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HomeNIGERIAExposed! Rot in Telecoms Industry

Exposed! Rot in Telecoms Industry

…Int’l firms stifle Nigerian coys

…Disregard Local Content Laws

…Cheat FG of VAT

…NCC indicted

 By Our Reporters

Major players in the Nigerian telecommunications space, with the tacit support of the Nigerian Communications Commission, NCC, are deliberately stifling local companies from getting any foothold in the industry.

An investigation carried out by The Abuja Inquirer has revealed that the big Mobile Network Operators, MNOs, come up with punitive policies, and arbitrary charges in US dollars just to frustrate International Data Access Operators from participating in the telecoms space.

This newspaper also discovered that the NCC, the regulator of the telecoms industry, has failed to sanction these international companies.

Industry watchers can recall that the President Muhammadu Buhari’s administration came up with a National Policy for the Promotion of Indigenous Content in the Nigerian telecommunications’ sector. This policy was designed to encourage Nigerian firms to participate in the sector by reserving certain aspects of the business for Nigerians.

But in utter disregard for the aforementioned policy, the actions of the NCC have led to loss of jobs and have frozen Nigerians out of the lucrative telecom market in favour of major foreign players.

For instance, this newspaper discovered that Nigerian companies who were licensed by the NCC as International Data Access, IDAs, operators to transport international voice calls into Nigeria have been forced to stop operating since Jan 1, 2022.

This was due to an NCC directive which stipulated that the Nigerian companies should pay the MNOs (US)$0.045 per minute for the international telephone calls they terminate into the mobile networks in Nigeria.

Charging local Nigerian companies in US Dollars for such services contravenes Nigerian laws. In a 2015 Circular, the Central Bank of Nigeria reaffirmed that it is an illegal, and a criminal offence to denominate the price for goods and services in Nigeria with any currency other than the Naira.

The CBN Circular: Ref: BSD/DIR/GEN/LAB/08/013 on Currency Substitution and Dollarisation of the Nigerian Economy dated April 17, 2015, says “Based on the above provision, the general public is hereby warned that it is illegal to price or denominate the cost of any product or service (visible or invisible) in a foreign currency in Nigeria and no business offer or acceptance should be consummated

in Nigeria in any currency other than the Naira…Appropriate sanctions shall be meted on any Bank that breaches this regulation”.

Nonetheless, the NCC went ahead to issue the Determination of Mobile Voice International Termination Rate, ITR, on November 25, 2021, and published same on their website on Dec 15, 2021. 

The MNOs, with the backing of NCC issued a rate of USD$0.055 per minute to overseas based telecom operators that enables them to send international telephone calls to them directly at a rate lower than the USD $0.062 these MNOs have offered to the Nigerian based licensed International Data Access Operators.

This action by the MNOs is not only against domestic laws, but it’s also discriminatory and does not ensure fair competition in the telecom industry.

This is further compounded by the fact that the overseas based Telecom Operators do not pay the stipulated 7.5% Value Added Tax, while the Nigerian based International Data Access Operators are compelled to pay the higher per minute rates of USD $ 0.062 mandated by the MNOs plus 7.5% VAT.

By this NCC directive, the locally based International Data Access Operators have been locked out of the market. This is because the higher rate per minute rates issued to them by the MNOs, plus the mandatory 7.5% VAT and sundry bank charges incurred from the receipt and transfer of foreign currency within Nigeria make it impossible to stay afloat. They cannot price their termination services in a way that will attract patronage from Overseas Telecom Operators.

This action by NCC has also led to significant loss of VAT revenues that should accrue to the Federal Government because these overseas telecom operators who connect to the MNOs directly do not pay the required 7.5% VAT.

It was also found out that before the NCC directive came into effect on Jan 1, 2022, the entire revenue stream per minute of calls terminated to the MNOs when converted to Naira was about N29.00.

The payment due to the MNOs per minute including VAT was regulated at N26.25. The Nigerian local content players who are licensed by NCC to deliver this traffic to the MNOs can only run the cost of delivering the traffic and make a marginal profit within the balance of N2.75 per minute.

This illegal policy completely wipes out any chance for Licensed Local Service Providers to earn any money. In fact, they are negative and will need to subsidize the transaction to meet with what will be due the MNOs if they continue to carry the traffic.

What is very worrying is that many of these local companies have invested a lot of money at very high interest rates from Nigerian banks in building their infrastructure capacity to carry this traffic. Most of their infrastructure are idle, while they must meet their debt obligations to these banks. The Nigerian staff operating these networks have been sacked.

An industry expert, who spoke to The Abuja Inquirer, last week, said; “There will be no growth in the industry as long as these types of NCC policies drive the industry. The MNOs are out for immediate profit and not interested in developing the telecoms industry. These companies have earned more than 1000% of their investment.

“The NCC has conceded their position as an unbiased and independent Regulator enforcing the Nigerian Communications Act that set up the commission, to a public defender of the MNOs against the interest of the Nigerian people. Any discerning observer of the industry can see that it’s the MNOs that are now the regulators of the industry and not NCC. This is a big embarrassment to Nigeria and a big shame”.

Several visits to the NCC Headquarters in Abuja to get their reaction were unsuccessful as the security men at the main gate refused one of our reporters any entry into the premises.

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