TELECOM INVESTMENT: Data, social media, value added services create new frontiers for investments – Vanguard News

TELECOM INVESTMENT: Data, social media, value added services create new frontiers for investments - Vanguard News

…Robust telecom network imperative for economic growth

…NCC remits N51.3b to FG in Q1 2019

…40 million Nigerians yet to access telecoms services

By Prince Osuagwu,  Hi-Tech Editor & Juliet Umeh

The telecom industry is an enabler. It has positively impacted all the sectors of the economy including banking, healthcare, commerce, transportation, agriculture, education among others. It has also made increased quarter-on-quarter contribution to the country’s Gross Domestic Product, GDP.

However, despite the transformative and innovative changes technology brings into different sectors of the Nigerian economy, and millions of dollars already invested in the sector, it is surprising that millions of Nigerians are yet to access telecom services in this 21st Century.

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In specific terms, latest statistics from the Nigeria Communications Commission, NCC, says that about 40 million Nigerians are yet to access telecoms services despite its huge potentials.

However, players in the sector are decrying the deficit in funding required to fully activate potentials of ICT in Nigeria while believing that robust telecom network is imperative for economic growth.

According to data from NCC, the Nigerian market score card as at 2010 has it that there were about 450,000 connected lines in the country while $60 million was invested in the sector. Also, in 2014, over 151 million lines got connected with about $32 billion investment also in the sector, and in 2018; over 172 million got connected with more than $68 billion investments. But as at the first quarter of 2019, the investment has grown to over $70 billion.

Meanwhile, as at 2001, investment in the sector was a paltry $500 million. It means that from 2001 till date, telecoms investment has increased tremendously.

However, experts in the telecom sector said there was need for more investment considering the growth parameters of the industry, business opportunities in the country and strong potentials for return on investments.

Key among the reasons they believe that despite the huge investment statistics, it should even be more than double of its current size is the growing Data, social media and value added services which in other climes, create new frontiers for investments.  Another is the country’s huge population of over 200 million people.

These statistics, according to them, create a favourable market for any serious investor and should attract fierce but healthy competition among investors.

As at the first quarter of 2019, there were about 24 million Facebook users in Nigeria and it is expected to rise to 27.2 million in 2021. Facebook also holds about 78.6 per cent market share in the country, while Twitter holds 10.12 per cent, Pinterest 8.55 per cent, YouTube 1.58%, Instagram 1.22 per cent, and LinkedIn 0.18 per cent.

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ICT sector professionals believe that these statistics, ordinarily should create a huge frontier for new investments in the sector.

Imperatives for economic growth

At an event organised by telecom sector advocacy group, the Association of Telecom Companies of Nigeria, ATCON, the Executive Vice-Chairman of NCC, Prof. Umar Danbatta, regretted that as much as 40 million  Nigerians are yet to access telecoms services and called for more investment in the sector.

He stated that even though over $70 billion investment has gone into the sector as at 2019, it was by no means adequate for one of the fastest growing telecommunications markets in the world.

He said that there is need for service providers to increase capital intensity of the industry and their infrastructure deployment to satisfy the increasing demand, and also create room to double the size of the investment in the next 10 years.

He noted that additional investment into the sector was imperative if Nigeria must accommodate the over 40 million Nigerians yet to be reached with basic infrastructure and services.

He said: “Telecommunications constitute a significant portion of the world economy as the global market value of the sector passed the USD2.5 trillion mark in 2010. Undoubtedly, everyone should be interested in the sector that generates such figures.

Therefore, robust telecommunications network is important for economic growth, which is achievable through investment.

“Nigeria has invested over $70 billion in the telecom sector as at 2019. Although this is huge, it is, however, by no means, adequate for one of the fastest growing telecommunications markets in the world.

“Now, we have about 40 million Nigerians yet to be reached with basic infrastructure and services. The capital intensity of the industry, the need for service providers to increase their infrastructure deployment to satisfy the ever-increasing demand, create room for double the size of this investment in the next 10 years.”

He also added: “The NCC roadmap for broadband has created new frontiers for investment, just as the quest for data and social media as well as the increasing value added services create new frontiers for investments.

“Therefore, the desire for investment in the sector will continue to grow as the size of the network increases.

Creating new investments

As for the DG/CEO, NITDA, Dr. Ali Pantami, “the only way we can get more investments into the industry is to continue to tell our story as a nation, showcase our potential opportunities and demonstrate strong commitment and transparency in our dealings as we seek both local and foreign investment.

“Nigeria is a country blessed with about 200 million people, many of whom are youths that are ICT savvy, the size of our population offers investors a very large market with quick return on investment.

“In addition, we have key features that could attract potential investors to Nigeria. They include: Large base of highly skilled labour at a reasonable cost; favourable policies including the ease of doing business initiative; vast mineral resources; recently signed African continental free trade area aimed at making it easier for the movement of goods and services within the African continent. These factors combined make Nigeria an investment hotspot,” he said.

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NCC remits N51.3b

Meanwhile, despite the need for more investments, the sector is still a strong revenue base for the Federal Government.

For instance, the Nigerian Communications Commission last week, remitted about N51.3 billion to the Federal Government’s Consolidated Revenue Fund, CRF in the first quarter of 2019. This represents 10.11 per cent of Nigeria’s GDP and  0.92 per cent increase from the first quarter of the last year. This year’s first quarter contribution is also 0.26 per cent more than the figure (9.85 per cent) recorded in the last quarter of 2018, according to the National Bureau of Statistics, NBS.

The remittance, according to Danbatta, is in compliance with the Fiscal Responsibility Act of 2007, FRA 2007.

The payment represents “Payment on Account” in respect of operating surplus of N44 billion and N7.3 billion spectrum assignment fee collected, both of which are due to the Federal Government as at April 30, 2019.

According to the FRA 2007, such payments are to be made every year after preparation of Audited Accounts.

Specifically, Section 22, Sub-section 1 of the Act states that, “Notwithstanding the provisions of any written law governing the Corporation, each Corporation shall establish a general reserve fund and shall allocate thereto at the end of each financial year, one fifth of its operating surplus for the year.”

Section 22, Sub-section 2 of the Act states further that, “The balance of the operating surplus shall be paid into the Consolidated Revenue Fund of the Federal Government not later than one month following the statutory deadline for publishing each Corporation’s Account.”

Aside from remitting the operating surplus, Section 17, Sub-section 3 of the Nigerian Communication Act (NCA, 2003) also stipulates that spectrum assignment fees generated shall be remitted 100 per cent to the Federal Government.

The Section states that, “the Commission shall pay all monies accruing from the sales of Spectrum under Part 1 of Chapter VIII into the Consolidated Revenue Fund, CRF.”

Danbatta said the Commission had taken the initiative to be making payments on Account as it generates revenue.

Giving statistics of how such huge revenue accrue to the NCC, Danbatta stated that as at May this year, there were over 173.6 million active mobile lines across mobile networks, corresponding to a teledensity of 90.98 per cent. Internet subscriptions during the month stood at 122.6 million up from 119 million in April.

He said that while the industry has provided and continues to provide direct and indirect jobs for millions of Nigerians, the Commission, through effective regulatory approach, is embarking on more initiatives to boost access to telecoms services in rural, unserved and underserved areas across the country by ensuring service availability, accessibility and affordability for more Nigerians.

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