Chinenye Anuforo
There are dozens of issues and events that made Nigeria’s information and communication technology (ICT) sector thick over the last four years that President Muhammadu Buhari took over the reign of power in Africa’s largest economy. Buhari was elected into office on the platform of All Progressives Congress (APC) after defeating then incumbent President Goodluck Jonathan of the Peoples Democratic Party (PDP).
As his administration comes to the end of its first four years and starts another four year term today, a number of events clearly defined the ICT sector including broad band penetration, crisis that rocked some of the operators as well as the listing of one of them on the Nigerian Stock Exchange.
Broadband penetration
In the last four years, for instance, Nigeria’s broadband penetration according to the Nigerian Communications Commssion increased from 8.5 per cent in 2015 to 33 per cent as at March, 2019.
The Executive Vice Chairman of the Nigerian Communications Commission (NCC), Prof Umar Garba Danbatta, said that the Commission remained committed to driving the process of attaining 70 per cent broadband penetration in the next couple of years, if that becomes the new target by the Federal Government.
Danbatta expressed the agency’s commitment toward taking the broadband penetration to the next level. He said, “When I was appointed by President Muhammadu Buhari in 2015, broadband penetration was only 8.5 per cent. It has now risen to 33 per cent, an equivalent of 63 million Nigerians enjoying the services. I am particularly thrilled to see that the rising trend has not only been sustained, but the NCC is now ready to take it to the next level,” he pointed out.”
Teledensity
During the period under review, Nigeria’s teledensity also rose from 107.67 per cent in August 2015 to teledensity of 124.05 per cent as at end of February, 2019.
However, NCC clarified that it has recently re-aligned the computation of the country’s teledensity with the latest population figure of 190 million given by the National Population Commission (NPC), up from the 140 million population of 2006.
Following the re-alignment, which is also in line with the International Telecommunication Union (ITU)’s calculation of teledensity, the Commission arrived at a teledensity of 91 per cent by the end of March, 2019.
Telephone density or teledensity is the number of telephone connections for every hundred individuals living within an area.
Hitherto, teledensity in Nigeria was calculated using the 140 million population official figure of 2006 against the prevailing monthly subscriber base.
According to the Commission, “As at February, 2019, when the 140 million population figure was last used and benchmarked against the active subscriber base of 173.6 million, the country’s teledensity stood at 124.05 per cent.”
In addition to this the nation’s active telecoms subscribers increased from 148, 70 million in August 2015 to 173.7 million as at end of March 2019 when the Commission began to use the rebased 190 million population of Nigeria, as projected by the NPC.
Prof. Danbatta, said the clarification on teledensity calculation became necessary to avoid misinterpretation of the re-alignment to mean a reduction in teledensity.
“Rather, the teledensity actually did not reduce because in March, active mobile subscriber base actually increased. So, what has happened is a re-alignment of the teledensity calculation with the rebased population figure of 190 million against the prevailing monthly subscriber base, which is a more realistic figure for the country in light of the latest population figure,” Danbatta said.
9Mobile crisis
At the same time, the telecommunication sector witnessed crises that would have seen many investors fingers burnt but for the swift intervention of the sector regulator, NCC and the Central Bank of Nigeria (CBN).
In order to boost its infrastructure in the competitive telecoms market that has MTN, Globacom and Airtel as competitors, Etisalat Nigeria approached a consortium of local banks and got a $1.2 billion medium-term seven-year facility.
The repayment modality for the facility was not in the public space until the economic downturn of 2015 which led to sharp devaluations of the naira, a trend that negatively impacted the value of the dollar-denominated loan.
The situation was aggravated by a CBN policy, which restricted access to foreign exchange. That policy forced many firms to abruptly closed shops.
According to the telco, the outstanding loan to the consortium stood at $227 million and N113 billion, a total of about $574 million if the naira portion is converted to United States (U.S) dollars. By implication, almost half of the original loan of $1.2 billion has been repaid.
Etisalat continued to service the loan until February 2017, when discussions began with the banks on how to restructure the repayment.
Engagements to renegotiate the terms of the loan went on and were yet to be finalised, though at an advanced stage until everything went sour which promoted CBN and NCC intervention, thus, the sale of 9Mobile.
When the opportunity to invest in 9mobile came in 2017, Barclays Africa was appointed to handle the sale through a transparent auction process.
