Expansion in telecoms industry undermined by infrastructure, charges, policy

ODINAKA ANUDU
Nigeria could have seen much larger local and foreign investments in the telecoms industry if not for poor infrastructure, low broadband penetration, multiplicity of charges and lack of implementation of well-thought-out policies, CEOs of telcos said on Thursday.
Nigerian authorities see the telecoms industry as a cash cow, imposing about 38 different taxes and levies on the struggling telecoms players.
Right of Way (RoW), defined as the legal right to pass cables along a specific route through the ground, is still a big challenge as many states charge as high as $20 per metre for laying fibre network, rather than N145 agreed by the National Economic Council.
Broadband penetration is relatively low at 21 percent as against the anticipated 30 percent, as the CEOs said the Nigerian National Broadband Plan (2013-2018) had not been implemented religiously.
Broadband is defined as an internet experience where the user can access the most demanding content in real time at a minimum speed of 1.5 Mbit/s. CEOs of telecoms estimate that broadband penetration will cost about $100 billion.
“Investors are willing to come to Nigeria. I have seen a lot of them who looked at the size of the Nigerian economy and wanted to come in, but once they start looking at the economics they pull out,” Funke Opeke, CEO of MainOne Cable Company, a Lagos-based communications services company, said.
“They will tell you they have done it in Kenya, Ghana and other African countries. So, why is it too expensive to do it here? The conditions are not just conducive at the moment to make such investment,” Opeke said at the breakfast meeting organised by the Nigerian-American Chamber of Commerce (NACC) in Lagos.
She urged the government to bring down the cost of infrastructure, be it RoW or main infrastructure, adding that low purchasing power of Nigerian consumers have had a negative impact of the telcos.
Nigeria’s Broadband Plan targets spreading 3G/LTE to at least 80 percent of the population while delivering a five-fold increase in broadband penetration, but this has not been achieved, thus hurting the prospects of the industry.
“I looked at the Broadband Plan and I told myself, ‘If only we had implemented this, we would have exceeded 30 percent,” said Godfrey Efeurhobo, CEO of Smile Communications.
“In all the policy statements, including the Economic Recovery and Growth Plan (ERGP), broadband is all there. But why is broadband not in the list of items that can access foreign exchange?” Efeurhobo asked.
“A number of our customers want us to be in all the states, but we are in eight cities and cannot even satisfy our customers. I cannot make a business case because it is expensive to be in these places and FX is my capex. If the government is subsidising agriculture, why not also broadband?,” he further asked.
For Olusola Teniola, president of the Association of Telecommunications Companies of Nigeria (ATCON), telecoms business is under threat.
“We are not cash cows. Telecoms businesses are under threat because we have poor, weak policies. All the capacities of fibre have not even reached the average Nigerian,” Teniola said.
According to him, telcos infrastructures must be protected and there is a need for the right policies that can achieve this. He stated that the margins of telcos are falling dramatically, reflecting the state of the industry and the economy.
“There are opportunities to expand in the industry, but at what cost?” asked Solomon Ogufere, commercial director of Vodacom.
“Are the policies implemented? Implementation is key. Synergy is important and regulation needs to support. When we play our role, we will see penetration,” he said.
Olabintan Famutimi, national president, Nigerian-American Chamber of Commerce, said: “Why is the Nigerian state so far behind? The failure to keep pace is the direct result of our failure to adopt a national broadband policy.
“The country needs to take aggressive action to significantly expand our broadband connectivity. Now is not the time for incremental improvements; we are behind, and we must adopt a comprehensive strategy if we are to address the growing needs of our citizens.”
“Five years later, the impact of the National Broadband plan is yet to be felt. Expectedly, the inaction is affecting Nigeria’s capacity to make progress on so many of the indices by which the nation’s economy and current diversification efforts are judged,” he said.