The Executive Vice Chairman of the
Nigerian Communications Commission (NCC), Professor Umar Garba Danbatta,
spoke on Nigeria’s participation at the International Telecommunication
Union Telecom World conference in Durban, South Africa and how Nigeria
intends to drive her digital transformation, using modern technologies. Emma Okonji who attended the world conference, presents the excerpts:
Nigerian delegation led by the
Permanent Secretary, Ministry of Communication, Mrs. Nkechi Ejele,
attended this year’s International Telecommunication Union (ITU)
Telecom World conference in Durban, South Africa, which attracted global
participation. What necessitated Nigeria’s attendance?
Nigeria participated in this year’s ITU
Telecom World conference in Durban, South Africa to explore policies,
technologies and innovations that can lead to a smarter Nigeria and
assist in transforming our country, including the different sectors of
the Nigerian economy like the telecoms sector. We want to see how we as a
nation can use the policies, technologies and innovations that were
displayed at the conference to transform our industries and
organisations. We plan to apply the knowledge gained from the conference
on the telecoms sector and other sectors, in order to enhance Nigeria’s
smart city initiative. NCC for instance, sponsored some Nigerian
startups to this year’s ITU Telecom World conference who are the future
technology disrupters, to showcase their solutions and talents to the
world. Last year, at the ITU Telecom World conference in South Korea,
NCC also sponsored some of them and they were able to impress
international audience with their solutions and they returned with
international awards, just like this year.
NCC has been at the forefront of
wooing foreign investors to invest in Nigeria, especially in the
telecoms sector of the country. What is government doing to attract
these investors through tax incentives?
The Economic Recovery and Growth
Plan (ERGP) document of the federal government clearly shows government
willingness to create the enabling business environment for investors to
thrive in Nigeria. For example, in the ERGP document, there is a
pioneer status given to investors who are coming in to invest in any
sector of the economy, including the telecoms sector. The pioneer status
incentive is 30 per cent, which means a reduction of Company Income Tax
by as much as 30 per cent. This is in addition to other incentives like
the relaxation of monetary policy of the federal government, access to
foreign exchange, physical policy, reduction and waivers on custom
duties, among others like the Executive Orders 5 and 6 of the ease of
doing business.
All these are measures put in place by
the federal government to make business in Nigeria very easy and
profitable for willing investors, and we at NCC will continue to
encourage investors to come to Nigeria and invest in the telecoms
sector, and our efforts are beginning to yield good results. The
telecoms space is big enough to accommodate more investors and we will
continue to encourage Foreign Direct investments in Nigeria.
Last year, NCC gave an
update on telecoms investment in Nigeria, which was put at $70 billion.
What is the current investment figure and the contribution of the
telecoms sector to Nigeria’s Gross Domestic Product (GDP)?
I must make it clear that we get
statistics about telecoms contribution to GDP from the National Bureau
of Statistics (NBS). The figure we gave last year about telecoms
investment in the country was $70 billion, and the figure was what the
NBS released as at last year. Although the bureau has not released
statistics for this year, but I can confidently say that the total
telecoms investment in Nigeria has surpassed $70 billion. This is true,
based on the reliable information we have that telecoms investments,
which include foreign direct investment ( FDI) and portfolio investment,
has currently reached 10.5 per cent, up from 9.15 per cent in the
previous year. The NBS quarterly report puts the contribution of
telecoms to GDP at $5 billion per quarter, which is 2 per cent rise per
quarter. This of course is a steady quarterly growth and when you
calculate the four quarters in the last one year after the $70 billion
figure was released, it becomes clear that telecoms contribution to GDP
has surpassed $70 billion in the last one year, and this is a
significant contribution to the Nigerian economy. In the last one year,
Nigeria recorded a steady growth in voice and data services offering,
including broadband penetration and all these put together in monetary
terms, clearly shows the immense contribution of the telecoms sector to
the Nigerian economy.
