Communication
Mubadala seeks to exit Nigeria’s telecoms market
ABUJA – Mubudala, Abu Dhabi’s sovereign wealth fund, is keen on negotiating an exit from Nigerian telecommunications operator EMTS, in which it holds a 30-percent stake, according to TMTFinance.
This move by the fund may be linked to recent reports that investor confidence in the country’s highly competitive telecoms market is dipping due to perceived structural defects in the market and a harsh operating environment. Industry watchers say this does not bode well for long-term growth and sustainability of the telecoms industry.
Mubadala could be seeking new pastures, cashing in on a telecoms industry increasingly facing higher operating costs, dwindling revenue per user and investor pullback, according to industry watchers.
Informed sources say Mubadala has already started holding discussions regarding a sale of its asset, although they cautioned that talks were still in infancy and extremely complex. According to an informed source, the most probable scenario expected to play out would be Mubadala selling its stake to Etisalat, which holds a 40-percent stake in EMTS.
The remaining EMTS shareholder, which holds a 30-percent stake, is Myacynth, a consortium of Nigerian investors. Informed sources say the fundamental drawback to the conclusion of the deal would be valuation expectations, with Mubadala’s valuation of the asset said to be considerably high. In order to pave the way for a deal, EMTS will first need to conclude the sale of its telecom towers in Nigeria, with the process currently underway.
Bidding offers are expected by mid-June, with Standard Bank advising. Estimations are that Etisalat has about 2,500 Base Transceiver Station (BTS) sites across the country. Attempts to reach senior executives at Etisalat Nigeria and Myacynth for comments proved abortive.
EMTS launched commercially as Nigeria’s fifth telecoms operator in 2008, after Mubadala was granted a 15-year renewable Universal Access Service Licence (UASL) for $400 million before selecting Etisalat Group as partner for the venture. It is currently the fourth-largest mobile operator in the country in terms of subscriber numbers, with around 19 million subscribers, according to 2014 figures from the Nigerian Communications Commission (NCC).
MTN, however, remains the market leader, followed by Bharti Airtel, and national carrier, Glo Mobile. Analysts expect an upswing of major transactions in 2014-2015 as major international mobile operators reposition portfolios, and new investors, increasingly backed by private equity, target opportunities across the continent. A number of investment opportunities are in play. India’s Bharti Airtel, South Africa’s MTN, and the UAE’s Etisalat are all negotiating mobile tower deals.
Edwin Grummitt, partner and head of MEA, Analysys Mason, states in a note accessed by BusinessDay on Monday, that a combination of long-heralded trends and new local opportunities are driving deals.
“The continuing march of network sharing deals, coupled with consolidation in over-crowded markets, and the acquisition of systems integrators to support operators’ convergence strategies, are all a logical and direct consequence of declining growth rates in their legacy core telecoms business,” he said, adding that investment capital was chasing fresh opportunities in other adjacent markets.
Nigeria’s telecoms industry is currently struggling with high operating costs, lower average revenue returns and investor restlessness due to the difficult operating environment, industry watchers say.
“Nigeria is a very tough environment to do business. Power is a big challenge. The use of generating sets makes your business outlook more expensive. There are generic challenges. But some of the challenges that we face as a telecoms company include Right of Way (Row) issues, government regulations, multiple taxation, insecurity, among others,” said Ejovi Aror, group managing director, ipNX Nigeria Limited, in an interview with BuisnessDay.
FSDH Nigeria’s Economic Outlook 2013-2017 states that the sector’s growth is expected to decline from 34.58 percent in 2011 to 16.53 percent in 2017. Immediate impact of declining growth, according to the outlook, will include difficulties in sourcing capital, as huge capital outlay is required to position the industry for the next phase of evolution; and lower investments, particularly in new areas such as broadband deployment.
It states further that these were imminent threats to projected contribution of the industry to the nation’s Gross Domestic Product (GDP).
“There is huge potential for market, though it still seems to operate below potential. While strong, mobile penetration is still lower than in a number of other African markets,” the outlook says.
