NCC says more telecoms firms are distressed

NCC says more telecoms firms are distressed
Ben Uzor Jr
Ernest Ndukwe, Executive Vice Chairman, Nigerian Communications Commission (NCC) has revealed that more telecommunications companies operating in Nigeria are showing disturbing signs of distress. According to Ndukwe, this is as a result issues revolving around poor corporate governance structure, wrong business decisions and the management style employed in the economic crisis. Currently, there are four telecom companies operating in the Code Division Multiple Access (CDMA) space namely; Starcomms, Visafone, Multilinks-Telkom and ZoomMobile. On the other hand, MTN, Zain, Globacom, M-Tel and latest entrant Etisalat operate in the Global System for Mobile Communications (GSM) sphere of the industry. Speaking on Wednesday in Lagos at the 2010 Exemplary Leadership Lecture organised by the Leadership and Role Model Foundation of Nigeria (LRMFN) under the distinguished chairmanship of the former Minister of Information and culture, Tony Momoh, Ndukwe maintained that the nation could not afford the collapse of any operating company. In explaining how the present banking reforms had severely affected the telecom industry, the EVC boss observed that the most operating companies cannot access requisite finances needed for expansion and network rollouts from financial institutions. According to him, banks have become stricter in lending to telecoms operators and this had adversely affected their profitability in the preceding year. Ndukwe had earlier in the month disclosed that the telecom industry grew phone lines by 10 million in 2009 as against the 20 million recorded in 2008. “It is more of the effect of the global economic meltdown. Operators do not have enough finance to rollout new networks in areas they have not been before. Also, they don’t have enough money to improve their services. Many of the smaller operators, even the bigger ones are finding it difficult to access loans from the banks at the moment”, he pointed out. Alluding to the need for companies showing signs of distress to impose upon themselves strict culture of operational risk and assessment, Ndukwe observed that inward looking companies should also adopt benchmarks, as they provide insights into the performance secrets of successful competing companies, their business practices that have helped them attain success. In his paper presentation entitled: ‘Team Playing and Bridge Building: An Appraisal of the Success factors for Sustaining the Telecom Revolution in Nigeria’ he said: “Issues of corporate governance, as they relate to assessment of risk, executive remuneration, strategic corporate direction, transparency and others, will need to be resolved effectively if organisations are to overcome the crisis and prevent collapse. We can ill afford the collapse of any operating company”, he posited. Business Day had earlier reported that telcos are consequently devising cost saving and other survival measures. Some of the telcos are engaging in staff rationalization, increasingly farming out non-core operations and staff, piling up interconnectivity debts and engaging in creative promotions and direct marketing schemes, aimed at further growing their subscriber bases, so they can better enjoy lower operating costs accruing from the economies of scale.