt that the responsibility of setting standards involving a distance operator should set its BTS from living homes fell within the environmental protection laws, called the threat of NCC and re-sealed the facility.

It brought a stalemate that lasted for several weeks in the industry and put many subscribers of telecom services while the tussle lasted.

Financial Vanguard gathered that it took the efforts of several committees in the National Assembly and other top government functionaries to conciliate the matter, even a permanent solution is not attained.

Nearly a week after the event, another crisis broke out. The regulator itself fell to the operator after discovering in May 2012, that the operator does not meet the agreed Key Performance Indicators, KPI, for the months of March and April. The KPI is set to monitor the quality of service provided to Nigerian subscribers.

Four major operators – MTN

Nigeria’s second national operator, Globacom is, the Airtel Nigeria and, Etisalat – fell under the hammer of the regulator slammed a collective fine N1.17 billion (around $ 7.3m) in them. The regulator also gave a stipulated time of two weeks for the operator to pay the penalty or risk further punishment N2.5million attract every single day of default.

The NCC said it came to the decision to test the operators of the four parameters – Call Set-up Success Rate, Call Completion Rate, Drop Call Rate and Traffic Channel congestion. Commission said the telecom company failed to meet minimum standards of quality service.

From breakdown, MTN and Etisalat was fined N360million ($2,200,000) each, while Airtel and Globacom was fined N270million ($1,700,000) and N180million ($1,100,000) according to the order. They were given until May 25 to pay the fine or get more N2.5million ($15,520) on a daily basis as the violation charges.

As regulator believe it is keeping the operators on their toes to comply with the rules and also provide quality service, the operators felt victimized, arguing that the poor service quality due to poorly developed infrastructure in the country. They described the NCC act of killing the goose that lay the golden eggs.

For lasted until the issue was divided into two parts sector with some part of the regulator and the other part of the operator.

In a recent chat with a prominent Nigerian ICT stakeholders and CEO of the company's network systems, Signal Alliance, Mr. Collins Onuegbu, he cautioned that the issue of provision of services in the country should not be considered as an isolated case because everyone works together together for a better service provision.

"I'm in a rush to penalize operators for poor quality of service because I know that some of the infrastructure they need to get their optimum services are not there yet. They are complaining of poor supply electricity, bad roads network, and continuous fiber cuts during road maintenance and vandalization of their facilities to other things. Unless we can all agree that things are not, them to be calm.”

Telecom mast

However, a group of ICT professionals in media, under the aegis of the ICT Alliance Magazine, did not see it as just that. The group felt that the operators must pay any fine imposed NCC them, arguing that the regulator will be given adequate support and extended for operators to standardize their services in the past ten years this group articulated view an advertorial that was published in several newspapers in the country.

However, penultimate week, the news came round to the operator paid the penalty. Confirmation of payment, NCC Director of Public Affairs, Mr. Tony Ojobo, admitted that the operator has paid the fine, adding that it also resolved that both the operator and the regulator will sit together and look at the KPI again to fine tune the prescription.

Fears over the impact FDI

Although the operators paid fines, the indications are that they paid hostile. Moments before the payment, the chairman of the Association of Licensed Telecom Operators of Nigeria, Alton, Engr Gbenga Adebayo, cried out against the impact of Foreign Direct Investments disagreements in the sector.

For Adebayo, "there were no institutions insulated against failure. No matter how we feel that the Telecom industry in Nigeria is growing, we must also understand that it is fragile and could collapse if not properly managed. That is my opinion why I am no regulator; no power should make a decision and say that it will last.”

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