“Broadband penetration remains low at less than 10 percent, with the government setting a target of 20 percent by 2017. The fundamental challenge remains the impact of declining growth on investment in broadband infrastructure needed to provide a platform for a vibrant Internet economy,” it adds.
The industry assessment showed that operators are currently facing the challenge of stagnating revenues and increasing operating expenses. Though the operators have undertaken a number of initiatives like infrastructure sharing, outsourcing and increasing asset productivity, operational challenges remain.
The network expenses of operators, according to MTN, are increasing due to the overall high inflationary environment, along with their network expansion activities.
“Current industry contribution to the GDP stands at 8 percent. Declining revenues will impact the GDP if not properly managed. Inflation has grown faster than the industry revenue growth, and this could lead to the collapse of the industry. The industry is currently witnessing distress as several Code Division Multiple Access (CDMA) operators have gone out of business,” said MTN.
– BUSINESS DAY
The Nigerian Communications Commission (NCC) has approved new tariff guidelines for telecommunications operators to enhance transparency, improve consumer understanding, and foster fair competition among its licensees.
The commission has also mandated that all telcos in the country limit the number of available tariff plans to a maximum of seven.
This information was disclosed in a document posted on the NCC’s website and signed by the Executive Vice-Chairman of the commission, Aminu Maida, on Saturday.
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In addition, the number of bundles offered per operator has been reduced to 100, with the directive that no subscriber can be on more than one tariff plan at a time.
The NCC defines a tariff plan as a structured pricing scheme outlining the charges and conditions under which telecommunications services are provided to subscribers.
The document read in parts, “The number of tariff plans offered per operator is limited to seven, and the number of bundles offered per operator is limited to 100.
“There are no limitations to the number of add-ons a subscriber can opt into. However, each operator must have in place a mechanism that informs subscribers of the number of add-ons they have at the point of purchasing another add-on. Subscribers must be able to check (via USSD string, SMS) the number of add-ons purchased.”
It has been reported that the two leading telecommunications companies in the country are currently offering more tariff plans than allowed by the new directive.
MTN offers eight tariff plans, Etisalat has seven, Airtel provides ten plans, and Glo offers its customers four tariff plans.
In the “Guidance for the Simplification of Tariffs” document, the NCC stressed the importance of fully disclosing all tariff components and terms, requiring telecommunications companies to ensure that all marketing and promotional materials are easily understandable.
The NCC also underscored the necessity for operators to prioritize consumer education and transparency in all communications to enable subscribers to make well-informed decisions.
It said “Develop and submit detailed migration plans to transition subscribers smoothly to new tariff plans, without loss of service quality or benefits.
“All promotional elements must receive prior approval from the Commission and should be offered as standalone products with clear terms and validity periods.
“Submit comprehensive periodical reports detailing all active tariff plans, bundles, promotions, and Quality of Service (QoS) metrics. The guidance shall take effect on 29 July and will remain valid and binding on licensees until further reviewed by the commission.”
“Operators can choose to maintain only one bonus-led new subscriber acquisition plan. However, a new subscriber can only be retained on such a plan for a limited period of six months before being migrated to a standard tariff plan of their choice.
“Where a subscriber fails to migrate after being prompted in accordance with the applicable business rules, the subscriber will be reverted to the default tariff plan.
“Tariff elements of promotional activities/new acquisition plans referred to above will only be allowed under the following conditions: bonuses must comply with the commission’s price floor and price cap.
“In addition, actual depletion rates on bonuses must not exceed the price or fall below the price floor for voice services. The bonus allowances (voice/data/SMS) must be stated in naira terms and minutes/seconds for voice, GB/MB of data and number of SMS. Operators must fully disclose the above in their advertising materials.
The telecommunications regulator also stated that add-on subscriptions must be optional for subscribers.
According to the directive, “Subscribers should be able to purchase any add-ons of their choice while remaining on their existing tariff plan and/or bundle.”
