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Why Nigeria’s Telecoms Sector Needs Government, New Regulatory Interventions

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The Nigerian Telecommunications industry is currently considered a key sector that contributes to economic growth and one that can help lift Nigeria out of recession.

Obviously, the impact started at the point of liberalisation of sector almost two decades ago, catalysed and opened up the sector to local and foreign direct investment (FDI) estimated at over $68 billion as at November 2016.

It has created approximately over 2.5 million jobs over the past 10 years, its impact reaches across all industries and holds the potential to modernize multinationals, SMEs and their supply chains.

The sector continues to provide mobile banking services to help bank the unbanked, provides access to e-learning platforms to help facilitate training and development, and brings healthcare services to rural regions, via telemedicine and text message counselling, amongst many other services.

Until June 2016, the telecoms sector was growing rapidly and comprised 9.8% of Nigeria’s GDP but this growth has now stalled, with the sector at a strategic crossroads. Several factors have converged simultaneously, which could materially impact the industry and undermine its potential to drive economic growth and stimulate the Nigerian economy as a whole.

For starters, from a systemic standpoint, the current weakness in the local economy has resulted in relatively low consumer purchasing power and continues to place pressure on the industry and its operators.

The weak Naira has made the importation of much needed telecom equipment into the country difficult, and the upgrading of towers and service capacity expansion too expensive to conduct on a large scale.

Operators are now either deferring or delaying upgrades or expansion of their networks and customers are starting to feel the impact. Signal quality has been affected, incidences of dropped calls have increased, and overall customer service quality has declined. Nigerian consumers have every right to demand more and should never have to settle for poor network quality or services.

To further compound matters, consumers continue to move away from legacy voice services and are switching to data bundle packs, which allows them use over the top (OTT) service providers such as WhatsApp, Skype and Facebook to make phone calls inexpensively over broadband connectivity not minding the often poor quality of these services.

While it’s clear that the simple solution to addressing this trend is massive investment into telecom tower network densification, as new 3G and 4G technologies are rolled out, these network upgrades can only be done if there is adequate financing and a suitable business case.

Moreover, there is an ongoing data bundle “price war” between incumbent telecom operators and internet service providers; with a frantic race to deliver cheap gigabytes of data, for rock bottom prices.

On the surface, these prices appear good for the consumer in the short term, but in the long run, this price war will put many operators out of business, as these current bundled offerings are priced well below their actual costs to network operators.

According to Research ICT Africa, the price of data has decreased by over 65% over the past two years, squeezing margins and pushing smaller mobile network operators to the brink of collapse.

Short Term versus Long Term Gains
Artificially low data prices are designed to drive out competition. This type of practice is called “predatory pricing” in respect of which there are restrictions in many parts of the world. These pricing wars never work out well for consumers, as they typically result in initial temporary low service prices, just long enough to force out the competition.

Then, all of a sudden, the few remaining players monopolize the market and suddenly double, or even quadruple prices, as they are the surviving and dominant game in town. It’s easy to identify anti competitive pricing, as we know what it costs the telecom industry to secure internet bandwidth.

A good example of healthy competition which has led to improved quality and product service offerings is mobile phones. The competition between Apple and Samsung and others has forced all parties to constantly launch new and improved products.

Competition leads to fair market pricing which has enabled mobile phones to be purchased by the masses. The current problem in the telecoms sector is that we don’t have fair market pricing -the price of data bundles in Nigeria is presently amongst the lowest in Sub Saharan Africa.

While market forces drive the industry, governments and regulators must shape the mobile economy by setting the policies and regulations that will deliver a healthy, competitive and sustainable mobile sector alongside consumer protection for all citizens.

Feasible Solution
Given the tremendous potential that telecommunications has to jump start and stimulate the Nigerian economy at all levels, we need the help of government and regulators to play the role of referee and establish a level playing field.

Fatai Folarin, Tax & Regulatory Services Lead Partner at Deloitte noted that, “The telecommunications industry in Nigeria is one that can currently be described as self-aware and steadily adapting to the stark realities of business – changing trends, intense rivalry, regulatory uncertainties etc. There is a general understanding that to remain sustainable, there is a need to recreate existing products, diversify into new areas for which the capabilities and resources are near, improve on general business processes and navigate through the regulatory landscape.”

We recognize the free market principles of business and competition, but we also note the artificially low prices that are having a negative effect on investment and growth within the sector.

Both large and small mobile network operators are currently working to try and mitigate the current challenges related to squeezed margins, and in other cases generating losses, and lack of direct access to foreign currencies, with the smaller firms struggling the most to compete. Reduced competition will be a lose-lose situation for all operators, and the public as a whole.

