State of Nigeria Telecoms Industry: An operator’s perspective

State of Nigeria Telecoms Industry: An operator’s perspective

State of Nigeria Telecoms Industry: An operator’s perspective

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By Ibrahim Dikko
Managing Director, Backbone Connectivity Network Nigeria


The Executive Vice Chairman/CEO of NCC, distinguished guests, ladies and gentlemen, we are here today to celebrate and recognise the ascension of Professor Umar Danbatta as the Executive Vice Chairman and Chief Executive Officer of the Nigerian Communication Commission.

He comes on board at a time of much expectation and challenges in the telecoms sector, however, we are quite confident that with his experience and leadership skills we would be able to successfully deal with the challenges and exceed the expectations of all stakeholders.

The telecoms sector has grown tremendously since privatisation and liberalisation that it currently displaces Nigeria’s oil sector’s contribution to GDP. The world has witnessed a shift from the agricultural to industrial age and now to the Knowledge/Digital age. This Knowledge age has come with a strong global reliance on information and communication driven by advanced technology creating a convergence otherwise known as the Internet of Things. This has had significant impact on the World as we know it through an emerging digital market and economy. It has come with severe disruptions to traditional business and business models and is transforming economic sectors both nationally and internationally, examples are Uber & Airbnb.

We had about 400,000 connected phone subscribers in 2001, this has grown tremendously to over 226 million connected subscribers with 150 million active lines in 2016. We have about N1.5 billion online/electronic transactions made daily. From a meagre 0.5% contribution to GDP in 2001 to nearly 11% in 2015, and with a current tele density of 107.33, we can proudly say that the ICT sector has made significant leaps and substantial contributions to our country.

Professor Umar Danbata, Executive Vice Chairman at NCC.
Professor Umar Danbata, Executive Vice Chairman at NCC.

Today, the ICT sector contributes about 9.8% to Nigeria’s GDP. It has become embedded and critical in the economic supply and value chain, transforming the way we live, do business, shop, communicate and provide public social services. The National Bureau of Statistics reports that the Telecom sector contributed N1.58 trillion in Q2 2016, up by 1% from Q1 2016. We had about 400,000 connected phone subscribers in 2001, this has grown tremendously to over 226 million connected subscribers with 150 million active lines in 2016. We have about N1.5 billion online/electronic transactions made daily. From a meagre 0.5% contribution to GDP in 2001 to nearly 11% in 2015, and with a current tele density of 107.33, we can proudly say that the ICT sector has made significant leaps and substantial contributions to our country.

Broadband penetration level is now up to 14% from 10% in 2014, signifying a growing trend in much needed communications infrastructure. In the midst of these successes, there are gaps in the ICT ecosystem that is inhibiting the kind of growth, sectoral connections and contribution to our economy that it is capable of. The National Broadband objective to attain 30% broadband penetration goal by 2018 is facing challenges some of which I will state here. The big question before us today is — how do we develop the requisite infrastructure to sustain and increase growth rates and increase broadband penetration levels? Is the environment enabling enough to allow for more infrastructure rollout? The answer rests in how we unlock the supply chain of our Digital Ecosystem.

We must recognise that our ICT ecosystem is powered by a value and supply chain and critically that broadband communications infrastructure is the pivot of the supply chain. Taking a critical look at the supply chain of our ICT ecosystem, we can gladly state that the international fibre cable infrastructure gaps have been successfully bridged in the last decade with the landing of various submarine fibre cable systems on the shores of Lagos increasing Bandwidth capacities at the shores from 4.78 Tbps in 2011 to over 11 Tbps to-date.

Adebayo Shittu, Minister of Communications
Adebayo Shittu, Minister of Communications

This has resulted in the significant reduction in the cost of international bandwidth especially at the landing points in Lagos. Despite collective Optic Fibre Cable infrastructure deployments of over 60,000km by both Independent Network Operators and Mobile Network Operators over the years, the Broadband Fibre infrastructure meant to address transmission of bandwidth capacities from cable landing stations in Lagos to the hinterlands and within metropolitan areas and cities nationwide remains fragmented, ineffective, inefficient, costly and unable to contribute meaningfully in the growth of the ICT sector and the economy in general.

The major challenges mitigating against pervasive broadband infrastructure range from exorbitant Rights of Way charges normally required to be paid upfront, multiple taxation, network asset vandalism, misunderstanding of Federal Government’s strategic broadband policy direction by the state governments etc.

Backbone Connectivity Network (BCN) took a bold step a decade ago to provide an open access non-discriminatory platform to enterprise clients, Mobile & Independent Network Operators, Internet Service Providers and Private Individuals in Abuja. We have recently extended that service to North Central, North East and North West regions. Our experience over the years puts us in the vantage position to share with you all our experiences on how best we can address the fibre infrastructure deficit at metropolitan and long distance transmission levels.

