Fresh mergers & acquisition deals imminent in small telcos

•Starcomms, Visafone in secret talks
Ben Uzor Jr

The Code Division Multiple Access (CDMA) segment of Nigeria’s highly competitive telecommunications market will likely witness another merger and acquisition (M&A) deal in the next twelve months, chief executive officer of Starcomms Plc, Logan Pather, disclosed yesterday.

Although, the newly appointed CEO was evasive as to who will acquire who, industry sources told Business Day yesterday that Visafone and Starcomms are in secret talks to further consolidate the CDMA segment by way of mergers and acquisition, in order to achieve scale and muster better buying power. This, according industry sources will enable them compete favorably with their GSM counterparts.

These, indeed, are not the best of times for CDMAs - also known as Private Telephone Operators (PTOs), as some of them are finding it extremely difficult to survive the stiff competition in the nation’s telecommunications industry. Analysts who spoke with Business Day yesterday, said subscriber preference for GSM technology, as well as corporate governance issues, low capitalisation and poor promotion of CDMA technology, have seen the fortunes of these CDMA operators decline over the years.

Speaking with newsmen in Lagos yesterday, Pathel said there was need for constructive measures by the CDMA networks with respect to consolidation. This, he added was necessary in light of the lopsided competition with larger GSM networks.

He also alluded to the tough operating conditions CDMA operators grapple with in their quest to provide efficient telecom services to Nigerians. According to him, CDMA networks put together control less than 10 percent of the telecoms market.

“We are very open to mergers and acquisition. It is necessary for our survival. It is necessary if we are to compete favorably in this market. There is a real possibility that within the next twelve months, the CDMA segment will witness further consolidation. Who will acquire who is another thing all together? I cannot give you that answer but I am positive that the CDMA segment will witness consolidation within the next twelve months.”

Usen Udoh, senior director, management consulting at Accenture was not surprised at the hint of another M&A deal in the CDMA segment, adding that it was inevitable going by the poor performances of CDMA operators. He said that CDMA operators must come together in the face of tough operating conditions. ‘The market points to more consolidation and it will happen”, he told Business Day yesterday. Meanwhile, Pathel is of the view that the emergence of Long Term Evolution (LTE) technology will imply that both GSM and CDMA can co-exist on this new wireless platform.

“Our technology is ready for LTE today. All our base stations are LTE ready but we need more spectrums to achieve full rollout. We are working in the background to achieve this. Our prime focus is to maintain optimum efficiency while reducing operating cost.” Pather noted that Starcomms LTE readiness will make it more attractive to investors. “When I am LTE ready, I will become an attractive company. Do you know how many investors have come into the telecoms market and failed? Those investors will want to come back given the right conditions. If there is going to be consolidation, we will have to put the business in a position where it would be valuable. The cost cutting will be very aggressive. However, consolidation will be self-induced.”

Speaking on his plan for the company as the new CEO, he stated: “My agenda for this company is survival. I have to make sure I acquire more subscribers. I must ensure that we are extremely efficient when it comes to cutting costs. We have made significant in-roads in cost reduction. Besides, what will differentiate us from other operators is customer service delivery.”

Confusion over SIM registration as agents outwit selves

Ben Uzor Jr

Confusion continues to trail the on-going SIM card registration as registration agents of partner firms’ contracted by the Nigerian Communications Commissions (NCC) and telecommunications companies (telcos) are in a fierce struggle to register more subscribers. Determined to meet the targets set by contracting firms and telcos, registration agents now use all manner of antics and guises to sway new and existing subscribers into registering their SIM cards with them. This, according to some subscribers has resulted in their inability to use their SIMs to make calls.

The NCC contracted seven partners to handle the registration process in different parts of the country. The contractors are: SW Global for South East; PNN for North Central; Chams will register subscribers in Lagos, while JKK will oversee those in South West. Others are: DataGroupIT for the North East; EAGLE/CBC for the North West, while E-Kenneth/SageMetrics will register subscribers in the South-South comprising. Informed sources close told Business Day that these contracting firms have directed their agents to register 420 individual per week as they stand the risk of losing their jobs.

