Nigerian CommunicationWeek

Help! Some CDMA on Life Support, Others Dead

CDMAs are dying as a result of poor corporate governance

Corporate mismanagement rather than market forces is responsible for the epilepsy which has reduced most code division multiple access (CDMA) operators in Nigeria to fringe players, Nigeria CommunicationsWeek can now reveal.
Apart from Starcomms Plc and Multilinks-Telkom, CDMA operators are now hanging on hair breath no thanks to years of successive mismanagement of the companies.
The same fraudulent and self-serving practices of some members of board and management and the overbearing influence of chairmen or MD/CEOs of CDMAs, especially in family-controlled businesses led to the collapse of the banking industry sometime ago.
Experts also point at non-compliance with laid down internal controls and operation procedures, biased recruitment exercises and general lack luster management practices as some of the reasons why the companies have failed to click. 
Elsewhere, local financiers repulsed by the companies’ stinking financial records have also turned their backs preferring to fund global system for mobile communications (GSM) operators with proven corporate practice.
Further investigations revealed that some CDMA operators had over the years regularly and consciously ignored sustained and systematic red flags as their promoters and managers diverted funds meant for expansion into frivolous projects like manufacturing, oil and gas, elections and so on.
Nigeria CommunicationsWeek gathered that most of the companies are now either on life support, or already dead and decomposing.
Nigeria Communications Commission (NCC) had earlier in the year admitted that a number of telcos have actually begun to show disturbing signs of distress.
NCC agreed that it is as a result of issues revolving around poor corporate governance, wrong business decisions, and the management style employed by these telcos in the economic crisis.
The poor state of affairs with the CDMA operators has also to do with growing subscribers’ preference for GSM services and poor network coverage.
The inability of unified license holders to roll out services due to the scarcity of fund has not helped matters.
Already, some CDMA companies are reportedly axing large chunks of their workforce to underpin their hemorrhaging finances.
But it is only a temporary palliative because faced with challenges of replacing their obsolete infrastructure the long term survival of the companies are doubtful.
Adewale Jones, renown telecom lawyer , said that private ownership of CDMA companies and the multiplication of sites and infrastructure hastened their demise.
According to him, the companies are not dying because of the nature of the business they are doing but as a result of a combination of poor corporate governance and paucity of funds for expansion.
“You can see that Starcomms and Multi-links –Telkom are doing well because they understand the import integrity.  Both companies are run as a business but the same cannot be said of other operators” Jones added.
Nigeria CommunicationsWeek gathered that unless the NCC comes up with tighter supervision of the management of the companies, the consequences of systemic failure in the industry will be far reaching.
Though the usually vocal stakeholders in the industry were taciturn when contacted at the weekend, they however agreed that there is need for the apex regulator to articulate a code of corporate governance, for which compliance must be mandatory.
It will be recalled that the similar effort worked in the banking sector after the Central Bank of Nigeria (CBN) in 2006 entrenched transparency and adequate disclosure of information.
CBN had then asserted that  “these are key attributes of good corporate governance which the merged banks must cultivate with new zeal in order to provide stakeholders with the necessary information to judge whether their interests are being taken care of. Currently there are many deficiencies in the information disclosed, particularly in the area of risk management strategies, risk concentration, performance measures etc”
It is in recognition of this that the Central Bank of Nigeria has handed down stiff sanctions to any chief executive officer who makes false rendition to the bank.

 

 

 

 

 

 

 

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