Monday, October 26, 2009

Telecoms’ Good News

Telecommunications investment in Nigeria since 2001 has hit an $18 billion mark. In 1999 total investment in the industry was a paltry $50 million. The growth by all standards, is good news for a country that is almost incapacitated by epileptic socio-economic infrastructure.
Chief Executive Officer of the National Communications Commiss-ion, Ernest Ndukwe, disclosed the figure at the just-concluded International Telecommunications Union (ITU) conference in Geneva, Switzerland. He attributed the investments flow to the deregulation policy of governments and a predictive regulatory environment.
The telecommunications industry in Nigeria also has the twin credit of being the most functional socio-economic infrastructure in the country and perhaps the most successful case of liberalisation in the country. The aviation industry, which has been badly affected by the global financial meltdown, was another successful case.
At the risk of sounding like a PR consultant for the industry, we are compelled to count some of the achievements of the industry to make a point.
The telecoms investment figure comprises about $12 billion in foreign direct investment and the balance made up of investments from within the country. Clearly, following the liberalization of the telecommunications industry by government in 1999, and the subsequent auction of the mobile licenses in year 2001, the telecommunications industry in Nigeria has witnessed tremendous growth.
From teledensity figures of 0.4 lines per 100 inhabitants recorded in year 2000, by October 2008, Nigeria had recorded teledensity figures of 42 lines per 100 inhabitants, and an active subscriber base of nearly 59 million lines. All the states in Nigeria are covered by both voice and data services through the GSM and the CDMA technologies.
Indeed, experts say Nigeria's telecommunications sector is the fastest and largest growing in Africa, with a total of 68 million telephone lines, from just some few hundreds of thousands eight years ago.
The advantages of this growth trend are too many to be listed here, but they include increased range and quality of services available to citizens; the creation of direct and indirect employment opportunities for skilled, semi-skilled and unskilled citizens; additional revenue for government through spectrum and numbering fees, import duties, VAT, etc,; improved service penetration to a larger and growing number in under-served and un-served urban, semi-urban and rural areas; technological development in the country; and the lowering of costs of acquiring and using the services.
With these achievements of the industry it is hard to explain the inability or reluctance of government to replicate the model in other ailing sectors such as the railways and electricity.
The beauty of successes such as this is that they become models and a motivation to continue to do the right things to grow the economy. They become models to be replicated in other sectors.
We are not unaware of the case for government's monopoly over the so-called national heritage but beyond facilitating government patronage and corruption, they have not served the country well.
We see another example in the telecoms industry. While local and foreign telecoms companies are blossoming, NITEL continues to be a sore thumb in the industry. And we believe that the reason is not unconnected with hidden interests that have made its transparent privatisation difficult.
NITEL's worth has depreciated considerably since Government broke its monopoly in 2001 and tried to sell it to an operator. Today, Nitel's infrastructure is in disrepair, and its fixed lines have fallen to less than 100,000, while MTEL subscribers have dropped to a few thousands. That is despite its status as a national carrier.
In spite of the weaknesses of private business models revealed in the global economic meltdown, we believe that government's role in business is the provision of an enabling environment and effective regulation. Nothing more. It is time for government to open other sectors of the economy to competition, as it did in 2001 the telecoms sector.
We believe that there are even more benefits to be derived from the telecoms industry as it grows. The challenge is for the regulators to address the weaknesses of the existing services in the industry such as the quality of GSM calls and internet services. Some of the services are appalling indeed. At this age of the industry, quality of service and affordability could be better, and should never be compromised