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ANALYSIS: SIMs/NINs Directive: Time to Rescue  Telecoms Industry

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By Vanguard Newspaper

The directive last week by the Ministry of Communications and Digital Economy that the National Identity Number, NIN, has become mandatory for a subscriber to carry a mobile phone is not only a slap on the faces of Nigerians already going through very troubled times but a plain manifestation that arbitrariness is being elevated to the dizzy heights of national policy.

Operators have been given only two weeks to comply and ensure that over 190m subscribers on their networks are properly registered. Or your operating license withdrawn.

We view this as a death sentence for the telecommunications industry, and some experts cautioned last week that a reversal of industry fortunes has been set afoot by an obnoxious official proclamation.

One operator moaned that the regulator wants to wipe out at least more than half of the subscriber base of the industry.

We agree that times are desperate in Nigeria, very desperate. Whole mass of students are spirited away from school and they reappear after a whole week in the den of criminals. Road travel has become a nightmare for the ordinary and the mighty ones. Bandits have taken over the roads and the farms.

Quite unfortunately even for the rich, air travel is beyond the reach of those who used to fly except the hedonists who steal the people’s money for plain pleasure.

According to figures from the National Population Commission, NPC, very bizarre decisions are being taken to rubbish the collective intelligence of a nation and expose the citizenry to ridicule before the international community.

So, using failure in security as pressure point, the ministry under the grip of Dr. Isa Pantami has given a directive capable of destroying the entire communications industry except common sense prevails.

The December 15, 2020, statement signed by Public Affairs Director, Dr. Ikechuckwu Adinde, which affirmed earlier directive for operators to totally suspend registration of new SIMs, stated among others: “Operators to require all their subscribers to provide valid National Identification Number, NIN, to update SIM registration records; The submission of NIN by subscribers to take place within two weeks (from today, December 16, 2020 and end by December 30, 2020).

After the deadline, all SIMs without NINs are to be blocked from the networks.” While conceding the pervasive security challenges, there has been outrage across the land; understandably, by subscribers who feel that apart from the suffering that has worsened more because of COVID-19, a major inconvenience is being added to their burden.

Recall that the country’s economy has gone into recession again and is not expected to recover until late 2021, a development that is forcing more Nigerians to fall into the poverty pit.

Vanguard immediately reached out to a powerful industry source to ask if the directive could be executed in two weeks. The answer was an emphatic NO. We also reached out to a source in the regulatory institution. Is this what should have been done? The answer again was NO. Let’s try to unwrap the intricacies of the unfolding story.

The SIM Card registration regime started in 2011. The exercise was carried out simultaneously by licensed agents of the NCC and the mobile operators. NCC was to warehouse the data. An understanding at the time was that, because of the sensitive nature of personal data, all data will be handed over to the National Identity Management Commission, NIMC, whose responsibility it is to manage the National Identity Database.

Till date the progress recorded in that area opens windows to speculations and recriminations. It is interesting to point out here that NIMC was established in 2007. In all the years of existence, the organisation has succeeded in registering only 43.6m! So what magic wand will it wave to accomplish the act in two weeks?

According to figures gleaned from the NCC website, there were 207,954,737 subscribers on the four mobile networks of MTN, Airtel, GLO and 9Mobile by October 2020. An industry source told Vanguard last week that of this figure, about 120m are unique subscribers, discounting double registration of mobile numbers, while the rest could be used in personal internet modems, sectors like banking, vehicle tracking and other sectors where mobile communications have become very handy. There has to be a way to capture these numbers and this cannot be enforced overnight.

Matching the 120m subscriber figure with their NINs is a nightmare which will rubbish the two-week window. For the journey to start at all, all the companies being licensed by NIMC, one expert explained, will have to source for their equipment and get them certified by NIMC before procurement and purchases can take place. To make any meaningful impact immediately, the industry may need at least 250,000 of those machines which are not manufactured here.

Moreover, the NIMC machines are not what are easily sourced in the open market. They are called the 442 machines because they can take four fingers at a go and take the remaining two fingers once. They are more robust than the SIM Card registration machines which can take only two fingers at a time.

The source told Vanguard that this is a logistics nightmare that can hardly be afforded by some of the companies being recruited by NIMC at the moment.

Industry observers are of the opinion that the President Muhammadu Buhari and the National Assembly should put a leash on the minister before he totally destroys the telecommunications industry.

