Many Troubles of CDMA Business in Nigeria

These are not the best of times for code division multiple application (CDMA) operators in Nigeria; they are going through tough times as a number of factors have conspired to ring them into obscurity.

To say that the CDMA sector is trouble is stating it mildly; financial institutions repulsed by the companies’ stinking financial records have turned their backs, preferring to fund global system for mobile communications (GSM) operators with proven corporate practice.

It appears the CDMA service providers were programmed to fail when the initial licensing regime gave it a regional outlook, rather than the universal for its GSM mobile operators.

However, it’s the CDMA who’s ultimately responsible for their troubles with widespread corporate mismanagement, including, but not limited to its non-compliance with laid down internal controls and operation procedures, biased recruitment exercises and general lack luster management practices.

These issues alone are bad enough, however, to make matters worse over the years CDMA operators have regularly and consciously ignored sustained and systematic red flags as their promoters and managers diverted funds meant for expansion into frivolous projects like manufacturing, oil and gas, elections, just to name a few.

The misappropriation of funds and inability of unified license holders to roll out services has not helped matters, fueling subscribers’ preference toward GSM services.

Due to these poor business practices and mishandling of funds some CDMA companies are already dead and decomposing, those remaining have reportedly axed large chunks of their workforce due to their hemorrhaging finances.

The cutbacks will only provide a temporary palliative as government is not forthcoming with a bail-out plan, nor is the industry eager to consummate mergers or acquisitions, making the long term survival of the companies doubtful.

To ensure that the faith which befell CDMA operators do not have ripple effect on the entire telecom industry, it is important to entrench transparency and adequate disclosure of information for the industry.

That is why we welcome the new corporate governance initiative recently introduced by the Nigerian Communications Commission (NCC) for the internal management of players in the industry.

Bu the commission should ensure tighter supervision of the management of the companies because the consequences of systemic failure in the industry will be far reaching.

Financial institutions should also be compelled to lend preferentially to the CDMA subsector to give them enough funds for expansion.