Telecoms companies are seeking more favourable regulatory and taxation regimes in Nigeria and other African markets to lower the cost of doing business on the continent.
BusinessDay checks show a raft of multiple taxes being imposed on the mobile operators by the federal, various state governments and their agencies across the country.
Telcos are often times compelled to pay such taxes as permitting tax, annual renewal taxes, miscellaneous fees, development levies, tenement rates and even sanitation fees, for one Base Transceiver Station (BTS), sometimes running well above N200 million, depending on the state.
“Regulators have to understand our limitations: the cost to do business in Africa,” said Christian de Faria, CEO, Airtel Africa, saying “they have to be more receptive to our ideas and have to be more understanding about our limitations when it comes to development of the very important piece of changing life.”
All of these taxes and charges are often generally aggressively pursued, and according to industry watcher, through the illegitimate use of law enforcement agencies, shutting down and occasionally vandalising sensitive telecoms equipment.
Market observers are however of the view that overlapping and often conflicting jurisdictions between the different agencies of government often lead to these multiple layers of taxes, charges and fees. “We need to work together with the regulator and government to understand that there is a conducive environment legally to enable us to do our work,” de Faria said. Consumers “have no clue what is behind the infrastructure, the investment, the whole ecosystem,” he said. “Governments and regulators have to bear this in mind when certain decisions or actions are taken,” he said in an interview at the Mobile World Congress (MWC) in Barcelona.
The Federal Government has already set a target of a five-fold increase in broadband internet penetration by 2017. Nigeria currently has an abysmal broadband penetration of 8 percent, according to statistics from the ministry of communications technology.
In recent times, mobile operators have accused various state governments of slowing down the process of Right of Way (RoW) approvals by deliberately imposing unnecessary and inordinate taxes on them, even after long months of deliberations on the economic benefits of increased broadband infrastructure.
BusinessDay further gathers that lengthy approval timelines, which in some cases take up to two years, also contribute greatly to the escalation of costs in the rollout of broadband internet networks. This situation, they say, makes it difficult for MNOs to lay fibre cables in order to facilitate the delivery of internet services to homes, schools, hospitals and offices.
RoW is a legal instrument allowing operators to deploy infrastructure on federal or state roads at a fee. “We have sufficient broadband capacities sitting on our shores, but distributing the capacities through a national backbone and last-mile connectivity is a major issue for us,” said Olajide Aremu, director, network operations for Globacom.
“This is because of the outrageous taxes imposed on telcos by state government agencies and the refusal to speed up the process of granting RoW approval by the same state government agencies,” he said.
Speaking with BusinessDay in an interview, Funmi Onajide, general manager, corporate affairs, MTN, said the main hinderance to profitability was the inadequacy of infrastructure. According to her, this implies that there is an incremental cost to doing business. She pointed out that it was more expensive to run a business that was reliant on generators and diesel than with public grid power supply.
“The other environmental challenges such as vandalism, theft of network infrastructure, multiple taxation and over regulation also result in unbudgeted expenditure and operational down time, all of which are at a huge cost,” she said.
Ben Uzor, with wire reports