In attendance at the meeting that had to do purely with the regulation of the industry were the CEOs of NCC, the National Information Development Agency, NITDA, and NIMC.

At least one operator told Vanguard they were never at the meeting; instead the minister is taking all the decisions which he is shoving down their throat, thus increasing the fear that the regulator is increasingly losing direction and hold on the industry.

Strains of helplessness are already showing. “We don’t know why the Executive Vice Chairman, EVC, is unable to call some meetings. We are not able to sit down to negotiate on anything,” the source lamented.

Those who fear the directive may become a dangerous super spreader of the COVID-19 pandemic may have been proven right when, last week, somewhere in Abuja, an eye witness told Vanguard that some youths who had gathered for two days at one registration spot, suddenly started demonstrating on noticing the near futility of the exercise and how some advantaged personalities were bending all the rules to favour a few.

The desperation to register will obviously rubbish the PTF recommendation on social distancing in a season of pandemic. Meanwhile, more trouble looms for the industry.

A knowledgeable industry source told Vanguard that, if not properly managed, the directive could destroy half the base of the industry, stymie revenue and investment, and lead to massive job losses.

But all these could pale into insignificance if the minister ever executes his growing threats that “violations of this directive will be met by stiff sanctions, including the possibility of withdrawal of operating license.”

This is hardly the way to speak to organisations that have invested heavily in your economy.


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Ugo Onwuaso is an ICT enthusiast. He believes technology should be used for general good. He holds a Master of Public Administration (MPA) degree from the Lagos state University.

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MTN Releases Result of Financial Year Ended 31 December 2020 with N298.9 Billion PBT, Up by 2.6% 

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MTN Nigeria on Sunday released its audited results for the financial year ended 31 December 2020, with Profit before tax (PBT) growing by 2.6% to N298.9 billion, active data users increased by 7.4 million to 32.6 million and Mobile subscribers increased by 12.2 million to 76.5 million.

Ferdi Moolman, ceo, MTN Nigeria, speaking about the report, said: “2020 was a challenging year for all. The unprecedented disruption that the COVID-19 pandemic caused the businesses and people we serve, challenged us in new and demanding ways.

“The impact continues to evolve. Adoption of our data and digital services accelerated as lockdowns and gathering restrictions were imposed, and work-from-home became the norm for many.

“Our thoughts and prayers are with those who have lost loved ones due to the pandemic; the toll on lives and livelihoods globally has been profound. To date, Nigeria has recorded 155,417 confirmed COVID-19 cases and 1,905 related deaths, according to the Nigeria Centre for Disease Control (NCDC).

“MTN Nigeria has also been directly impacted by the pandemic, with 62 employees diagnosed with COVID-19 and 46 recoveries. Sadly, one of our employees succumbed to the virus.

“Our employees adapted quickly to working remotely to ensure that our customers remained connected. I am incredibly proud that we were able to meet the challenges faced in 2020, by pulling together, working closely with the government and our regulators, and understanding our customers’ evolving needs”.

The report reads in part, As we navigated the fallout of the pandemic, adapting our processes and structures to the new realities, we acted swiftly to support the national response in a holistic way. This was encapsulated in our Y’ello Hope initiatives through which we provided support to our broad base of stakeholders to the value of approximately N25 billion.

We provided free-to-access services (including SMS and data) to the most vulnerable, supported the acquisition of essential medical supplies (tests and personal protective equipment), and joined the Coalition Against COVID-19 (CACOVID) that drove multiple initiatives, including building isolation centres across the country. We also paid our taxes early in support of government’s ongoing efforts. In January 2021, MTN Group partnered with the African Union contributing US$25 million to their COVID-19 vaccination programme. MTN Nigeria is pleased to play its part in this initiative, through which Nigeria will receive 1.4 million vaccine doses for the benefit of health workers.

In addition, we committed marketing resources to our #WearItForMe campaign to help create awareness around wearing masks, and our REVV support programme for Micro, Small and Medium Enterprises (MSME) helped them navigate the new digital reality.

Our performance demonstrated the strong operational execution and resilience in our business. We connected 12.2 million new customers to our network, bringing our total subscriptions to 76.5 million. The introduction of additional customer registration requirements and suspension of the sale and activation of new SIMs towards the end of the year affected subscriber growth. We remain committed to ensuring our subscriber records are updated with the National Identity Number (NIN), and continue working closely with the government, supporting their efforts by expanding capacity to provide NIN enrolment services across our customer interaction touchpoints.

