Etisalat Nigeria shareholders have requested a basket of regulatory concessions from the Federal Government to make the number four mobile phone company remain competitive as it battles some banks over debts.
Technology Times can exclusively confirm that the Etisalat Nigeria shareholders that met with the Nigerian Communications Commission (NCC) Monday submitted the list of requested concessions including the restoration of preferential mobile termination rates (MTRs).
Etisalat Nigeria wants NCC to allow it operate under the Asymmetric MTRs which will let the mobile phone company leverage its relatively smaller market share to earn higher revenues during exchange of traffic with bigger rivals like MTN Nigeria, the number one mobile phone company in the country.
A high-powered delegation of Etisalat Nigeria shareholders, led by Waleed al-Muhain, Group Deputy CEO of Mubadala Development Company of United Arab Emirates, which is also one of the troika that owns the mobile phone company met with the meeting Professor Umar Danbatta, Executive Vice Chairman and Chief Executive Officer of NCC and some members of his team in Abuja, where they handed over their basket of demands.
Hakeem Belo-Osagie, Chairman of Etisalat Nigeria and other senior officials of the mobile phone company were also part of the NCC meeting in Abuja.
The Abuja meeting formed part of talks underway with regulators and its creditors towards resolving issues around debts estimated at N541.8 billion owed three banks by the mobile phone company, according to a report by Premium Times.
“Etisalat Nigeria wants NCC to allow it operate under the Asymmetric MTRs which will let the mobile phone company leverage its relatively smaller market share to earn higher revenues during exchange of traffic with bigger rivals like MTN Nigeria, the number one mobile phone company in the country.”
People conversant with situation in the Abuja office of NCC told Technology Times on condition of anonymity that the Etisalat Nigeria shareholders are requesting the telecoms regulator to grant some concessions that include moratorium on payment of its licensing and other mandated fees under its licensing obligations to the agency.
The mobile phone company’s shareholders reassured the telecoms regulator, which had waded into the debt issues between Etisalat Nigeria and the creditor banks, of the state of health of the company as a going concern.
“They said that with monthly revenue within the range of N18 to N20 billion monthly, the company was not in any financial crisis”, according to our source.
The problem came for Etisalat Nigeria’s local operations and bottom line because of monetary policy review by the Federal Government, and the fall of the Naira, which has significantly impacted its foreign exchange-dependent business, Etisalat Nigeria say.
The company’s shareholders want NCC to restore the Asymmetric MTR, the regulatory policy that allows relatively smaller operators like Etisalat Nigeria derive more revenue from exchange of traffic during interconnection with bigger mobile phone companies.
The Etisalat Nigeria shareholders reckon that the regulatory concession on interconnection will shore up the competitiveness of the fourth biggest mobile phone company in the country, and help its telecoms industry survival.
According to NCC figures, Etisalat Nigeria, with 19,621,806 active lines controls 12.91% of the mobile telephony market share to rank fourth among the “Big Four” GSM Networks in Nigeria, namely MTN Nigeria, Globacom and Airtel Nigeria, by first quarter of 2017. Within the same period, MTN Nigeria controls 60,391,959 (40%); Globacom, controls 37,328,827 (24.60%) and Airtel Nigeria 34,656,605 (22.80%).
Numbers determines telecoms market might and the Etisalat Nigeria owners believe that a regulatory intervention can help tilt the balance in favour of the mobile phone company.
The adoption of Asymmetric MTRs has been justified by regulators policy mechanisms to reduce barrier to entry for new entrants and smaller players and also help them earn more revenue while checking market dominance by bigger and incumbent operators.
Etisalat Nigeria, which rolled out commercial service on September 26, 2011, with the launched of its 3.75G HSPA+ network in Nigeria, is the last entrant among the Big Four. MTN Nigeria and Airtel Nigeria (then Econent Nigeria), were the first batch to launch commercially in August 2001, followed by Globacom in August 2003.
Etisalat Nigeria benefitted from the Asymmetric MTR policy regime, which helped to fuel growth for the newest entrant at the time but the mobile phone company may have since outgrown eligibility for that policy determination by the telecoms regulator.
NCC has over the years stepped in to set interconnection rate which have often determined the downstream retail pricing for telecoms services in the competitive Nigerian market.
In the NCC March 20, 2013 DETERMINATION OF VOICE INTERCONNECTION
RATES, the telecoms regulator did not include Etisalat Nigeria among the list of companies eligible to benefit from the asymmetric MTR, which according to NCC at the time include Visafone Communications Limited, Starcomms Nigeria Plc, Multi-Links Nigeria Limited and Reliance Telecommunications. Others included Intercellular Nigeria Limited, VGC Nigeria Limited, 21st Century Nigeria Limited, Monarch Communications Limited and Intra Networks Limited.
The telecoms regulator justified that setting the interconnection rates drives efficient growth of the telecoms market.
“The process of arriving at a new regulatory regime for the interconnection of operators and for retail pricing in Nigeria has been conducted in a climate of openness and with a view to providing maximum transparency to all parties without compromising the confidentiality of commercially sensitive information. The Commission is confident that the results will make a significant contribution to the development of a thriving telecoms sector in Nigeria and hence benefit both consumers and the industry”, according to the Determination issued at the time.
Following this, NCC directed that termination rates for voice services provided by new entrants and small operators across, irrespective of the originating network are as follows:
- ₦6.40 (Six Naira Forty Kobo) from 1st April, 2013;
- ₦5.20 (Five Naira Twenty Kobo) from 1st April, 2014; and
- ₦3.90 (Three Naira Ninety Kobo) from 1st April, 2015.
NCC was also to further set out that a “new entrant” is defined as newly-licensed operator entering an existing or new market within 0 to 3 years.
On the other hand, “Small Operator is defined, for the purpose of this Determination, as an existing Operator with a market share of 0 – 7.5% in terms of subscriber base.”
According to the regulator, “Asymmetry shall cease as soon as it is evident that any Small Operator has exceeded the 7.5% market share threshold before the end of this determination period.”
The regulator also said that “any Small Operator that has benefited from Asymmetric Rates before exceeding the threshold of 7.5% market share shall cease to qualify for Asymmetry in the future should the referenced market share decline.”
Under the regulatory determination at the time, NCC had set the Termination Rates for voice services provided by other operators in Nigeria irrespective of the originating network as follows:
- ₦40.90 (Four Naira Ninety Kobo) from 1st April, 2013;
- ₦4.40 (Four Naira Forty Kobo) from 1st April, 2014; and
- ₦3.90 (Three Naira Ninety Kobo) from 1st April, 2015.