The recent default status of Etisalat Nigeria, is a prime example of how it can all go wrong. Etisalat is the fourth largest telecom operator in the country, but as a direct result of the company’s razor thin margins on its current service offerings, and against the backdrop of the devaluation of the Naira, the company has failed to meet its obligations to its lenders.

Concerted regulatory efforts need to be made to ensure that all sides survive and the quality of service levels continue to be enhanced, by having the regulatory bodies insist the mobile network operators focus on additional customer metrics such as, measuring their signal reach, network uptime and improved quality of a data services.

A regulated price minimum price level will help stop the downward spiral of the telecoms industry and allow all telecom players, big and small, to compete on network service and customer service quality. Policy makers must therefore ensure that all current players survive.

The Nigerian Communications Commission (NCC) can issue more spectrum licenses and make up revenues when additional spectrum is auctioned and mobile network operators roll out into new rural areas.

We also need to consider the telecoms sectors as critical to our nation’s economic development and, as such, place the sector on the critical national infrastructure list

This important designation will give operators priority access to much needed foreign exchange and the procurement and purchase of telecom upgrade equipment for the networks.

In conclusion, mobile network operators serve millions of SMEs and multinationals that are dependent on internet access and other enterprise solutions – a half day service disruption results in large revenue losses for various businesses throughout the country.

It is therefore very important that the government, regulators and international institutions continue to define and refine strategies to increase growth and ensure the long-term sustainability of the Nigerian telecommunications sector, thereby also boosting investors’ confidence and signalling to the international community that we truly remain open for business.

 


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Nigeria CommunicationsWeek believes that technology makes life more exciting and helps improve the lives of people around Nigeria and indeed the world. So since 2007, we have devoted our energy to independent reportage of technology and how they affect lives.

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NASENI Retreat Focuses on Aligning Development Institutes’ Goals

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In order to achieve greater cohesion amongst its Development Institutes and also sustain their proper alignment with the goals and vision of the National Agency for Science and Engineering Infrastructure, NASENI, the Agency is holding a two-day strategic retreat for Overseeing Officers who are managing the institutes.

Participants at the retreat also include Project Managers, Coordinating Directors and some Directors from NASENI headquarters.

The event, held in Abuja, is expected to strengthen leadership skills to achieve strategic alignment of the various Development Institutes’ goals with the overarching vision of NASENI, ensure collaborative synergies with the headquarters to streamline efforts, maximize resource utilization and enhance decision making capabilities.

It will also shift the focus of research and development (R&D) efforts towards solutions that are market-ready, innovative and capable of generating sustainable economic values.

In his welcome address at the opening ceremony, the Executive Vice Chairman/Chief Executive Officer of NASENI, Mr. Khalil Suleiman Halilu, stated that the retreat was not merely about planning, but about creating the blueprint for action, adding that each of the participants hold a unique and pivotal role in translating the vision of NASENI into reality.

“The conversations, strategies, and commitments forged here will determine how effectively we position NASENI to lead Nigeria into a future defined by innovation, self-reliance, and technological advancement, instill a shared commitment to excellence by adopting global best practices in innovation management”, he stressed.

He pointed out that recent assessments have shed light on the need for greater cohesion between the goals of the Development Institutes and NASENI’s renewed vision, highlighting that the retreat was a critical step in the Agency’s transformative journey-a journey anchored in the guiding principles of Creation, Collaboration, and Commercialization (3Cs).

He added that the principles encapsulate the essence of what NASENI stands for: creating cutting-edge solutions that are commercially viable and impacting directly on the lives of Nigerians who sit at the core of the renewed hope agenda of the President.

“Today, we gather not just to deliberate but to lay the groundwork for a stronger, more unified NASENI-one that is poised to drive Nigeria’s technological aspirations to unprecedented heights.

“As an institution saddled with the responsibility of indigenous technology advancement, NASENI has always been a beacon of innovation, a catalyst for progress, and a key driver of sector-specific solutions.

“Across our specialized Development Institutes, I see clearly that remarkable work has been done to push the frontiers of research, foster innovation, and develop solutions that address national and industrial challenges.

“Yet, we recognize that to stay true to our mission in this rapidly evolving world, we must continuously adapt, align, and refocus our efforts”, he affirmed.

The EVC/CEO, therefore urged the top management staff to engage fully, think boldly, and collaborate purposefully. “This is our moment to redefine our collective impact and to reaffirm our dedication to a vision that transcends individual institutes to unite us under the banner of progress for our nation.