The directive also specifies that a free add-on must be treated as a promotional offering and requires approval from the Commission in accordance with the 2023 guidelines on promotional advertisements.
Additionally, in line with existing regulatory instruments, service providers must obtain evidence of informed consent from subscribers before accepting an add-on.
The NCC noted that there are penalties for non-compliance with the guidance and that operators must adjust their offerings to comply within 90 days from the date of the directive issued on Saturday.
The commission noted “Transition plans for existing tariffs must be submitted on or before 12 August 2024. The Commission will review and respond to submissions within 10 working days.
“Tariff approval and modification applications must include comprehensive disclosure forms detailing all aspects of the tariff.
“Non-compliance will result in penalties, including fines, suspension of tariff approvals, or other regulatory actions as set out in the Act, related regulatory instruments and the subsisting Enforcement Process Regulation.”
The NCC has mandated that operators must notify subscribers of any changes to their tariff plans, including transitions to new plans, with at least 30 days’ notice. The commission emphasized that “notifications should be clear, outlining the reasons and benefits involved.”
In related news, operators have denied claims that the commission has approved a tariff increase. Gbenga Adebayo, Chairman of the Association of Licensed Telecom Operators in Nigeria, stated, “Telecommunications companies have not received any authorization for a tariff review.”
Additionally, inquiries made by our correspondent via calls and text messages confirmed that the rates remain unchanged.
In a significant market projection, Mordor Intelligence predicts that the Nigerian telecom sector is set to surge to a value of $11.43 billion by 2029.
The report anticipates a steady growth trajectory with a cumulative average growth rate (CAGR) of 4.70% between 2024 and 2029, based on the current market value of $9.09 billion.
The transformation of Nigeria’s telecom landscape, fueled by government initiatives to boost internet infrastructure and broadband connectivity, coupled with rising data consumption, 5G deployments, and innovative strategies from major telecom players, is expected to drive this substantial market expansion.
The report underscores additional factors propelling the growth of Nigeria’s telecom sector, emphasizing the surge in smartphone adoption.
the report said “Increased smartphone adoption in Nigeria has fueled the development of a dynamic digital services sector. Currently, millions of Nigerians use mobile apps, including social networking sites, e-commerce, and financial services.
“These apps could leverage smartphones’ capabilities to offer speed, convenience, and efficiency, encouraging more people to invest in smartphones.
“In addition to these expansions and collaborations, the growing adoption of digital technologies and government support in aiding the same alongside the 5G technology implementation across the country is analyzed to boost the demand for telecom towers significantly.”
“In addition to these expansions and collaborations, the growing adoption of digital technologies and government support in aiding the same alongside the 5G technology implementation across the country is analyzed to boost the demand for telecom towers significantly.”
Mordor Intelligence highlights that the flourishing e-commerce and digital service platforms in Nigeria are significant drivers behind the escalating demand for dependable telecom services in the country.
The Nigerian Communications Commission (NCC) has granted MTN’s request to partially disconnect Globacom (Glo) from its network owing to unsettled interconnect charges.
Reuben Muoka, the NCC’s Director of Public Affairs, disclosed this in a document named ‘Pre-Disconnection Notice’ on Monday.
The move follows Glo’s persistent failure to clear its outstanding debts despite multiple attempts to resolve the issue.
Under this partial disconnection, Globacom subscribers will solely receive calls from MTN users, while retaining access to other network services like outgoing calls to other networks and data services.
However, they won’t be able to initiate calls to MTN users during this period.
The statement read, “All subscribers are, therefore requested to take notice that the Commission has approved the Partial Disconnection of Globacom to MTN in accordance with Section 100 of the Nigerian Communications Act, 2003 and Paragraph 9 of the Guidelines on Procedure for Granting Approval to Disconnect Telecommunications Operators, 2012.
“At the expiration of 10 days from January 8, 2024, subscribers of Globacom will no longer be able to make calls to MTN but will be able to receive calls.
“The Partial Disconnection, however, will allow in-bound calls to the Globacom network,” it added
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