Telecoms Nigeria: ‘Huge debt burden’ sparks concern, NCC chief says

Telecoms Nigeria: ‘Huge debt burden’ sparks concern, NCC chief says

Telecoms Nigeria: ‘Huge debt burden’ sparks concern, NCC chief says

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[newsletter_lock]The Nigerian government has expressed concern over the huge debt burden hanging over the telecoms industry, the nation’s regulatory chief says.

Professor Umaru Danbatta, Executive Vice Chairman at the Nigerian Communication Commission (NCC) says that the huge debt profile, figures which he did not disclose, hover over the Nigerian telecoms sector.

The controversial huge debt profile and measures that can be taken to address the issue came under spotlight Monday at a breakfast meeting Danbatta attended with top media executive convened by NCC in Lagos.

Despite the regulatory measures put in place by the NCC to guide and ensure seamless partnerships in the Nigerian telecoms industry, Danbatta reckon that the issue remains a major source of challenge, especially in the wake of rising indebtedness in the Nigerian sector.

“Danbatta, who admitted that the huge indebtedness of telecoms operators to their contractors on one hand, and among themselves in the area of interconnect debt on the other hand, was silent on the actual amount being owed.”

Meanwhile, there is a silver lining amid the debt burden plaguing the Nigerian telecoms industry as the telecoms regulator says investments in the sector have jumped from $50 million in 2001 to over $70 billion as at September 2017. The Value Added Service (VAS) segment of the telecoms market alone is worth over $200 million as at 2018, and is estimated to grow to $500 million by 2021, he says.

Telecoms Nigeria: ‘Huge debt burden’ sparks concern, NCC chief says
Professor Umaru Garba Danbatta seen in photo speaking with Media Executives at the breakfast meeting in Lagos

He attributed the growth in telecoms investment since 2001 to the adoption and implementation of global best practices and standards in telecoms regulation, but says the successes did not come without challenges.

Danbatta, who admitted that the huge indebtedness of telecoms operators to their contractors on one hand, and among themselves in the area of interconnect debt on the other hand, was silent on the actual amount being owed.

He however, stated that the NCC is involved in mediation and arbitration to ensure that the huge debts are paid to forestall disruption of telecoms services.

Danbatta says “the debt profile in the telecoms sector is huge, but what we are doing is to mediate in order to ensure that these debts are paid, because a situation where those who are owing the money do not pay affects the services of those who are being owed, because there is need to invest to provide those services that the debtors need in order to survive. So we always encourage amicable settlements of debts.”

According to him, ”the law establishing the Commission empowers it to mediate, and arbitrate in many cases in order for us to ensure services are not disrupted. These efforts are going on behind the scene. We don’t talk about it but the telcos which are here, will attest to this fact that the NCC is involved in mediation in order to settle the huge debt profile in the industry.

“We have information in the NCC on how much each operator is owing, but we do not need to make it public because not paying cripples activities of those being owed. So the debt profile in the industry is very huge and something needs to be done to ensure it does not get out of control and hamper services in the telecoms sector, he adds.

Danbatta also says the NCC was aware of the huge debt, especially the debt owed contractors that have provided services to the telecoms operators for several years past, but points out that “the indebtedness is not peculiar to a particular telecoms operator, but cuts across all the operators.”

He recalls that the celebrated 9mobile debt crisis was among the challenges that the sector grappled with recently but was elated that the issue was resolved with the intervention of the Central Bank of Nigeria (CBN).

“We are witnesses to the challenge that faced one of our major service providers, 9mobile, but with the intervention of the NCC and the CBN, the country was saved the predicament of losing one of the key service providers”, he says.

In another development, the telecoms regulator affirmed that MTN Nigeria would formally list on the Nigerian Stock Exchange (NSE) in 2018, despite the challenges trailing the decision.

Danbatta says the listing of MTN Nigeria was part of the agreement reached with the telecoms services provider during negotiations for the debt forbearance granted it when it breached laws bordering on deactivation of unregistered  Subscriber Identification Modules (SIMs).

It would be recalled that in October 2015, Technology Times exclusively reported the fine imposed against MTN Nigeria, the mobile phone business unit of South Africa’s MTN Group, as the most unprecedented in the telecoms market.

NCC says it exercised Section 20(1) of the Telephone Subscribers Regulation (TSR) law on MTN for not meeting the deadline set up by the Mobile Network Operators (MNOs) for disconnecting the Subscribers Identification Modules (SIM), with improper registration.

Telecoms Nigeria: ‘Huge debt burden’ sparks concern, NCC chief says
A mobile phone seller and customers seen at Computer Village in Ikeja, Lagos
The compliance audit carried out by NCC on MTN network revealed unregistered 5.2 million customers’ lines were not deactivated. This led to NCC slamming MTN a fine of $1000 for each unregistered SIM, which amounted to $5.2 billion, according to the regulator.

This was, however, slashed to $3.4 billion in December 2015 after negotiations in addition to other concessions aimed at encouraging the company to continue its operations in Nigeria.

Speaking on the planned listing of MTN Nigeria on the Nigerian Stock Exchange, Danbatta says that, “you recall that we had an agreement with MTN according to which the fine must be paid and listing on the Stock Exchange was part of the agreement reached. I can assure you that MTN is going to list before the end of this year.”

“The Nigerian telecoms regulatory chief says that if MTN Nigeria “are not making progress with the listing we won’t wait until the year runs to an end before we take action. We can always write to remind them about the need to meet that important obligation of that settlement agreement we reached with them and I think this is an eye opener to NCC.”

 

Telecoms Nigeria: ‘Huge debt burden’ sparks concern, NCC chief says
South Africa’s MTN Group’s top brass and Nigerian shareholders have launched the equivalent of a major diplomatic push in Nigeria following a series of “strategic sessions” with top government officials, including Professor Yemi Osinbajo, the nation’s Vice President.

According to him, “we need the media to go to MTN to ask the progress they are making and that will assist NCC in keeping trail with whatever progress they are making in the implementation of that important component of the agreement.”

The Nigerian telecoms regulatory chief says that if MTN Nigeria “are not making progress with the listing we won’t wait until the year runs to an end before we take action. We can always write to remind them about the need to meet that important obligation of that settlement agreement we reached with them and I think this is an eye opener to NCC.”[/newsletter_lock]

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Kolade Akinola Technology Journalist at Technology Times Mobile: + 234 (0) 807 401 6027