“Most of these agents handling NCC’s registration exercise now use all manner of guises to lure new subscribers into registering with them when they do not possess the capacity to activate SIMs. “They are punishing Nigerians, it tantamount to disenfranchising the subscribers. This is one problem I have with the exercise”, Dele Ogunbanjo, president, National Association of Telecommunications Subscribers (NATCOMS) told Business Day. Agents registering for telcos have also been accused of misinforming subscribers by insisting that they register with them even after they have registered with NCC.

“We have said this clearly, if you have registered with NCC there is no need to register with MTN or any other Telco. If you have registered with MTN there is no need to register with NCC. “No telcos today is insisting on duplication of SIM registration”, Wale Goodluck, corporate service executive, MTN Nigeria told Business Day in a phone interview yesterday. Echoing Goodluck’s view, Reuben Mouka, head of public affairs, NCC said, “If you purchase a new SIM card there is no need to register with the NCC. Only operators are responsible for registration of new SIMs. These registration agents do not have the facility or the capacity to activate new SIM cards. Only an operator can activate new SIMs”.

Meanwhile, the NCC has warned telecoms subscribers and telecom operators over the sale, or use of 'pre-registered' SIM cards. Muoka, said the act of selling pre-registered new SIM cards to the members of the public by vendors or retailers, and use of such cards by anybody whatsoever, contravenes the regulation on registration of phone subscribers. He said such person or persons shall be liable on conviction to a fine, or imprisonment, or both, in line with the Nigerian Communications Act 2003.

He said the commission will also hold network service providers liable when such cards are found to be in use as they are expected to ensure that new SIM cards are not pre-registered before they are sold to members of the public through their various channels. Mouka said those found to be involved in this illegality will face arrest, detention, investigation, prosecution and sanction in line with the provisions of the Communications Act. He also warned the public desist from buying pre-registered SIM as they will also be liable if such line is in any way connected to any crime or misuse.

However, industry analysts maintain that the registration process has become a burden to many consumers. According to them, the sheer size of the country and the biometric requirements of the project greatly contribute to the inadequacy of registration points needed to cater to the entire populace in a timely manner. The burden on the consumer, according to them, is further increased by the fact that the majority of subscribers in Nigeria have more than one SIM Card for reasons of backup and cost-effectiveness. Others tend to have more than one SIM card for voice and data services.

Besides, this situation increases the burden on the registration centers to handle the numbers. Ogunbanjo said advocacy group was obligated to caution that the successes in the telecom industry over the last 10 years are now being threatened by the challenges faced with the registration of telecoms consumers, which is intended to curb the menace of the rampant abuse of telecommunications by criminals, especially the scourge of kidnappers. He called for proper and extensive public sensitisation down to the grassroots level, to enable Nigerians get proper information on SIM registration.

Nigeria needs 25 million PCs to attain MDGs, says Zinox boss

Ben Uzor Jr

If Nigeria intends to meet the Millennium Development Goals (MDGs) by 2015 especially in the Information Communication Technology (ICT) industry, the nation needs to deploy a minimum of 25 million Personal Computers (PCs) in the next three year, Leo Stan Ekeh, chairman, Zinox Technologies Limited, disclosed at the weekend. Ekeh, who made this revelation at a celebration of 10 years of ICT revolution organised by the ICT Publishers Alliance in Lagos, said that 3.7 million of these PCs should be deployed for each of the 6 geo-political zones. According to him, 2.5 million PCs should be deployed in Abuja, further adding that it would encourage even development; hasten the realization of the MDGs by 2015 thus placing the nation firmly on the road to actualising vision 20:2020.

“These PCs would be targeted at youths who leave secondary school with 6 ‘Alphas’ , and all graduating students from the polytechnics, Colleges of Education and Universities. The machines are to be funded by the federal government under an arrangement that requires all corporate persons to pay 1 percent ICT tax for a period of 5 years. “On the alternative savings from the sovereign wealth fund could be ploughed into the provision of these PCs in the next three years”, he added. According to him, these 25 million PCs are produced and delivered by the indigenous Original Equipment Manufacturers (OEMs).

Ekeh stated that this would address the problem of capacity building as Nigerians acquire more technical competencies. He said that prices would be forced down appreciably enabling the local OEMs to compete with their foreign counterparts, adding that Nigerian banks are not lending money to local OEMs and vendors because of unpredictable patronage. “Boost the local industry with 25 million PCs and you can be sure that banks would line up with all kinds of finance packages. Besides, the deployment of large numbers of PCs would boost participation in the development of software applications, the internet and social media and we can start talking of the ICT revolution in real terms”.

