DEVALUED NAIRA: Telecoms Services, Product May Cost More

AS mixed reactions trail the devaluation of the Naira last Tuesday, the ICT sector, a money spinner is tipped to experience some hiccups when some key elements in the industry play, and the results suggests a possible increase in cost of services and devices, writes Isaiah Erhiawarien.

Reactions from stakeholders in the ICT industry suggestions that Nigerians may need to pay for telecoms services next year when the effect of the devalued Naira begins to affect   the economy.

Last Tuesday, the Naira was devalued by the Central Bank of Nigeria, CBN, by N13, from N155 to N168 to one dollar in order to strengthen the economy. The implication is that while more Naira will be need to buy dollar for import, local goods that are produced using imported raw materials will become expensive meaning that if earnings from income of Nigerians do not increase, they have to look more sources of income to survive.

Following the telecoms revolution over a decade ago, which kicked the national economy into a new dimension; the economy and the life of Nigerians now depend heavily on telecoms, and more recently the mobile money bug which is gradually eating deeper into social and economic fabric of national life.

Investigations show that the economy is now heavily depending on telecoms infrastructure such as telecoms mast and devices such as phones, tablets, PCs, POS gadgets as well as recharge cards.

In the last ten years, since the explosion of the telecoms growth, which is widely celebrated at telecoms forum, no efforts so far has been made to produce the devices locally, with exception of the recharge card.

For instance, the telecoms infrastructure companies, most them which are foreign required huge dollar to import every materials that they need to build telecoms mast, a very critical infrastructure for the effective delivery of telecoms services.

Recent development indicated that the mobile telephone operators opted for infrastructure sharing due to the high cost deployment of telecoms mast across the country to meet the growing depending of expanding subscriber’s base that all operators are experiencing.

Investigations revealed that telecoms operators in Nigeria currently have close 30, 000 base stations or telecom towers scattered all over the country which are build by local and foreign companies with materials that are imported a huge cost and high customers charges, and some cases the foreign companies have expatriate that are paid in dollars.

Speaking the National Mirror, the President of the Association Telecommunications Companies of Nigeria, ATCON, Engr. Lanre Ajayi said that the cost of the procurement of telecoms equipment and delivery of services by the telecos will go up saying that the impact of the increased cost will eventually be transferred to the final consumer.

His fears borders on the fact the telecoms industry is largely depended on import, even including personals. For instance, there are call centres that are currently owned by foreigners.

Reacting to the new Naira devaluation policy, a recharge card dealer, Biodun Ishola  noted that some may take advantage of the new policy to add a few kobo to it saying that presently some sellers are adding N10.00 to even the value of the N100, 200, even N500 denomination card.

Ishola who also runs a blog: http://rechargecardsmillionaires.blogspot.com/ aid that the virtual top may for sometime make it impossible for those who trade on the virtual platform to add money to it.

He dismissed fears about the possibility of the new CBN policy affecting the unit cost of producing a recharge card stating that if it does affect it will be so minimal not to necessitate an increase in the price of the airtime voucher.

Although it is not yet clear if operators may want to make a case for tariff increase bearing in mind the current trend at the nations seaport as well as the increasing electricity power failure across the country, which has made operators to be investing huge money in other power source, it is however remains unclear if the regulatory body, the Nigerian Communications Commission will grant such request.

The operators and the NCC as at the time of writing report are yet to make statement on how the new policy will affect their businesses.

However, the President of the Nigerian Internet Group, NIG, Engr. Bayo Banjo said that there will be a sense of insecurity of investment from investors adding that they will be nervous in bringing their fund into the economy.

He however said that the operators may not feel much of the impact of the devaluation of the Naira on their equipment since what they sell is services.

The telecos has however of recent been experiencing dwindling returns on their investment thereby resulting to the sale of towers by operators.

Last week, Airtel signed an agreement to sell 4,000 of its towers to American Tower Company, ATC so as to    Etisalat Nigeria has also sold  2,136 of its towers to IHS Holding Limited and MTN Nigeria is also in the league of tower seller with its figure standing at about 9,183.

A major reason for this is huge cost building and managing these towers.

Statistics indicated that the cost of building one mobile phone tower in Nigeria is about $150,000-$200,000.

 The telecoms industry has for long been groaning under the huge burden of the increasing cost of doing business in Nigeria.

For instance, in a memorandum submitted by ATCON to the Senate House Committee on Communication, the association highlighted that the industry was yet find a conducive ground to operate.

ATCON in the MO expressed surprise that the destruction of telecoms infrastructure remains a regular occurrence for all telecomm operators in Nigeria adding that  it costs about N24, 750,000 to install a single base station together with its tower, special antennas and two generators to power the station.

On power, ATCON laments that over N5 billion spent monthly by operators on power generation could be reinvested in further coverage expansion to address the congestion on the network which resulted to poor quality of service.

More worrisome, ATCON observed is the heavy taxes imposed on telecom companies at the federal, state and local government levels have placed major obstacles, which slows down network expansion thereby compromising quality of service.

Association noted that another problem in the industry is the challenge of conflict of roles and responsibilities amongst government adding that it has become a common phenomenon in the Nigerian Telecom Industry as there are overlapping and duplications of duties by federal and state agencies.

Reacting to the new policy, Africa's largest telecoms operator, MTN, put a positive gloss on the devaluation of the naira, saying the weaker Nigerian currency would also reduce costs in its biggest African market.

MTN is one of many South African companies tapping Africa's largest economy and most populous market.

In statement, MTN declined to quantify the impact on its revenues of the devaluation, which was triggered by a sharply weaker interbank naira rate over the last two months. However, it noted that the currency movement would also reduce its costs.

"We endeavour to have as large a portion as possible of our costs in each operation denominated in local currency, which would in turn offer some protection against the currency movement," it said in a statement.