What are some of the
opportunities for additional foreign investors that may be interested in
investing in the Nigeria’s telecoms sector?
There are lots of opportunities for
investors in the county’s digital transmission system including
microwave, satellite and optic fibre, such as submarine cable
communications, as well as digital exchanges for both wired and wireless
lines. We also have investment opportunities in our billing systems and
data communications networks, broadband and integrated service digital
network (ISDN). Nigeria needed 120,000km metropolitan optic fibre
coverage for ubiquitous network connections nationwide, but the country
has only 38,000km coverage now, which I see as an investment opportunity
beckoning on both foreign and local investors to take advantage of, and
invest in the country.
NCC is intensely focused on bringing
efficient, qualitative and affordable ICT platforms within the reach of
individuals and corporate bodies through the implementation of our
8-point agenda, the Federal Government’s Economic Recovery and Growth
Plan (ERGP) and the ICT Roadmap to drive synergies, which would expand
opportunities for disruptive technology innovation and global
competitiveness in Nigeria.
What are some of the regulatory measures taken by NCC to deepen broadband penetration in the country?
Several regulatory measures have
been put in place by the NCC to further grow broadband penetration in
the country. The commission had earlier assigned 2.3GHz licence to
Bitflux Consortium and six of the 14 slots available on 2.6GHz to MTN
Nigeria and two slots to Openskys, and six slots are still available for
assignment.
Nigeria had a mere five per cent
broadband penetration in 2012 but now we have attained 22 per cent and
hope to hit the 30 per cent recommended by National Broadband Plan by
December 2018, through various initiatives including granting subsidies
to Infrastructure Companies (InfraCos) licencees, and for spectrum
trading. In line with our initiatives to encourage investment for
InfraCos’ roll out, the commission created subsidy provisions in its
2017 and 2018 budgets for the InfraCos, which is expected to be
disbursed by piecemeal to the InfraCos as the deployment of their
infrastructure progresses. We have, however, assured all the licencees
that the subsidy is based on the implementation and milestones of their
rollout obligation
As part of the flexible approach to
regulatory management and constant stakeholders’ engagement, the
commission introduced spectrum trading only a few months ago. This is to
enable holders of such spectrum that is not in use to transfer, lease
or share such spectrum with those who may have a need for it. We see
this as a cutting edge regulatory initiative to safeguard the use of
this scarce national resource. The NCC undertook these regulatory steps
in line with the National Broadband Plan (NBP) of 2013-2018, where it is
anticipated that 30 per cent broadband penetration will be attained by
the end of 2018.
At the opening ceremony of
the ITU Telecom World 2018, the President of South Africa, Mr. Cyril
Ramaphosa highlighted three pillars on which his country is driving
digital transformation. What are the strategies for Nigeria in driving
her digital transformation?
Yes, I heard clearly, the South African
president’s speech at the opening ceremony of ITU Telecom World 2018
conference, when he listed the three pillars on which his country is
driving digital transformation, to include Women, Youths and SMEs. The
truth is that every county has its own strategy and I subscribe to the
position of his Excellency, President Cyril Ramaphosa of South Africa on
the country’s drive in digital transformation for a digital economy.
The Nigerian strategy is similar to the South African strategy as
enumerated by their president, but we have additional strategies beyond
that of South Africa.
