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Africa’s Top Telco CEOs Want Mobile Industry Tax Reductions

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Six African CEOs of the continent’s largest telcos have urged governments to establish new policies to expedite the positive and inclusive impacts of mobile technology, in order to address investment and usage gaps.

The CEOs made the announcement this week in Rwanda.

The group included Segun Ogunsanya, Airtel Africa Group; Hassanein Hiridjee, Axian Group; Frehiwot Tamru, Ethio Telecommunications; Ralph Mupita, MTN Group; Jerome Henique, Orange Middle East and Africa; and Shameel Joosub, Vodacom Group.

The CEOs met in Kigali, Rwanda, at the ongoing Mobile World Congress (MWC) Kigali 2023, to discuss the prospects and obstacles for stronger partnerships with African governments, to achieve digital inclusion and mobile infrastructure development across the continent.

The CEOs’ announcement comes as calls are growing to urgently get African economies fit for the digital age through supportive legislation for the telecoms sector.

Mupita – who leads Africa’s largest telecom provider – recently called for balanced laws that increase investor confidence, promote innovation and drive growth in the industry.

At the time, he said: “Regulation is a potential massive driver of the growth and transformation of the industry. The regulatory frameworks that we have had over the last 20 years have served us very well. They were designed in the transition era from voice to data, basically from 2G to 3G technology.

“But these regulatory frameworks are not fit for the future, and without change, will keep Africa behind as the rest of the world advances. They are based on a belief that you need four to five, or even six player markets when we see consolidation globally in many markets.”

Fast forward to this week, the CEOs met with President Paul Kagame of Rwanda, MWC host and chairman of the Smart Africa board, who was accompanied by Paula Ingabire, Rwanda’s minister of information, communications and innovation.

The CEO group said in a statement: “Success is a team game. And further political support, across the continent, is essential to register meaningful progress.

“This includes facilitating the right market structures and conditions to avoid unnecessary fragmentation, and policies that support the investment environment needed for success.”

The CEOs went on to call upon African leaders and policymakers to partner them on digital development with the mobile industry by reimagining existing structures.

The group said there must be tax rationalisation for the mobile industry through the development of targeted fiscal policy reforms that support economic growth and digital development, deepening digital and financial inclusion, and aligned with national targets; for example, removal of tax on low-cost smartphones and sector-specific tax.

Secondly, they are seeking regulatory support to implement the recommendations of the UN Broadband Commission’s ‘21st Century Financing Models for Bridging Broadband Connectivity Gaps’.

The third plea from the CEOs was on climate action policies, which they said must improve access to renewable electricity for corporate buyers, as this is essential for the mobile industry to achieve its climate targets.

“Together, we believe passionately in the power of mobile to act as a catalyst for economic and social inclusion across Africa. We extend an open invitation to other African heads of state to engage with us in driving solutions that focus on deepening digital and financial inclusion in the continent for the benefit of all African citizens,” the group said.


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Imperative of Upholding Nigeria’s Telecoms Lifeline  

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By Ikemesit Effiong    

It is neither profound nor insightful to state that Nigeria is living through a near-unprecedented cost-of-living crisis.

Imperative of Upholding Nigeria's Telecoms Lifeline  

Aminu Maida, executive vice chairman, NCC

Core inflation touched 33.2% in March with food inflation now an eye-watering 40% – the highest in post-1999 democratic Nigerian history.

It may sound a bit apocalyptic but we are heading towards our all-time high of 47.6% recorded in January 1996.

We have already burst past March 1996’s reading of 31.7%. In a note on future inflationary trends in Nigeria, Aaron O’Neill at Statista made two salient points: our inflation has been higher than the African average for more than a decade now and a significant decrease is unlikely for quite some time.

The International Monetary Fund’s expectation that annual inflation this year will average out at 22.96% is increasingly looking a tad too optimistic.

The bigger challenge though, in his view, is our inflation’s unsteadiness. Food inflation is now at levels not seen since August 2005.

Plantain prices have increased by 129%, rice by 98%, onion prices by 97%, bread by 71% and beans by 64% – between January 2023 and January 2024 alone according to the National Bureau of Statistics.

An inflation rate that is all over the place is usually a sign of an economy that is huffing and puffing, causing prices to fluctuate, and unemployment and poverty to increase.

Nigeria’s economy – a mixed economy where state participation in economic life is higher than most free-market economies – is not entirely in bad shape.

More than half of its Gross Domestic Product (GDP) is generated by the services sector – chiefly telecommunications and finances, typically a feature of advanced economies.

Notwithstanding, the private sector is teetering.

The Financial Times reports that Nigerian Breweries (NB), which is part-owned by Heineken, has increased prices three times this year.

“So dire is the economic distress in Africa’s most populous nation that the brewer’s chief executive, Hans Essaadi, complained on an investor call that “customers can no longer afford Goldberg, a cheap and well-loved lager,” the London-based publication highlighted this as illustrative of the travails of some of the country’s biggest corporates.

Fixed foreign currency-denominated costs, import restrictions, uncertain policy-setting, a weak Naira and insecurity in many operating areas have forced most like NB to raise prices; some like Procter & Gamble to quit manufacturing in-country or others like GSK and Bayer to contract third parties to distribute their products.

