Broadband: Telecom Operators Warn Of Possible Collapse … – Leadership Newspapers

By CHIMA AKWAJA, Lagos

Broadband telecommunications service providers using fourth generation (4G) technology, also known as Tier II operators, have drawn attention to the difficulties threatening to cripple their operations, with the attendant effect of derailing the broadband plan of the federal government.

Accordingly, the operators are asking the the industry regulator, Nigerian Communications Commission (NCC), to take immediate and decisive steps to avert the looming threat of strangulation, which its members currently face.

The leaders of the telecoms operators made the call during a visit to the executive vice chairman of the NCC, Prof. Umar Garba Danbatta, in his office in Abuja.

They were represented by a high-powered delegation made up of Mr. Godfrey Efeurhobo, managing director of Smile Communications; David Venn, managing director of Spectranet; Mr. Osondu Nwokoro, director regulatory and external affairs of nTel and Mr. Chuma Okoye, chief commercial officer of Swift Networks.

They warned against a systemic industry failure threat with likely negative collateral and great national socio-economic implications in the offing.

According to them, the industry was in a situation where all operators are finding it difficult to justify the required investment case for additional capital expenditure (capex) for network capacity expansion to improve quality of service to customers.

They further noted that the network operating expenditure (opex) of telecommunication operations has sky rocketed in the last 15 months by over 85 per cent with revenues remaining relatively flat.

Most operators, they observed, were currently struggling with meeting obligations to their suppliers, particularly Network Vendors, TowerCos and servicing Loan obligations.

This worrying trend, they noted, includes even some of the Tier I Operators, adding that a perfect storm was brewing and if not stopped, it will result in the collapse of key players in the industry.

According to them, this is because the domino effect of bankruptcy of any of the Tier I or Tier II operators on the entire ecosystem, particularly banking, employment, corporate and SMEs businesses, constitutes a major threat to the Economic Recovery and Growth Plan (ERPG) of the current administration.

The observed that such bankruptcy and consequent collapse will also substantially lessen competition with its attendant deleterious impact on consumer choice and attainment of the Broadband objectives of the country.

The MDs stated that the NCCs declaration of 2017 as the Year of the Telecoms Consumer can be derailed by failure of operators to deliver on the expected quality of service, particularly on data throughput and experience due to the weak investment case to support additional capex as a result of deteriorating market conditions.

Symptoms of the declining fortunes of operators, they stated, were already evident in the market as debts continue to grow and overall service quality continues a downward trend.

They said there is a grave threat to the Broadband Agenda of the government and expected dividend from growth in Broadband penetration envisaged in the Economic Recovery and Growth plan 2020.

This threat, they warned, will materialize if the market is not sanitized and the Tier II operators are not protected to encourage and justify the capital investment required to continue to invest and improve broadband penetration in the country.

The Tier II operators also bemoaned their deteriorating fortunes due to predatory pricing and cross subsidy of data using voice by Tier I operators who possess significant market power.

This, they said, is a challenge the NCC must intervene to stop.

They, however, concluded by applauding the various interventions of the NCC in engaging other stakeholders in ameliorating the difficulties that operators face.

Expressing their gratitude to Danbatta for intervening with the CBN to reduce the burden of Forex liquidity, they also commended him for his role in leading the campaign to educate the populace that base stations do not cause cancer.

They further implored him to protect the Tier II Operators so that their operations will not collapse.

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Broadband: Telecom Operators Warn Of Possible Collapse ... - Leadership Newspapers