OLUSOLA TENIOLA is the President of Association of Telecommunications Companies of Nigeria (ATCON). In this interview with Business A.M.’s OMOBAYO AZEEZ, Teniola dissects investment, technical, regulatory issues, among others, in the telecoms sector vis-à-vis economic disruption triggered by the novel Coronavirus (COVID-19) pandemic, with extended concerns on what a post COVID-era will look like for operators and their subscribers. EXCERPTS:
It’s a terrible time the world is going through and the telecommunications industry is not insulated from the economic headwinds triggered by coronavirus. Economically, what does this means for the operators?
There are several positive aspects that we face as an industry. Few among them are: increased usage of telecoms services to enable online services (Digital Financial Services, e-Learning, Virtual meetings and eCommerce, etc), which translate into data consumption online, with WiFi services provided predominately by ISP(s). The change in consumer behaviour means that an increase in data consumption will translate into an uplift in revenue for Q1 and a positive increase in Q2 (y-o-y). The stay-at-home directive has been the main cause for this ramp up in demand from consumers and away from enterprises that are mainly closed. The medium to long term will be exposure to the continued purchasing power of consumers, particularly if there are large job losses in both the private and public sectors. Then the ability to continue to fund recharging of pre-paid accounts, which represents 98 percent of payments in the industry will have a negative-to-flat effect on Q3 and Q4 2020 top-line growth. With a predicted ‘U’ shaped recovery being accepted as the new norm, then changes in consumer behaviour may reflect a possible ‘W’ shaped COVID-19 measures typified by 2nd wave or subsequent lockdowns before a vaccine has been finally found.
The restriction in movement and lockdown order, and the pervasive work-from-home initiative that followed must have implications on the technical aspect of operators’ networks. What are these implications?
The cost of running networks will be very much determined by the skills sets already existing and the adoption of virtual network configurators and ability of operators to dynamically modify their operations to improve Quality of Service (QoS) and manage the various spikes in data traffic alongside increased minutes of use for voice calls (that replaces face-to-face meetings). The focus for any operator is the need to build additional capacities to cope with the surge in traffic from homes on the mobile networks and intermingled with ISPs. There is a need to strengthen the weakest links by spending CAPEX budgets on equipment and rolling out more optic fibre and towers. The need for government to lessen the red tape around Rights of Ways (RoW), site acquisition, alongside incentives to encourage network coverage expansion to rural communities in a timely manner, will remove congestion and reduce the technical fire-fighting needed to keep the networks running 24/7 for 365 days in the year.
Some have reported that some initiative such as spectrum sharing is needed at this point to accommodate more traffic, what’s your opinion on this and can it be achieved to meet the current urgency?
Spectrum sharing as in national roaming is one form of Radio Access Network (RAN) sharing and introduces active sharing into the industry on a wholescale basis. NCC [Nigerian Communications Commission] has supported some initial trials between some members of ATCON and it appears that the level of infrastructure in areas of most need, i.e., in the rural areas, where the economics may be greatly challenged on a Return-on-Investment (ROI) basis. So, in principle the need to share spectrum is a brilliant way to go, however, the size of bandwidth allocated per spectrum is relatively limited to be shared and traffic management will need to be coordinated in a much more holistic manner for this to be effective. The release of TV White Space (TVWS) alongside a tidying up of current spectrum that is not available to be assigned will assist in the implementation. The Government already has an incentive to take up this line of approach as the recently launched Nigerian Broadband Plan 2020-25 recommends a number of solutions and actions to make this a reality.
As we anticipate a post COVID-19 era, Experts are envisaging a totally disrupted economic environment and the symptoms of this can already be seen. What becomes of investment to improve and expand telecommunications services in the country?
This is a great question. Nigeria has been an FPI destination for many years and FDI had a larger portion of total investments between 2010 and 2014. Since then a steady decline in FDI share has been noticed and this hasn’t been missed on the telecom sector. In fact, other than some M&A activities, FDI y-o-y to date has dropped by 90 percent and with the COVID-19 reality, it further highlights the challenge for our members to attract the necessary FDI needed to fund the gaps identified in the Nigerian Broadband Plan 2020-25. The FOREX I&E (Importers and Exporters) window is difficult or near impossible for our members to access and hence liquidity in the parallel market is insufficient to cover all our members CAPEX projects, especially when other sectors compete for the limited dollars available in the market. This presents investors with a dilemma, If the naira further devalues against the USD$, how can they hedge against any further decline in value when 100 percent of equipment needed is imported? The need for CBN’s intervention that allows our members access to the I&E window is now paramount and further incentives by government as recommended in the Nigerian Broadband Plan 2020-25 will aid any investments made during these trying times.