We believe that the time has come for bold, innovative and refocused ideas and solutions that will accelerate broadband deployment, unlock ICT supply and value chain thereby creating sustainable growth for telecom companies and the economy at large. We suggest the following for the EVC’s kind consideration as part of our contribution towards supporting policies and incentives needed to enhance broadband infrastructure deployment;

⦁ First, we must recognise and salute the EVC for the advocacy he has been undertaking with state governors and others towards resolving the ROW challenges we have all been facing. Even though Federal Government has standardised ROW rates, the state governments are yet to align with those rates despite being the biggest beneficiary of increased broadband infrastructure. The current ROW policy, effectively a tax on investment, disincentives investment due to high cost, upfront payment and in some cases charged annually. The EVC may wish to note a World Bank study between 2000 and 2006 found that low-income and middle-income countries experienced “about a 1.38 percentage point increase in GDP for each 10 percent increase in [broadband] penetration.” The World Bank further found that the development impact of broadband on emerging economies is greater than for high-income countries, which “enjoyed a 1.21 percentage point increase in per capita GDP growth” per 10 percent increase in broadband penetration[ii]. With Nigeria’s projected 2017 GDP estimate of US$657 billion, a 1.38% GDP growth is equivalent to $8.6 billion (N309.6 Billion Naira) additional input to the Nigerian economy annually. This is greater than the current combined contribution of the Arts, Entertainment and Recreation sector to Nigeria’s GDP. This we believe provides a very strong basis for reengagement with the National Economic Council. It is pertinent to point out that both developing and developed countries have embraced fibre broadband infrastructure development as a critical pivot for socioeconomic growth, therefore, the National Economic Council should be encouraged to recognise the harmonisation of ROW charges and increasing broadband penetration as a critical national imperative and a strategic cornerstone of the change and diversification agenda of the Federal and state governments.

It is necessary that we speed up the legislative process to enact the ICT Critical Infrastructure Act to criminalise sabotage and vandalism to telecoms infrastructure and subsequently see to it that Federal Executive directives are issued to security agencies to enforce the law and administrative protection from theft and vandalism.

Senator Bukola Saraki, Senate President
Senator Bukola Saraki, Senate President

⦁ We commend the efforts NCC through the Universal Service Provision Fund (USPF) to extend fibre broadband infrastructure to the unserved and underserved areas of our country. We believe a review of the current model is required for greater effectiveness and impact of the very laudable initiative. This would range from shortening the tender process, consideration to move to a longer term IRU model (5 – 10 years) rather than the present yearly tender and to either increasing coverage area (600km to 1,200km) or increasing density (clustering in focused area) in proposed zones to ensure critical mass and higher impact.

⦁ Consideration need to be given to securing waivers for import duties and levies for equipment for broadband deployment such as FOC etc, granting tax holidays to Infracos. Broadband infrastructure as the pivot for ICT growth should be regarded as a critical socio-economic infrastructure.

⦁ Engage and collaborate with partners such as BOI and CBN to create an ICT infrastructure fund with a 2 year moratorium period which would provide long term investment funds at single digit interest rates. This would definitely have a strong and positive impact on operators, enable rapid deployment of broadband infrastructure, assist our country bridge its ICT infrastructure gap deficit, facilitate growth of our digital economy and increase our sector contribution to GDP.

⦁ We must all pause and reflect deeply on the digital ecosystem bottlenecks that abound such as Base Station permits and taxes, telecoms equipment manufacture & services and the continued lack of and epipleptic power supply situation in the country. This continues to negatively impact businesses with the corresponding adverse influence on the digital ecosystem. We need to eliminate the high taxes, bureaucratic bottlenecks, considerably ease the cost of doing business and improve the overall environment to best of our ability to progress the development of the digital ecosystem with attendant benefit to its constituent parts. We must also look critically at the challenges of Wireless transmission, of adding more Base Stations to areas where technology upgrades are needed, for example from 2G to 3G, etc.

⦁ We must also engage government parastatals that seek to embed and enjoy most times exorbitant ROW charges on routes and cause avoidable bottlenecks in fibre deployment. This charges are generally on routes that ROW charges have already been paid, this are some of the challenges including community issues that operators face concerning deployments. We must note that infrastructure companies whose sole business is to operate at wholesale capacity transmission level must survive and interconnect for Nigeria to have an independent neutral carrier/backbone strong enough to unlock the supply chain challenge that exists in our country today.

⦁ It is necessary that we speed up the legislative process to enact the ICT Critical Infrastructure Act to criminalise sabotage and vandalism to telecoms infrastructure and subsequently see to it that Federal Executive directives are issued to security agencies to enforce the law and administrative protection from theft and vandalism.

I conclude with a recent positive development in our country at a time when FDIs have reduced drastically, an indication of its criticality and the power of transformation of our sector, that very recently, the founder of the world’s largest online social network platform and one of the world’s richest men visited our country. His platform is reported to have about 15 million users from Nigeria with 97% accessing his platform via mobile.

I thank you all for your attention and wish the EVC a successful tenure.


* Ibrahim Dikko, Managing Director, Backbone Connectivity Network Nigeria, made this presentation at a reception held by Association of Telecommunication Companies of Nigeria (ATCON) in honour of Professor Umar Danbatta, Executive Vice Chairman of Nigerian Communications Commission.

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