Despite assurances by the Nigerian Communications Commission (NCC) that it has secured a concessional foreign exchange (forex) access window for telcos from the Central Bank of Nigeria (CBN, the telcos at the weekend raised the alarm that they were on the brink of collapse because of forex challenges.
The carriers, under the aegis of Association of Licensed Telecoms Operators of Nigeria (ALTON), lamented that the failure of the CBN to grant them concessional forex access window was taking a terrific toll on their operations.
Its Chairman, Gbenga Adebayo, who spoke during a breakfast meeting with the Nigeria Information Technology Reporters Association (NITRA) in Lagos at the weekend, lamented that the industry is facing major challenges in purchasing forex to fulfil contractual obligations to equipment suppliers and foreign vendors.
This situation is adversely impacting the network operations and also some recent developments in the industry have alluded very clearly to the risks at hand, he warned.
The prevailing scarcity of forex has occasioned a situation where the banks are unable to obtain forex for an upward period of six months, he lamented.
According to him, carriers are similar to manufacturing firms and deserve to be treated in the same manner because the core network equipment and other auxiliary equipment procured for providing voice and data services are equivalent to plant and machinery acquired by the manufacturing firms for the production of goods and services in the country.
He said items classified as plants and machinery that are procured and imported into the country by carriers include Radio Frequency (RF) coverage equipment (Base Transmission Station (BTS), Base Station Controller (BSC), Node B, Radio Network Controller (RNC); and core equipment comprising Mobile Switching Center (MSC), Media Gateway, Radio Management Centre (RMC), Charging Control Node (CCN), Enterprise Mobility Management (EMM), Packet Core, Multiprotocol Label Switching (MPLS) Nodes; transmission equipment, such as microwave, optic fibre, and RF planning tools.
Others are customer contact equipment such as subscriber identity module (SIM) cards; and network tools, such as planning and monitoring tools.
“These equipment are subsequently integrated to form a network to provide services of voice/data/SMS/VAS/enterprise solutions/leased lines – which are finished goods in the telecoms sector.
“In addition, telecoms sector is termed “infrastructure of infrastructures” and social overhead capital which propels productivity in other sectors of the economy. The multiplier effects of efficient and reliable telecommunications services on other spheres of the economy, such as banking, aviation and hospitality cannot be over-emphasised.
“ALTON is of the opinion that the telecoms sector deserves to be supported through direct forex allocation from the CBN interventions. This will facilitate the deployment of pervasive broadband network nationwide and ensure that the country retains its prime position, as the largest Telecommunications market in Africa,” he said.
He said the exemption of telecoms equipment and services from items to be accorded priority in the allocation of forex by the banks has adversely impacted the industry as it has increased operating cost (opex). “In the absence of local substitutes for its plant and machinery, telecoms service providers are constrained to source forex from interbank market at higher rates compared to other sectors such as manufacturing, aviation and agriculture accorded priority in forex allocation at reduced rates by the CBN. Owing to the prevailing economic situation in the country, ALTON members cannot transfer the increased cost burden to the consumers, thereby contracting profitability and ability to make further investment to drive growth in the industry,” Adebayo said.
Another effect is unfavourable credit terms which has made it very challenging for telcos to honour their obligations to foreign vendors as at when due. This has occasioned delayed payment to equipment suppliers and other foreign vendors, who have now resorted to imposing unfavourable payment terms on telcos in the country. “Some of the foreign vendors had issued Notice of Disconnection of service, which could disrupt service availability with attendant impact on customers’ experience,” Adebayo added.
He said the forex situation had led to network enhancement and improvement initiatives. According to him, ALTON members had made commitments intended to ensure the implementation of National Quality of Service (QoS) Fixing Project. He said it is a coordinated network investment plan supervised by the NCC at designated locations nationwide over a period of time by the carriers to ensure improved QoS.
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