Can the situation at hand affect achieving the set target of 70% broadband penetration?
The country is already at 38 percent broadband penetration, according to latest NCC figures. This was on the back of USD$70 billion investments from 2001 to 2018. We need circa USD$5 billion as specified in the Nigerian Broadband Plan 2020-25 to be able to achieve 90 percent 4G population coverage and 70 percent broadband penetration by 2025. With innovative financing and access to long term facilities it is possible to achieve the target and more, over the next 5 years.
Experts are advocating stimulus for the revival of different sectors of the economy, is the telecoms industry also in need?
Stimulus as an option implies that government has sufficient cushion to provide financial support in an era of crisis. According to various reports and more specifically the latest IMF report for 2020, it appears that government will not be in a place to offer any kind of stimulus to assist any sector. We have to wait for the outcome of the vice president-led committee on what exactly the government plans to do to turn around the fortunes of the economy post COVID-19 lockdown. What our sector really needs are incentives for private sector investments and prioritisation of ICT in supporting the digital economy and other sectors in providing services to the vulnerable and most needy. The telecoms sector is already fully private sector led and driven.
A lot of people are resorting to electronic and digital alternatives to their tasks, including learning. How can those in the rural areas be also brought on board?
With the establishment of community networks that rely on inexpensive access to spectrum and/or TV White Space and roll-out of expansive fibre optic backbone networks interconnected to these community networks and extensive reorientation of our citizens to imbibe digital literacy; it is possible by 2025 for up to 100 percent of rural communities to be using digital tools and platforms to interact with the “digital world”. The areas of priority are agriculture and improved harvest yields; teleworking for essential services and environmental support. Healthcare could be positively impacted by adoption of remote telemedicine.
So many pejorative and incriminating explanations, as well as conspiracy theories have been woven round 5G technology, creating fears and dislikes for the 5G especially that it is responsible for COVID-19. Kindly give thorough explanation on this sir, to clarify the issue
In Lesotho, a country in Southern Africa, they have had 5G installed in the country since 2018 and is one of the first countries to introduce the 5G technology. To date the country hasn’t reported any cases of COVID-19. In Nigeria and many other countries that haven’t deployed 5G there have been large cases of COVID-19 and rising and hence simply COVID-19 is a flu-like virus and is spread by humans. 5G has nothing to do with the spread of COVID-19. The fake news and conspiracy theory are very unfortunate and have led to misinformation and infodemic during the COVID-19 ‘stay-at-home’ lockdown period, which in some countries has caused unwarranted and criminal destruction of telecom equipment that are not related to the 5G technology. The following verifiable sources on COVID-19 should be accessed from www.who.int and NCDC. For 5G www.itu.int and NCC. The mobile manufacturers Forum (www.mmfai.org ) also ensures safety standards and expert bodies address any risks ever known to man. To date no known risks have been found or confirmed and in Nigeria the government will still hold wider stakeholder consultation after it has fully studied the report coming out of the trial of the 5G technology performed in Abuja, Lagos and Calabar by one of our members last year.
The national conference of ATCON has been put off sine die. Is it still going to hold post COVID-19?
The conference will hold after government allows gatherings of this nature to happen after the lifting of the lockdown currently in force. An exact date will be shared with the media as soon as it has been finalised by the National Executive Council of the association.
How do you see the operators coming out of COVID-19 era?
This is a great opportunity for all operators to ensure that customers are truly the focus of any service rendered, whether it’s to the consumer spending N200 or those relying on it to survive in what will be a very challenging period ahead. Lessons would have been learnt during this lockdown and gaps found in our infrastructure and how services are rendered will be of utmost concern. On a general note, the industry will record positive results in revenue for the remainder of the year. Connectivity being the main revenue stream to date with opportunities to also seek other streams of revenue from the various use cases and different consumer behaviours exhibited over the past 2 to 3 months. The envisioned Digital Economy relies on a strong telecoms industry to underpin all the other pillars that will serve all other sectors. The new normal is upon us and an opportunity we cannot afford to miss.