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Author: Watchtower
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Hard times for telcos despite adding N1.5trn to GDP



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[Image: telecoms-towers-123895841.jpg]

With Nigeria’s  telecommunications sector contributing  N1.549 trillion to the gross domestic product (GDP) in the second quarter of 2017, the same revenue cannot be said of growth in terms of income for the operators. 

While the GDP continues to spike, telecom operators and service providers bear the brunt and no longer make jumbo profits as they used to do. Rather, virtually all of them are striving to survive in a saturated and inconvenient business environment. 

The telcos struggle to stay afloat is alsoin the face of a decline in teledensity from 110 to 99 per cent. While Kenya is much smaller in comparison to Nigeria, it still boasts of ICT contribution of 10 per cent to the GDP, 40.2 million mobile subscribers,  29.6 million Internet subscribers, and mobile signal population coverage is about 95 per cent. In addition, Kenya’s three mobile operators, Safaricom, Airtel Kenya and Telkom Kenya (mobile and fixed), according to the Communications Authority of Kenya, enjoy hassle-free operations and guaranteed means of re-couping their investments.

Similarly, Daily Sun’s source in Portugal, Mr. Rio Ronaldo, explained that the Portuguese telecom sector is far ahead of Nigeria in terms of funding, regulation and quality. This is even as the European Union (EU) has established regulations that all member nations must follow. 

That may not be the case with Nigeria as is the focus seems to be on the GDP, while the operators are left to face a harsh economy on thir own.
Little wonder that Etisalat investors took their portfolio investments back to Dubai. Other telcos may follow suite or be forced to merge if they are unable to meet the operational expenditure (Opex) and capital expenditure (Capex) benchmark, coupled with thier inability to have access to forex.

Daily Sun’s investigations showed that most telecom operators in the country have to make hard decision daily because of factors such as dwindling purchasing power of subscribers, inactive SIM cards, mobile number portability and migration of subscribers to over the top (OTT) services like WhatsApp, Skpe and Facebook to pass across information.

Other challenges include increasing drop in voice calls, technology disruption and impact of recession that may further threaten their future survival.
The Nigerian Communications Commission (NCC) website showed that 10 million subscribers were lost between January to June 2017. While telecoms operators  lost N1.83 trillion during the same period, with average revenue per user of N1,830 for each subscriber.

Hundreds of telco staff have been laid off as the otherwise large workforce was downsized to the barest minimum as a cost-saving measure. Industry analysts believe that no telecoms industry in the world sacks staff like it is done in Nigeria.

Chairman, Association of Licensed Operators of Nigeria (ALTON), Mr. Gbenga Adebayo, disclosed that in spite of efforts by telecoms operators to keep the flag flying, they still contend with stiff challenges as government has continued to pay lip service to the issue of OTT and making their equipment critical infrastructure.
Said he: “Telcos pay over N300 billion to the coffers of government in taxes and levies annually. They have a strong presence in the country, and attracted over $38 billion FDI in the past 16 years. The industry is a catalyst for telecoms infrastructure development in the country, and also a major employer of labour, having created over 30,000 direct job opportunities and over 500,000 indirect job opportunities.”

Meanwhile, the executive vice chairman of the NCC, Prof. Umar Garba Danbatta, speaking through the executive commissioner, stakeholder management, Mr. Sunday Dare, said there would henceforth be an annual report, which would be made available to the commission, to review in more detail telecom operators that are not as strong as they look.

“We are looking through the books in a deeper way beyond submission. By October, NCC will know the financial health status of these operators,” Dare said.

He advised that, with the Etisalat incidence, other operators should be thinking of consolidation and mergers to create synergy and improve their lot. 
He also stressed that stakeholders in Nigeria’s telecom industry would need to check and scrutinise monopoply, anti-protectionism and OTT, among others.