This huge investment, according to Ekeh, will power domesticated technology and place in the hands of Nigerian youths the equipment to launch an era of ‘unlimited possibilities’. “These young men and women would form the nucleus of a new generation of job providers while kick starting a new knowledge economy. Those of them who go into paid employment would be IT savvy enough to introduce a new era of efficient service delivery in public and private sectors. The Zinox boss criticized government’s inability to provide employment for graduates averaging 600, 000 per year because they still concentrate on deploying outdated solution in a digital century.

“This generation closely interconnected by satellite television, social media and the internet would give rise to a new ICT based work culture, increasing productivity and self sufficiency; reducing corruption and the kinship that leads to ethnicity; and enabling a self interpretation of faith that would undermine religious extremism”, Ekeh posited. Industry analysts say Nigeria’s low PC penetration hold significant prospects for local OEMs as growth in PCs penetration will be sustained by increasing awareness levels in the population, especially the youth, spurred by education, the internet and deliberate initiatives from industry stakeholders.

MTN plans $1bn investment in network upgrade

• Celebrates 10 year anniversary
Ben Uzor Jr

Mobile network, MTN Nigeria says it will invest an additional $1 billion in the current financial year, for network expansion and improvement of quality of service. Speaking at the company’s colourful tenth anniversary celebrations in Lagos yesterday, Brett Goshen, chief executive officer, MTN Nigeria, said the telecoms firm intends to further expand upon its subscriber base which currently stands at over 40 million. Goshen said as part of the strategy to achieve this, the network would deliberately push into underserved rural communities.

“We have close to 7, 000 base transceiver stations located all over the country, and we are still rolling out more. We have deployed one of the most expansive fibre optic (over 8, 530km) and microwave infrastructure (Y’ellobahn – 11, 500km) in sub-Saharan Africa. In a dynamic market such as Nigeria, you cannot stop investing if you want to remain the leader. That is why we are committed to investing an additional $1 billion to upgrade network in the current financial year”, Goshen added. The MTN CEO was, ably represented by Amina Oyagbola, human resources executive, MTN Nigeria.

However, Goshen maintained that the firm had witnessed unprecedented growth that it was now a global benchmark for what can be achieved an emerging economy. “One constant factor emboldened us to stamp our imprimatur on this market, and that was its enormous potentials; particularly the intelligence, can-do spirit and remarkable resilience of its citizenry”. He gave lucid insight into how the company was playing a fundamental role in driving socio-economic growth and development of the country through sustainable initiatives.

He disclosed that MTN Nigeria had paid about N700 billion in taxes and levies till date, and that 99 percent of the firms 2,200 permanent workforce is Nigerians. “As at today, 349 Nigerians hold management positions and 70 percent of our Executive Management Committee are Nigerians. Dependence on expatriates has reduced from over 300 expatriates who were mainly in the core technical components of the business in 2002 to only 18 as at July 2011”.

Pascal Dozie, chairman, board of directors, MTN Nigeria who was at the event commended senior executives of the firm including: Wale Goodluck, corporate services executive; Bola Akingbade, chief marketing officer; Karl Toriola, chief technical officer; Akin Braithwaite, customer services executive; for their dedication and steadfastness towards providing best-in-class services to its subscribers.

Speaking further, Goshen said the MTN Foundation which is funded by up to one percent Profit after Tax, has 20 projects across 292 project sites in 36 states and the Federal Capital Territory (FCT). “With over N5 billion so far deployed to fund numerous initiatives, the foundation is definitely fulfilling its pledge to improve the quality of lives in our communities”. The MTN Foundation, established in 2005, focuses on implementing high impact corporate social investments in three critical social areas of need – Health, Education, and Economic Empowerment.

The company used the occasion to the flag off “MyCustomer Week’, which is a week-long celebration of its customers, who are the cornerstone of the business. It entails a number of carefully planned activities aimed at rewarding its teeming subscriber. The MyCustomer programme was introduced by MTN Nigeria in 2009 to deliver a one-to-one preferential, best-in-class customer service experience. The programme is about ensuring that MTN delights it customers beyond their expectation. Furthermore, it is aimed at motivating every MTN staff to strike the emotional connection with the customers at every opportunity they have to interact with them.