At that time the former CEO of MTN Nigeria, Adrian Wood, who became the face of Teleology in Nigeria led Teleology Holdings to bid for 9mobile.
After due considerations, based on the technical competences and financial capabilities to manage 9mobile, Barclays Africa announced Teleology Holdings as the preferred bidder and Smile Telecoms Holdings as the reserve bidder, among 16 contenders who initially submitted bid for 9mobile.
Letters were transmitted to both final contenders on February 21, 2018, informing them of their positions in the sale of 9mobile.
The letter also directed Teleology Holdings to make a non-refundable cash deposit of $50 million within 21 days of from the date of the letter, dated February 21, 2018, or stand the chance of losing the bid to the reserve bidder, which is Smile Telecoms Holdings.
After the payment of the initial $50 million deposit, Teleology was expected to pay the remaining balance of $251 million, to complete the $301 million it proposed during the bid process to acquire 9mobile.
Teleology was mandated to pay the balance of $251 million within 90 days, beginning from March 21, 2018, which was the deadline given it to pay the $50 million non-refundable cash deposit. Determined to take over 9mobile,
Teleology Holdings met both payment deadlines, but had to patiently wait for months before approval was eventually given for the total ownership of 9mobile.
So, with the emergence of the new Board, the long process for the acquisition of 9mobile has reached a definitive end marking the beginning of a new era for the telecommunication company.
CBN/AGF sanction on MTN
Another event that shock the sector in the period was the CBN/Attorney General of Federation (AGF) slam on MTN. In August 2018, the Central Bank of Nigeria (CBN) said MTN Nigeria illegally repatriated the sum of $8,134,312,397.63 in collusion with four banks.
It imposed heavy sanctions totaling N5.87 billion on the four banks under its regulatory purview and asked them to refund the sum of $8,134,312,397.63 for what it described as “flagrant violation of extant laws and regulations of the Federal Republic of Nigeria, including the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act, 1995 of the Federal Republic of Nigeria and the Foreign Exchange Manual, 2006’. The apex bank said the action became necessary following allegations of remittance of foreign exchange with irregular Certificates of Capital Importation issued on behalf of some offshore investors of MTN Nigeria Communications Limited and subsequent investigations carried out by the apex bank in March 2018. Few months after, the Attorney General of the Federation (AGF) also slammed another fine on MTN Nigeria. However, the CBN had resolved the matter with the telecom giant in December 2017.
MTN listing
During the review period, MTN Nigeria successfully listed on the premium board of the Nigerian Stock Exchange (NSE).
Stakeholders have argued that MTN Nigeria’s listing on the NSE will create a new telecoms and technology asset class for investors and provide an opportunity for a wider group of Nigerians to participate in the MTN investment story. This listing is a major milestone that deepens Nigeria’s equity capital markets while attracting new portfolio investment over time. From this point, all MTN Nigeria shareholders will be able to freely trade their shares on the NSE.
Commenting on the development, National Council President, NSE, Otunba Abimbola Ogunbanjo, said, “We are particularly pleased that MTN Nigeria has joined the prestigious club of companies listed on our Premium Board with this landmark transaction, which will differentiate it as a professionally run telecommunications company with high standards, having met The NSE’s listing criteria. A Premium Board listing is a sign of commitment to strong corporate governance, excellence, professionalism, efficiency in service delivery and providing increased returns to shareholders. It is our expectation that the MTN Nigeria listing, which is the NSE’s 2nd largest, will encourage other telecommunication companies to list their shares on The Exchange, thereby opening the sector up to cheaper, long term capital that will boost innovation and development.”
Speaking on the listing and MTN’s performance, Chief Executive Officer, Ferdi Moolman, said: “We’ve evolved from an ambitious start-up at the genesis of a new and emerging industry, to a business that is able to touch lives in every corner of Nigeria. We have established a sustainable platform for growth, from which we are able to meet the growing and dynamic needs of our customers, our communities and our country. This platform has been built through a sustained focus on customer-centric delivery, striving to ensure that every subscriber gets as much value for their money as possible. We are grateful to customers for their loyalty, and to our people, our partners and our regulators for the opportunity to continue to contribute to Nigeria’s growth story.
We are only beginning to tap into the opportunities that connectivity enables and are fully focused on investing to connect every Nigerian, and to make social innovations like mobile electricity and high impact mobile solutions in education, healthcare and agriculture available in communities everywhere.”