AUGUST, marks 12 years of the entry of Global System for Mobile
communications (GSM) into Nigeria. In a dozen short years, the entry of
GSM into the Nigerian market has precipitated what has now been
described as a revolution. The period before the GSM era is one a lot of
people would want to forget, as it was the Dark Age of connectivity in
Nigeria. At that time, the total number of telephone lines in the
country was about 400,000 and the entire country was served exclusively
by a monopoly, the government owned operator, NITEL.
Observers note that the period was termed dark not only because of the poor quality of the service, but also for the fact that there existed no consumer protection framework whatsoever.
The arrival of GSM thus ushered in a breath of fresh air!
With marketing forces fully at play, Nigeria quickly earned the admiration of the world as Africa’s fastest growing telecom market to the amazement of skeptics. During this period, operators have taken service to nooks and crannies of the country. Indeed, today, there are over 110 million connected lines.
In terms of growth, Nigeria is ranked among the largest and one of the fastest growing telecom markets in Africa. Again, this is another indication of the robustness of the market.
Those who should know reveal that the telecom industry in Nigeria has attracted more than US$25 billion in private sector investments, including Direct Foreign Investment during this period, up from a private sector investment of a mere $50 million in 1999. In addition, the sector has contributed over N400 billion to the coffers of the Federal Government through Frequency Spectrum sales, annual operating levies and other fines. This is aside from over N1 trillion paid in taxes.
Studies indicate that the telecommunications sector now contributes significantly to the Gross Domestic Product (GDP), which was hitherto dominated by the oil sector. The percentage share of GDP from the sector rose from 0.06 in 1999 to 6.5 by end of 2012.
So why is nobody listening to the telcos?
Especially when one considers that the growth in the telecommunications sector has significantly impacted on other sectors of the economy. The financial sector is perhaps, the one whose activities have been deepened much more by telecommunications, than any other in recent times. Aside from improvement in transactions using the telecommunication platforms, the banks have also been able to improve their investment portfolio through loan syndications among others.
In facilitating banking transactional services, the telecommunications industry has also provided the bedrock for the finance industry. Electronic banking facilities such as ATM services, online financial transactions, international credit and debit card facilities, airline ticketing and reservations, are some of the numerous ways that the telecommunications industry has aided the growth, sophistication, security and quick transactions in the Nigerian financial sector.
Also, the advertising, public relations and logistics sectors have received tremendous boost as a direct result of the operations of telecommunication companies in Nigeria. In all, telecom has created hundreds of thousands of new jobs both directly and indirectly over the past decade.
While the telecom operators have admittedly been striving to deliver more value to subscribers from day one, the quality of service (QoS) still leaves much to be desired. Indeed, telecom consumers have complained relentlessly leading to several incidences of sanctions for the operators by the regulator, the Nigerian Communications Commission (NCC).
But the operators have also complained ceaselessly of challenges delivering telecommunications services in Nigeria. Sadly, nobody appears to be listening!
Specifically, telcos have shouted themselves hoarse over the challenges of insecurity, decayed social infrastructure, multiple taxes and duties and the activities of social miscreants, and how these hinder the ability of operators to provide optimal services to subscribers. Still nobody appears to be listening!
As Emeka Oparah, Director, Corporate Communications and CSR of Airtel, scintillatingly described the power situation a year ago now: “Perhaps, the most obvious is power generation, which has been on a steady decline since 2001, in spite of the massive investments which successive administrations have claimed to have made in the sector. The most graphic illustration of the situation is to compare the cost of power generation by a typical telecommunications company with operations in Nigeria and Malawi (one of the poorest countries in the world!) and the statistics are truly eye-watering. While the operator’s OPEX (operating expenses) shows over 80 percent as power generation in Nigeria, it is a mere five per cent in poor Malawi. This means that there’s almost steady power supply from the national grid in Malawi, while the situation in Nigeria is pathetically left at the realm of speculations and pontifications by those concerned.
“With over 25,000 base stations across the country by all telecommunications operators, there’s an average of 25,000 generators (some say 50,000 at 2 generators per base station) consuming diesel and other maintenance costs all year round. Needless to say, the cost of accessing, delivering and storing diesel is another matter altogether depending on the location in question. Of course, some parts of the country are NOT on the National Grid, so the operations are 100 percent powered by generators! Even with the resort to solar and hybrid power, the operators have not made any significant savings in costs in this key area. Over N5 billion spent monthly by operators on power generation can be reinvested in further coverage expansion or tariff reduction, you know”.
There, it is obvious, that telcos are bleeding, literally.
But why is nobody listening?
The government has a moral responsibility to ensure what happened in the manufacturing sector doesn’t begin to play out in telecoms industry. The case of Dunlop Nigeria Plc comes to mind; the company moved its production line out of Nigeria in 2006 due to, wait for this, power challenges. A recent article in the Punch Newspaper indicated that the firm’s N8 billion tyre-production plant and other facilities in the Ikeja complex have been lying disused following the move.
The report noted “many manufacturing companies have packed up on Oba Akran Avenue… No manufacturing company can rely on PHCN supply. They may get you into serious loss.”
When one considers that this company went down after producing tyres in Nigeria for 45 years, it brings home the seriousness of the power challenge businesses in Nigeria have to contend with.
Investigation showed that the company used to invest over $800,000 yearly on electricity generation, while paying half the amount as electricity to the PHCN each year.