In Nigeria, we have identified about
five strategies of the digital ecosystem, but to successfully achieve
these strategies in Nigeria, we need government enabling polices and the
right institutions that will enhance digital transformation in Nigeria,
because digital transformation is key to Nigeria’s development. As part
of the Nigerian strategy for digital transformation, we have considered
the youths, women and SMEs in our policy. In all of these, the role of
NCC in the digital transformation of the country is key and the NCC is
currently giving access to telecommunication services in the underserved
and unserved areas of the country, more so in a situation where only 50
per cent of Nigerian households have access to telecommunication
services. Again we are building the critical mass adoption and use of
telecommunications services in order to achieve the right broadband
internet penetration. We have a National Broadband Plan which the NCC is
at the forefront of pushing it to ensure that we have a deeper
broadband penetration for Nigeria. We have currently achieved 22 per
cent broadband penetration in the country, which is above the minimum
target of achieving 30 per cent broadband penetration, with plans to
achieve the maximum target by the end of this year. So the NCC is also
targeting massive capacity building in schools and colleges, including
tertiary institutions and communities outside the schools. The other
aspect of the digital transformation for Nigeria is in the area of
telecoms infrastructure. In order to boost the rollout of telecoms
infrastructure across the country, we decided to zone the country into
seven zones and licensed Infrastructure Companies (InfraCos) in all the
seven zones. The role of the InfraCos is to provide broadband
infrastructure that will facilitate faster rollout of broadband service
across the country. All these initiatives are targeted at enhancing
digital transformation in the country.
Are there incentives that will motivate the InfraCos to roll out broadband infrastructure much faster?
To ensure rapid rollout of broadband
infrastructure across the country, the NCC provided some palliatives in
the form of incentives for all InfraCos that are willing to roll out in
rural communities, including underserved and unserved communities.
Aside the incentives, the InfraCos licence was made very cheap to
encourage InfraCos. NCC is not interested in making money out of
InfraCos, but to encourage them to roll out broadband infrastructure in
all nooks and crannies of the country. Beyond women, youths and SMEs, we
also have plans for the physically challenged persons and we give them
opportunities to belong to the country’s digital transformation process.
What is your view about
government’s position on MTN, where the telecoms company was asked to
return money it repatriated from the country between 2007 and 2015 and
to pay tax arrears within the same period, totaling $10.134 billion?
Government is an institution whose
actions are guided by law. For example, the CBN is a government
institution that regulates the financial sector of the economy, while
the Federal Inland Revenue Services (FIRS)is another government
institution that regulates the tax sector of the economy and the NCC
regulates the telecoms sector of the Nigerian economy. What is happening
between MTN and the Nigerian government is based on regulatory issues
in their different sectors. Although the issue is currently centred on
financial and tax regulation, but there are public fears and outcry that
the action taken so far by government could cause a ripple effect on
other sectors of the economy because telecommunications, as it were,
which is the core business of MTN, cuts across all sectors of the
Nigerian economy. As telecoms regulator, we are aware that there is no
sector of the Nigerian economy that does not enjoy the services of
telecoms sector, and we are concerned about the current MTN issue with
government because MTN Nigeria is a licensed operator under the
supervision of NCC. But I will like to say that although the alleged
breach is purely on financials and taxes, the NCC as a regulator of the
telecoms sector, is doing everything possible to ensure quick and
amicable resolution of the matter. We are already intervening, just the
same way we intervened in previous matters concerning MTN Nigeria. As a
regulator with human face, we will always provide guidance to all our
licensed operators, both big and small, during crisis of any sort. MTN
has been in touch with us over the recent matter and we have mapped out
strategies to address the issue, which I will not like to divulge to the
media as at the moment.
What is NCC doing about additional licensing of spectrum frequency for telecoms operators?
The issue of spectrum licences is
ongoing, and this is closely followed by the renewal of licences. We had
a scenario when MTN bought over Visafone in 2015 and later wrote the
commission to take over the shares of Visafone and approval in principle
was granted MTN. Having met the conditions, the approval of transfers
of 99.999 per cent of shares was conveyed to MTN. Subsequently MTN wrote
for the transfer of the 800MHz spectrum of Visafone and we made MTN
realised the implication of transferring spectrum licence, which is a
national resource. There is another 700MHz spectrum belonging to the
broadcast industry that was in the custody of the National Broadcasting
Commission (NBC) that was long sold to MTN by the NBC, which again,has
the same condition like any other national licence. There were industry
agitations after the sale of the 700MHz spectrum to MTN and the spectrum
was later reallocated to NCC. But instead of NCC conducting a fresh
auction for the spectrum, the NCC decided that MTN should keep the
spectrum since it has already been paid for, but the NCC insisted that
MTN must use the 700MHz spectrum for the provision of telecommunication
services only and not for broadcast services. This has been concluded
and MTN is very happy about the decision of the NCC. This of course
shows the true position of our human face as a regulator to MTN and all
other telecoms operators, both big and small. But the Visafone 800MHz
spectrum cannot be given to MTN, because it is a national resource that
belongs to the NCC and there are dominant issues involved. Other
operators have kicked against giving MTN the Visafone 800MHz spectrum
without auctioning it because they could be interested in the spectrum
as well. To avoid dominance, we are still studying the issue and will
soon come out with our position on the 800MHz spectrum.
