Multiple Taxes, Others Stagnate Telecom N21.45tn Investment
Telecom stakeholders are expressing fears that the government’s policies will not only scare away potential investors, but can make the industry to crumble.
Investment inflow into the Nigerian telecommunications industry is witnessing a lull without appreciable Foreign Direct Investment since the industry hit the N21.45tn ($70bn) investment mark last year, according to investigations.
The development is coming following the various challenges confronting the industry, which are becoming intractable for the telecom umpire, the Nigerian Communications Commission.
The challenges stifling the FDI and local investment inflows into the industry include multiple taxes, multiple regulations and Right of Way problems.
According to the President, Association of Telecommunication Companies of Nigeria, Mr Olusola Teniola, mobile operators currently pay on the aggregate 23 different taxes to various agencies of government at the federal, state and local levels.
“The challenges are also going to conspire against the six infrastructure companies already licensed by the NCC to deepen broadband penetration, because they won’t be insulated from the challenges facing existing operators in the industry,” he said on Sunday.
This also explains why the plan by the NCC to hit the 30 per cent broadband penetration by end of this year remains dicey, according to industry watchers
The industry has only been able to reach 22 per cent broadband penetration till date, though far above the minimum threshold of 20 per cent set for countries around the world to be met by 2018 by the Broadband Commission of the International Telecommunications Union.
The Director, Legal and Regulator Services Department, NCC, Mrs Yetunde Akinloye, bemoaned the various threats affecting the industry’s growth, especially the issue of multiple taxes and regulation.
According to her, after approval is given by the state authorities to telecom companies to build their infrastructure, operators still face challenges of having to deal with the payment of all kinds of frivolous levies imposed by local authorities and the so-called ‘area boys’.
“Refusal to do their bidding means the operators won’t be given the permission to peacefully lay out their infrastructure,” she said, noting that despite this, “demand for telecom services continues to grow in the face of infrastructure that is not growing.”
Akinloye said, “Government authorities and different agencies impose these levies in order to boost their revenues and we have met with the Nigerian Governors’ Forum to educate them on the implication of not allowing operators to build infrastructure in their states.
“This is because they are asking them to pay all sorts of taxes and levies, majority of which are not backed by any law in the country.”
The RoW is another problem facing the operators and which is putting pressure on their readiness to roll out more infrastructure, according to findings.
Right of Way is the permit given to a mobile network operator to lay fibre optic cables along the road and to build base stations in order to improve service delivery.
On this, findings showed that operators had not been able to make appreciable mileage in the area of more fibre optic deployment and base station roll-out
Information obtained from the Association of Telecommunications Companies of Nigeria showed that most state governments were denying the operators access to build additional base stations, while the already built ones were being shut down indiscriminately.
In Abuja, for instance, as in many states, findings showed that most operators had not been allowed to build additional base stations in the last five years, whereas building additional base stations is a sine qua non for improved service delivery across networks.
It was recalled that the Executive Vice Chairman of the NCC, Prof. Umar Danbatta, had in the last one year visited some state governments and pleaded for the RoW to enable the telcos to build base stations as well as reopen shut stations.
However, few months after, some of the state governments have gone back to either shutting the already existing base stations or denying the telcos access to build more.
Danbatta stated, “This singular action of not granting Right of Way will not only keep stagnating telecom investment, it will also not help in deepening broadband penetration.
“We need to engender a more robust conducive regulatory environment that attracts foreign investors into the country’s current $70bn (N21.45tn) telecom industry, release more spectrum to drive wireless Internet communication, license more players in the broadband infrastructure space and work with stakeholders to ensure that the challenges facing operators are obliterated.”
Teniola also called on the government to remove obstacles facing telecom operators in the course of deploying Internet infrastructure.
Teniola said, “We need increased support for telecom companies and other players in the entire Information and Communications Technology spectrum so that they can roll out infrastructure that can help us deepen Internet accessibility and availability faster.
“Aside from the 23 different taxes and levies that telecom companies currently pay, they are also faced with the perennial cases of vandalism, indiscriminate closure of their Internet infrastructure, denial of Right of Way as well as lack of direct access to foreign exchange.”
Industry analysts say the National Broadband Plan 2013-2018, being implemented by the Federal Government through the telecom regulator, is further helping in deepening broadband penetration.
According to data from the NCC, broadband penetration increased from six per cent in 2013 to 21 per cent in 2016 and with a target to reach 30 per cent penetration by end of this year.
“We have to create a veritable platform for aggressively increasing access to true broadband services, whose availability has greater impact on the nation’s economy,” the Chief Executive Officer, MainOne Cables, Ms Funke Opeke, said.