There is one sector, however, that has seen little action in this direction.

The Imperative of Telecom Tariff Revision

At the nexus of connectivity and commerce, the telecommunications industry in Nigeria plays a dual role: as an economic engine and a societal enabler.

The sector’s investment profile in the country stood at $75.6 billion as of 2021, according to the Nigerian Communications Commission (NCC). Nigeria’s 221.7 million active voice subscriptions and 160.2 million data subscriptions now support a substantial 14% of GDP.

The country’s rising teledensity is such a critical linchpin for economic growth and infrastructural development that any disruptions exact a heavy price.

A 2021 SBM Intelligence survey found that 53% of respondents were “very” negatively impacted by an NCC-mandated shutdown of telecom services in the North-West due to regional security operations.

Moreover, the sector stands as a significant employer, empowering millions of Nigerians with opportunities for livelihood and advancement.

As such, the industry’s health is not merely a matter of corporate profit margins but a national imperative intertwined with the fabric of its progress.

Central to the sustenance of any industry is a conducive economic environment that allows for sustainable growth and innovation.

However, the existing regulatory framework, which shackles tariff adjustments, undermines this fundamental principle.

While other sectors have adeptly responded to economic fluctuations by revising prices, the telecom industry remains bound by regulatory constraints, impeding its ability to adapt to changing market dynamics.

A Perfect Storm: Challenges Hinder Growth      

While Nigeria’s four Mobile Network Operators (MNOs) relentlessly strive for service excellence through consistent network upgrades, their efforts are stymied by environmental and infrastructural obstacles.

Frequent fibre optic cable cuts due to road construction and vandalism; multiple taxation, coupled with the ever-present challenge of acquiring rights-of-way including charges related thereto, act as significant impediments.

These issues, further compounded by exploitative rent-seeking practices, have long plagued the industry, defying resolution despite concerted efforts.

These challenges are not lost on key stakeholders like the Nigerian Communications Commission (NCC), the Ministry of Communication, Innovation & Digital Economy, and a well-informed consortium of governmental and media entities.

MNOs have proactively engaged through media platforms, highlighting these issues and advocating for urgent government intervention.

The industry’s push for Critical Infrastructure Protection for ICT/Telecommunications and the reduction of exorbitant right-of-way (RoW) charges exemplify this proactive approach. Katsina, Nasarawa and Zamfara now lead the country in eliminating RoW charges but much of the country remains an operational nightmare for MNOs.

The Unsustainable Squeeze: Rising Costs, Stagnant Tariffs                         

Despite the advent of GSM technology 23 years ago, a disquieting public perception persists – that of consistently poor Quality of Service (QoS).

While this perception may have elements of truth, it’s crucial to recognise the mitigating factors beyond the control of the operators.

Economic hardship has led to an exponential increase in the cost of all consumer goods and services, with a glaring exception: telecommunication services.

The reason? Price regulation by the NCC.

This price stagnation stands in stark contrast to the reality faced by MNOs.

The industry is heavily reliant on foreign exchange (FX) for crucial equipment and services.

Most telecommunication equipment are imported with the absence of local alternatives as there are primarily four to five core manufacturers of telecommunications equipment and none is situated in Nigeria, or even Africa.

The depreciation of the Naira has significantly inflated operational costs, further straining already tight profit margins. It is unsustainable to expect ever-increasing network investments in the face of frozen tariffs.

The Current State of Play            

Nigeria’s approach to setting tariffs in the telecommunications sector has evolved through a combination of regulatory frameworks, market dynamics, and economic considerations.

During the industry’s transformation in the early 2000s with the issuance of licenses to private operators, tariff regulation was crucial in ensuring consumer protection and promoting fair competition.

The NCC implemented tariff guidelines to prevent anti-competitive practices and safeguard consumers from excessive charges. Tariff regulation also aimed to balance the interests of consumers with the need for MNOs to generate revenue for network expansion and improvement.

For an industry in its infancy striving to offer Nigerians access to new forms of technology and communications, it was necessary to guide pricing to enhance market adoption.

Competition added extra pressure on prices, a wealth of choices ultimately benefiting the consumer. Through it all, the margins were sufficient to incentivise operators to carry out the most extensive investment rollout in Nigerian history.

The market is more mature now and the booming economy of the 2000s is a fading memory.

Mobile phone, and broadband penetration are now at over 100 and 40% respectively, while the entire country is practically covered by 3G and 2G.

The digital economy with the immense success of content creators, e-commerce, software education, financial inclusion, cross-border freelancing and social connectedness has been built on the back of the telecom industry’s investment priorities.

The cost of providing existing services, the competitiveness required to sustain the continued rollout of 4G and eventually 5G technology and wider market dynamics have meant the current tariff structure is less a cushion for customers and more a shackle for operators.

The Path Forward: Rethinking Tariffs                    

In advocating for tariff revision, it is imperative to contextualise the industry’s plight within the broader narrative of economic sustainability and national progress.

Urgent measures must be taken to safeguard an industry that serves as a catalyst for economic growth and societal empowerment.

