In this interview, Executive Vice Chairman of the Nigerian Communications Commission (NCC), Prof. Umar Garba Danbatta, speaks on the state of the telecoms industry.
What are your plans to address the issue of poor service quality in the telecoms sector?
Service quality has improved slightly even though there is still a gap between the standard set by NCC and what the operators are offering currently, with regards to Key Performance Indicators (KPIs), as set by the NCC.
In the last quarter of 2016, the service quality improved slightly, but we are no where near the stipulated standard set out by the NCC. Although we are going to enforce full compliance of service quality, but there are no deadlines for the implementation because NCC has a tradition of consulting with the operators through its open guideline policy.
In the next few weeks, NCC will be publishing the performances of operators for the first quarter of the year, in terms of service quality and the subscribers will see the performances of their service providers. We will first present the scorecard to the operators, discuss it with them, before making it known to the public.
Recent statistics released by the NCC, shows that subscriber teledensity is decreasing. What are the plans to reverse this new trend?
The truth is that the decrease in number is not affecting only subscriber teledensity, but it is also affecting subscriber number and mobile internet penetration in the country. The statistics shows that subscriber number is decreasing from its initial over 200 million across networks, to about 152 million currently. The reason behind the drop in number is that Nigerians are migrating from 3G services to 4G LTE services that are currently being offered by telecoms operators. Consumers are migrating because they are looking for services that will enable them make free WhatsApp calls and get data bundle at a relatively cheap rate to boost their data communication and browsing pattern. Consumers are no longer comfortable paying so much for voice and data services on the 3G network, hence the migration to the 4G LTE, and we see a situation where more Nigerians will continue to migrate and drop some of their 3G lines. So the migration is affecting teledensity growth, subscriber growth and internet penetration.
What happened to the suspended data price floor that was initially introduced by the NCC?
The introduction of the interim price floor for data by the NCC, was meant to usher in certain levels of development in the telecoms sector. It was introduced to stem unhealthy competition among telecoms operators. So the interim price floor was introduced as a regulatory measure to address certain ugly incidences in the telecoms sector and to protect the subscribers from undue exploitation. The price floor was not meant to hike data price in the first instance, but to protect the telecoms subscribers. As regulator, we welcome competition but frown against unhealthy competition that could stifle telecoms growth.
So based on public outcry, the NCC decided to suspend it, and returned to our consultant who is currently doing a cost-based assessment in order to come up with acceptable price floor for data. But one thing subscribers must bear in mind is that low price floor will lead to slow speed of connectivity and the eventual poor internet service, while moderate price floor will lead to high speed connectivity. So subscribers should be able to know what they want.
What is NCC doing to auction the remaining eight slots in the 2.6GHz spectrum?
The 2.6GHz spectrum was advertised for auction some time ago because we needed to drive deployment of 4G LTE broadband services, in order to improve broadband penetration in the country. But unfortunately, only MTN participated in that auction and it eventually emerged winner of six slots out of the 14 slots contained in the 2.6GHz spectrum. NCC had since allotted the six slots to MTN and the money was paid in naira denomination, at N200/dollar, which was the exchange rate as at the time of auction, even though the spectrum licence was advertised in dollar denomination. In order to find out why operators declined to bid, leaving only MTN, we carried out a postmortem test. After the postmortem analysis, we discovered that the reserved price for the auction of the spectrum was on the high side, and that it affected the interests of other operators to bid, as well as the prevailing harsh economic situation, hence several operators declined to bid.
The remaining eight slots will be auctioned on a later date, and we will restrict the auction process to only licensed mobile network operators (MNOs). We have written to all the licensed MNOs, informing them of the commission’s intention to auction the remaining eight slots at the same exchange rate N200/dollar, even though the exchange rate has increased currently. The intention is not to make huge profit, but to provide an enabling business environment for MNOs to thrive. The process is ongoing and as soon as it is completed, we will make it public.
What is the current development with the Etisalat loan indebtedness to 13 banks and the threat by the banks to take over the business of the telecoms company as a result of its inability to pay the $1.2 billion loan?
Negotiations between the management of Etisalat and its creditors are ongoing. Abu Dhabi’s leading strategic investment company, Mubadala, a major shareholder in Etisalat Nigeria, is in Nigeria to negotiate the $1.2 billion bank loan with the lending banks. The Mubadala team met with NCC and the CBN to discuss the renegotiation plan of the repayment of the loan. I will not want to disclose the details of the renegotiation plan, but what I can tell you is that discussions are on going on new measures to repay the loan. Mubadala will also be meeting the management of the 13 banks to further discuss how they intend to repay the loan. I am sure that the issue will be resolved very soon.
What is NCC doing to ensure that Etisalat and other telecoms operators have access to forex to enable them invest more in telecoms business?
The issue of forex scarcity is not affecting only Etisalat as a telecoms company, but it cuts across other licensed telecoms operators in the country. What NCC has done in this regard was to secure a priority window for forex for telecoms operators, which has never happened before.
The NCC had to step in and engaged directly with the financial regulator, the Central Bank of Nigeria (CBN), and an agreement was reached for a priority window for telecoms operators to enable them have access to foreign currencies in the midst of scarcity. So far, a couple of operators have been able to enjoy that priority window, and NCC will continue to push for more availability of forex for telecoms operators.
What is the state of development with the MTN fine of N1.04 trillion, following its refusal to deactivate 5.2 million unregistered SIM cards on its network, which was later reduced to N330 billion, after several plea bargain?
MTN had since complied with the payment arrangement of the fine and it has so far paid N110 billion, based on the structure of the payment agreement reached between it and the federal government. It initially paid N80 billion, and recently paid additional N30 billion into the recovery account of the federal government. The payment structure was staggered and spread over three years and MTN, to the best of my knowledge, has not defaulted in the staggered payment structure.
But let me say this that the financial position of MTN has improved, having recorded about 7 per cent growth according to its financial report.
Recently, it was alleged that MTN Nigeria partnered a UK company to generate and operate its own electricity consumption. Does the law allow MTN to do that?
The law does not permit MTN to generate its own electricity in partnership with a foreign company. What is actually going on is that the UK company is providing solar electric energy for Nigerian consumers and they are using the MTN network to determine if the consumers are actually getting the service and they are riding on the MTN network. So MTN is not directly involved in electricity generation.
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