What is the current state with the sale of 9mobile?
Barclays Africa, the financial
adviser handling the sale of 9mobile announced Teleology Holdings
Limited as the preferred bidder of 9mobile and Smile Telecoms Holding as
the reserve bidder in the ongoing sale of 9mobile.
Now the spectrum licence of 9mobile
belongs to Emerging Markets Telecommunication Services (EMTS), but
trading as 9mobile. Teleology had since paid a non-refundable deposit of
$50 million and the record is there to show for it and we have verified
the payment. Teleology also paid $251 million into an escrow account of
the Central Bank of Nigeria. Barclays Africa had directed Teleology to
make an initial non-refundable cash deposit of $50 million within 21
days, which expired on March 21, 2018, and then pay the balance of $251
million within 90 working days from March 21, which expired July 25,
2018, and Teleology had since made these payments.
Based on these payments, the NCC needed
to transmit a letter of no objection to Teleology for the transfer of
the shares of Etisalat from EMTS to United Capital Trustees, which is
the receiver manager for the 13 local banks that gave Etisalat, now
9mobile, the loan of $1.2 billion. The shares will then be transferred
from United Capital Trustees to Teleology. It is a two phase transfer of
shares and NCC has transmitted the letters of no objection for the two
phase transfer of shares from EMTS to United State Capital Trustees, and
then from United Capital Trustees to Teleology. But what has not been
transferred is the spectrum licence to Teleology because there is a
caveat around it. So the operational and spectrum licences of 9mobile
are still with EMTS. Again Teleology is expected to make another tranche
of payment of $100 million to service the debts of equipment suppliers
and vendors like Huawei, IHS and Nokia, which 9mobile is owing. Again,
there is another amount that is consistent with the recapitalisation of
9mobile that Teleology needed to pay. All these remaining payments have
to be concluded before the NCC will release its report on Teleology’s
capability in handling 9mobile, to conclude the sale of 9mobile.
What is NCC’s view about the
bank-led mobile money operation in Nigeria as against the telco-led in
Kenya, where the penetration of mobile money in Kenya has been described
as high and encouraging?
Mobile money in Nigeria is bank-led
and its penetration level is still very low since its inception, which
is put at one per cent penetration. With a population of about 190
million, one per cent mobile money penetration is still on the low side
and it has not improved and not encouraging also. I have it on good
record that about 40 per cent of the total 190 million population of
Nigeria is financially excluded. The reason for the low penetration of
mobile money service in Nigeria is because of the modules of operation,
which is bank-driven, yet banks leverage on the infrastructure and
network of the telecommunication operators to drive mobile money in
Nigeria. It appears they do not have the capacity to drive mobile money
and the telecoms operators have expressed their desire to be part of the
driving processes, but this has not been approved by the CBN that
regulates mobile money and financial services operation in Nigeria. The
telecoms operators have said severally that they have the capacity and
infrastructure to drive mobile money and that they are willing to
provide additional capacity, yet mobile money is still bank-led and the
penetration level has been too slow. I am convinced that once CBN
licenses telecoms operators to provide mobile money service, the
penetration level will increase and the level of financial exclusivity
will be drastically reduced.
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