Tariff revision is not merely a corporate prerogative but a strategic imperative essential for the industry’s survival and a calculated investment in Nigeria’s future.

The additional revenue generated will directly translate into network infrastructure upgrades and modernisation. This translates to tangible benefits for all stakeholders.

A conducive regulatory environment is important in fostering the telecom industry’s resilience and vitality. Responsible government policies that prioritise infrastructure protection and investment incentives are indispensable in fortifying the industry’s foundations. Moreover, enhancing the operating environment for telecoms is not only in the national interest but also a catalyst for attracting Foreign Direct Investment (FDI) essential for sustainable growth.

Many may argue that reviewing tariffs at a time of stagnant wages, decreasing investments and rising prices is unreasonable but ensuring the long-term viability of a critical industry requires a collaborative effort. Regulators need to consider a data-driven and transparent tariff review that reflects the economic realities faced by the sector.

Aminu Maida, the NCC’s Executive Vice-Chairman rightly told the Nigerian Information Technology Reporters Association (NITRA) in February that customers expect excellent quality of service and operators will be held accountable for poor service delivery. Indeed, customers deserve the best possible service, and operators, going by the billions of dollars in present and future investment commitments, appear dedicated to delivering it.

A sustainable and well-regulated telecoms sector is the cornerstone of achieving this shared vision. It starts with rethinking how much operators are allowed to charge their clients.

Effiong is a legal practitioner, Partner and Head of Research at  and Chairman of the Technology Committee of the Nigerian Bar Association Section on Business Law.

 

 


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Samsung Returns to Top of The Smartphone Market – Industry tracker

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Samsung regained its position as the top smartphone seller, wresting back the lead from Apple as Chinese rivals close the gap on both market leaders, industry tracker International Data Corporation (IDC) reported Monday.

South Korea-based Samsung overtook Apple as worldwide smartphone shipments grew nearly 8 percent in the first quarter of this year to 289.4 million, IDC said, citing its preliminary data.

It was the third consecutive quarter of growth in the global smartphone market, signalling that a recovery from a slump in the sector is underway, according to IDC.

IDC Worldwide Mobility and Consumer Device Trackers team vice president Ryan Reith expected top smartphone companies to gain share and small brands to struggle for position as recovery progresses.

Samsung shipped 60.1 million smartphones in the first quarter of this year, claiming nearly 21 percent of the market, according to IDC figures.

Apple shipped 50.1 million iPhones, garnering just over 17 percent of the market in the same period, IDC reported.

Apple smartphone shipments were down 9.6 percent in a quarter-over-quarter comparison, while Samsung shipments slipped less than one percent, according to the market tracker.

Meanwhile, China-based Xiaomi saw shipments grow about 33 percent to 40.8 million and Transsion about 85 percent to 28.5 million, taking third and fourth positions in the overall smartphone market, IDC reported.

“While Apple managed to capture the top spot at the end of 2023, Samsung successfully reasserted itself as the leading smartphone provider in the first quarter,” Reith said.

IDC expects Samsung and Apple to maintain their hold on the high end of the smartphone market while Chinese competitors seek to expand sales, according to Reith.

Nabila Popal, research director with IDC’s Worldwide Tracker team, said: “There is a shift in power among the Top 5 companies, which will likely continue as market players adjust their strategies in a post-recovery world.

“Xiaomi is coming back strong from the large declines experienced over the past two years and Transsion is becoming a stable presence in the Top 5 with aggressive growth in international markets.”

AFP


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SHELT System Integration Launches “SHELT SI” in Nigeria

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SHELT, a leading provider of cybersecurity solutions, is proud to announce the launch of its new business unit in Nigeria, SHELT System Integration (SHELT SI).

SHELT SI PR

SHELT SI PR – 1

With a solid reputation built over six years of serving the nation’s financial, telecom, and government sectors, SHELT is now expanding its offerings to accelerate Nigeria’s digital transformation. The new business unit will operate under Cyber Immune Limited, a SHELT subsidiary in Nigeria.

SHELT SI emerges as a vital addition to SHELT’s portfolio, providing customers in Nigeria with trusted and unbiased expertise to design and implement cutting-edge, resilient, secure, and scalable solutions.

SHELT SI will forge strategic partnerships with global leaders to provide Networking and Cloud Management Solutions, Security Solutions, Collaboration Solutions, Managed services, Communication services, and IT Professional services while attracting top talent in Nigeria.

When asked about this milestone in SHELT’s growth, Mr. Youssef Abillama, Managing Partner of SHELT Global Limited, said: “We have full confidence in Nigeria and its commitment to digitization. SHELT is well positioned to be the technology partner of choice and trusted advisor to our customers in every step of their digitization journey.”

Mr. Walid Bou Abssi, Country Manager of SHELT Cyber Immune Limited, commented: “I am immensely proud of the launch of SHELT SI in Nigeria. This expansion underscores our dedication to empowering the nation’s digital evolution.

With SHELT SI, we are committed to providing unparalleled service to our clients, offering an unmatched value proposition driving innovation and resilience in Nigeria’s cybersecurity and network infrastructure space.”


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