“Together, we can and will achieve extraordinary outcomes. Let us move forward with clarity, resolve, and to demonstrate an unyielding commitment to excellence that defines NASENI,” he concluded.


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IHS Nigeria Partners with the NCMM to Digitize Nigeria’s Cultural Heritage

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IHS Nigeria, part of the IHS Holding Limited (“IHS Towers”) group, one of the largest independent owners, operators, and developers of shared communications infrastructure in the world by tower count has announced a strategic partnership with the National Commission for Museums and Monuments (NCMM) and the Federal Ministry of Art, Culture, and the Creative Economy (FMACCE) to support the digitization of Nigeria’s cultural heritage.

This collaboration aims to make Nigeria’s historical artifacts, artworks, and cultural monuments more accessible to the public through a digital museum.

The partnership between IHS Nigeria, NCMM, and FMACCE will leverage technologies to digitalize and display artifacts online, helping to preserve and showcase Nigeria’s cultural heritage. It marks a significant step towards modernizing the preservation and dissemination of Nigeria’s cultural assets, making them more accessible to a broader audience.

The digital museum is the first significant project under the Honorable Minister’s Digital Culture Initiative and is designed to provide a platform for the exploration and appreciation of Nigeria’s diverse cultural heritage. This partnership underscores IHS Nigeria’s commitment to sustainability and its role in helping foster cultural preservation and digital education.

Mohamad Darwish, CEO, IHS Nigeria, commented, “We are excited to partner with the National Council for Museums and Monuments and the Federal Ministry of Art, Culture and the Creative Economy on this groundbreaking initiative. As a company deeply rooted in Nigeria, we recognize the importance of preserving, protecting, and promoting our cultural heritage.

“This partnership also aligns with our commitment to sustainability, education, economic growth, and community development. We look forward to contributing to the preservation of Nigeria’s cultural legacy”.

Hannatu Musawa, Nigeria’s Minister of Art, Culture and the Creative Economy, commented, “We are delighted to partner with IHS Nigeria on this initiative which aligns with His Excellency President Bola Ahmed Tinubu’s Renewed Hope Agenda, and our Ministry’s 8-point plan on fostering strategic partnerships.

“I am particularly pleased that this initiative, which is the first significant project under our Digital Culture Initiative, embodies our commitment to innovation, global partnerships, and the sustainable growth of our creative industries, positioning Nigeria as a leader on the global stage.”

Olugbile Holloway, Director General, National Commission for Museums and Monuments, commented, “We are grateful to IHS Nigeria for their support in this remarkable initiative.

“We believe that to keep ahead of current trends and appeal to a younger demographic, it is imperative that a digital experience of our rich cultural heritage is created and made available to the public.

“The digital museum will serve as an invaluable resource for researchers, students, and the general public, both in Nigeria and around the world, and will play a crucial role in the preservation of our national heritage.”

 


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Google Faces Major Antitrust Action: DOJ Demands Chrome Sale

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In a significant escalation of its antitrust battle against Google, the US Department of Justice (DOJ) on Wednesday, November 20, urged a federal judge to break up the tech giant by ordering the sale of its widely used Chrome browser.

The DOJ also called for an end to Google’s agreements to be the default search engine on smartphones and proposed measures to prevent it from leveraging its Android operating system to dominate the market.

The DOJ suggested that if these remedies fail, Google should be compelled to divest Android entirely. The proposals mark one of the most aggressive antitrust moves against a major tech company in decades, with regulators seeking to curtail Google’s alleged abuse of its market power.

Google’s president of global affairs, Kent Walker, criticized the filing, accusing the DOJ of pursuing a “radical interventionist agenda.” Walker warned that the proposed breakup would disrupt Google’s product ecosystem, harm innovation in artificial intelligence, and threaten America’s global technological leadership.

This case represents a historic shift in the US government’s approach to regulating tech companies, following decades of relative inaction since the failed attempt to break up Microsoft in the early 2000s.

Google is set to respond in a filing next month, with a hearing scheduled for April before Judge Amit Mehta. The judge’s August ruling declared Google a monopoly, setting the stage for this next phase of the legal battle. Any decision is likely to be appealed, potentially taking years to resolve and possibly reaching the US Supreme Court.

The case’s future could also hinge on political changes, as President-elect Donald Trump’s incoming administration may take a different approach to antitrust enforcement. Trump has previously criticized Google for alleged bias against conservatives but has also expressed skepticism about breaking up major tech companies.

The DOJ’s proposals come amid broader efforts to address the dominance of big tech, with five antitrust cases currently pending against Amazon, Meta, Apple, and Google. These cases, brought under the Biden administration, are expected to shape the regulatory landscape for years to come.


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