Evidently, we cannot continue like this. We must intensify efforts to improve the generation, and distribution of power in the country. Hitherto unconnected areas should be hooked up to the national grid. And in the light of the critical role telcos continues to play in the quest for national development, perhaps it is time to grant them priority access to power.
Let’s spare a thought for telcos!
Observers note that the period was termed dark not only because of the poor quality of the service, but also for the fact that there existed no consumer protection framework whatsoever.
The arrival of GSM thus ushered in a breath of fresh air!
With marketing forces fully at play, Nigeria quickly earned the admiration of the world as Africa’s fastest growing telecom market to the amazement of skeptics. During this period, operators have taken service to nooks and crannies of the country. Indeed, today, there are over 110 million connected lines.
In terms of growth, Nigeria is ranked among the largest and one of the fastest growing telecom markets in Africa. Again, this is another indication of the robustness of the market.
Those who should know reveal that the telecom industry in Nigeria has attracted more than US$25 billion in private sector investments, including Direct Foreign Investment during this period, up from a private sector investment of a mere $50 million in 1999. In addition, the sector has contributed over N400 billion to the coffers of the Federal Government through Frequency Spectrum sales, annual operating levies and other fines. This is aside from over N1 trillion paid in taxes.
Studies indicate that the telecommunications sector now contributes significantly to the Gross Domestic Product (GDP), which was hitherto dominated by the oil sector. The percentage share of GDP from the sector rose from 0.06 in 1999 to 6.5 by end of 2012.
So why is nobody listening to the telcos?
Especially when one considers that the growth in the telecommunications sector has significantly impacted on other sectors of the economy. The financial sector is perhaps, the one whose activities have been deepened much more by telecommunications, than any other in recent times. Aside from improvement in transactions using the telecommunication platforms, the banks have also been able to improve their investment portfolio through loan syndications among others.
In facilitating banking transactional services, the telecommunications industry has also provided the bedrock for the finance industry. Electronic banking facilities such as ATM services, online financial transactions, international credit and debit card facilities, airline ticketing and reservations, are some of the numerous ways that the telecommunications industry has aided the growth, sophistication, security and quick transactions in the Nigerian financial sector.
Also, the advertising, public relations and logistics sectors have received tremendous boost as a direct result of the operations of telecommunication companies in Nigeria. In all, telecom has created hundreds of thousands of new jobs both directly and indirectly over the past decade.
While the telecom operators have admittedly been striving to deliver more value to subscribers from day one, the quality of service (QoS) still leaves much to be desired. Indeed, telecom consumers have complained relentlessly leading to several incidences of sanctions for the operators by the regulator, the Nigerian Communications Commission (NCC).
But the operators have also complained ceaselessly of challenges delivering telecommunications services in Nigeria. Sadly, nobody appears to be listening!
Specifically, telcos have shouted themselves hoarse over the challenges of insecurity, decayed social infrastructure, multiple taxes and duties and the activities of social miscreants, and how these hinder the ability of operators to provide optimal services to subscribers. Still nobody appears to be listening!
As Emeka Oparah, Director, Corporate Communications and CSR of Airtel, scintillatingly described the power situation a year ago now: “Perhaps, the most obvious is power generation, which has been on a steady decline since 2001, in spite of the massive investments which successive administrations have claimed to have made in the sector. The most graphic illustration of the situation is to compare the cost of power generation by a typical telecommunications company with operations in Nigeria and Malawi (one of the poorest countries in the world!) and the statistics are truly eye-watering. While the operator’s OPEX (operating expenses) shows over 80 percent as power generation in Nigeria, it is a mere five per cent in poor Malawi. This means that there’s almost steady power supply from the national grid in Malawi, while the situation in Nigeria is pathetically left at the realm of speculations and pontifications by those concerned.
“With over 25,000 base stations across the country by all telecommunications operators, there’s an average of 25,000 generators (some say 50,000 at 2 generators per base station) consuming diesel and other maintenance costs all year round. Needless to say, the cost of accessing, delivering and storing diesel is another matter altogether depending on the location in question. Of course, some parts of the country are NOT on the National Grid, so the operations are 100 percent powered by generators! Even with the resort to solar and hybrid power, the operators have not made any significant savings in costs in this key area. Over N5 billion spent monthly by operators on power generation can be reinvested in further coverage expansion or tariff reduction, you know”.
There, it is obvious, that telcos are bleeding, literally.
But why is nobody listening?
The government has a moral responsibility to ensure what happened in the manufacturing sector doesn’t begin to play out in telecoms industry. The case of Dunlop Nigeria Plc comes to mind; the company moved its production line out of Nigeria in 2006 due to, wait for this, power challenges. A recent article in the Punch Newspaper indicated that the firm’s N8 billion tyre-production plant and other facilities in the Ikeja complex have been lying disused following the move.
The report noted “many manufacturing companies have packed up on Oba Akran Avenue… No manufacturing company can rely on PHCN supply. They may get you into serious loss.”
When one considers that this company went down after producing tyres in Nigeria for 45 years, it brings home the seriousness of the power challenge businesses in Nigeria have to contend with.
Investigation showed that the company used to invest over $800,000 yearly on electricity generation, while paying half the amount as electricity to the PHCN each year.
Evidently, we cannot continue like this. We must intensify efforts to improve the generation, and distribution of power in the country. Hitherto unconnected areas should be hooked up to the national grid. And in the light of the critical role telcos continues to play in the quest for national development, perhaps it is time to grant them priority access to power.
Let’s spare a thought for telcos!
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