Investments in Telecom Hit $16Bn, Alton Warns of a Dive

Association of Licensed Telecommunications Operators of Nigeria (Alton) has flaunted its contributions to the economy by reporting a princely $16 billion from foreign direct investment in the last ten years but warned of stunted growth if barriers to further investments are not removed, Nigeria CommunicationsWeek can now report. The Nigeria telecom sector, easily the growth engine of the country’s economy from 2001 to date is now beset by myriad of problems including; multiple regulation and taxation, illegal access denials, site shut-outs, shortage of long term investment capital in-country, inadequate power supply, unrealistic Opex and Capex levels for a developing country, lack of incentives to drive service penetration to the remote and rural areas, rent seeking charges for permits and approvals necessary for deployment and security. Gbenga Adebayo, chairman, Alton, said the bottlenecks are a scare-force to further investment in the sector. Alton, an industry body for all telecommunications companies and others providing subsidiary services to telecommunications service providers in the country is at the forefront of promoting growth in the telecommunications sector and, enhancing efficient and affordable telecommunications services delivery to users of these services. But Adebayo said gains in the IT and telecom sector “have come through the mobile telephony industry.” He adds that “80 per cent of the country has been covered by GSM-based mobile operators and CDMA based wireless operators.” The implication is that the sector’s contribution to the overall national GDP growth now put at over 7 per cent has being significant. While investments stand at $16 billion at the end of 2010, the telecom sector’s contribution to the national GDP stood at 3.5 per cent, and is expected to grow to circa 5 per cent in 2015. “Investment in telecom generates a growth dividend, because the spread of telecommunications reduces cost of interaction, expands market boundaries, and enormously expands information flows. Hence, the development of telecommunications makes for the delivery of societal services which enhance education, health and agriculture,” said Adebayo. The Alton chairman noted that for Nigeria to remain competitive, “it must continue to strategize and issue policies, laws and regulatory instruments that will ensure the continued growth of the sector.” He warned however that Nigeria cannot attain global economic power status unless IT application is emphasized as a “driver of development.” Recognising IT as a critical social overhead capital, with an accompanying policy change that would herald a transformative agenda are essential in bringing about the much needed next phase development to the country, he stated. Among necessary changes needed to drive growth and further penetration in the sector, Adebayo, stated Nigeria should urgently look at its taxation policy as it affects critical investment in telecom and ICT in general. While the majority of telephone subscribers would want the regulatory authority to bring down the axe on the mobile operators for the general poor quality of service (QoS), not so for Adebayo’s Alton. He exonerated the mobile operators, but rather blamed government policies that stifle further investments in the sector that would drive growth and better quality. He noted that investment in critical infrastructure have stalled in recent years as a result of the governments’ multiple regulation and taxation regimes. “We note that there are currently about 20,000 base station sites in Nigeria serving a population of over 150 million people,” said Adebayo. In country evaluation, he contrasts that the United Kingdom with a total population of 60 million is served by 53, 300 base stations. “For Nigerian networks to provide best in class services compared to the UK, Europe and other countries, it is expected that the industry will need to roll out additional base station sites in excess of 50,000 nationwide,” said Adebayo. Several government agencies like the Nigerian Environmental Standards Regulatory Enforcement Agency, (NESREA) have sought to impose standards on mobile operators that are significantly different from prescribed NCC guidelines over tower and mast installations. Of recent, states and local governments have joined the fray in exacting influence over the telecom infrastructure investment by imposing regulatory fees to shore up their internally generated revenue (IGR) base. Recent studies indicate that companies and industries with expansive usage of “ICT grow faster, more productive and more profitable” than others who depend less on IT application.