Active data users increased by 7.4 million to 32.6 million, supported by growth in gross connections and the expansion of our 4G network. Our mobile money (MoMo) business also continued to accelerate with a 269.2% increase in the number of registered agents to over 395,000 and 4.7 million active subscribers from approximately 553,000 in 2019.

Service revenue grew by 14.7%, in line with our medium-term targets, driven mainly by voice and data revenue. Voice revenue growth was 5.9%, and although this was subdued in Q2 due to COVID-19 induced restrictions, we saw a pickup in momentum into H2. Data revenue rose by 51.2%, with increased data usage and traffic. To accommodate this and enhance service quality, we focused on capacity upgrades and 4G population coverage, while expanding our investments in rural connectivity. Our 4G network now covers 60.1% of the population, up from 43.8% in 2019.

EBITDA rose by 9.7%, supported by service revenue growth. However, the EBITDA margin declined by 2.5pp to 50.9%. This was mainly due to increased operating expenses, arising from the rollout of new sites and the impact of Naira depreciation, affecting in particular the costs of our lease contracts. Despite the increase in costs, we recorded an improvement in our bottom-line earnings, with profit before tax (PBT) and profit after tax (PAT) increasing by 2.6% and 0.9% respectively.

In line with our dividend policy, the board has proposed a final dividend of N5.90 kobo per share to be paid out of distributable net income. This brings the total dividend for the year to N9.40 kobo per share, representing an increase of 18.7%.

I thank the Board, Management, and staff of MTN Nigeria for the support given to me and the opportunity to serve in Nigeria as I complete my tenure as CEO of MTN Nigeria and assume a new role as MTN Group Chief Risk Officer. Effective 1 March 2021, Karl Toriola will take over as the CEO. I wish Karl and his new team the very best.”

Operational review

We made considerable progress in growing the base for our business, connecting 12.2 million new subscribers to access communication services. The growth in our subscriber base provided support for voice revenue, which accounted for 67.1% of service revenue and rose by 5.9%, with an acceleration in growth to 8.9% YoY in H2. This was enabled by our expanded customer acquisition touchpoints, rural telephony initiatives and revamped acquisition offers. The suspension of new SIM registration in mid-December did not have a significant impact on voice revenue as we saw an increased level of activity from the existing base.

Data revenue maintained the positive momentum from Q2, prompted by the COVID-19 lockdowns, rising by 51.2%. The performance in data was led by a combination of increased subscribers, usage (MB per user) and ultimately traffic, supported by increased network capacity and 4G penetration. Data traffic rose by 126.5% and average usage by 64.0%. We added approximately 8.2 million new smartphones to the network, bringing smartphone penetration to 45.9% of our base, up from 41.9% in 2019.

Fintech revenue rose by 27.3%, boosted by MTN Xtratime, our airtime lending service. We expanded our MoMo agent network with the addition of over 280,000 registered agents during the year. This was achieved as we continued to convert our traditional airtime agents in line with our one distribution model. Our fintech subscribers increased by more than eight times to 4.7 million, driving higher transaction volumes of over 51.5 million during the year and core fintech revenue growth of 28.0%.

The uptake of our digital business continued to gain traction with the revamp of our products and services, improved customer journey and increase in active user base. As a result, digital revenue recorded growth of 107.2%, entrenching the pleasing structural turnaround in the business. In H1, we redefined how we account for the active user base to capture unique paid subscriptions, and we have seen this number grow by 75% to 2.8 million from 1.6 million in H1. This was driven mainly by subscriptions for ayoba, our instant messaging platform, which rose by 120.9% to 1.4 million.

Enterprise revenue increased by 1.5%, supported by growth in revenue from devices and fixed connectivity. The economic impact of the COVID-19 lockdown, particularly in Q2, led to a decline in the uptake of our products and services by the businesses we support. We are, however, encouraged by the recovery that occurred in H2 as restrictions eased and economic activity began to improve. We anticipate further uplift in enterprise revenue once the USSD pricing dispute is resolved and we recover outstanding fees from the banks. Our enterprise business includes revenue from mobile and fixed connectivity, cloud and ICT solutions, and devices. It cuts across voice, data and digital services for SMEs, the public sector and large enterprise customers.

Capital expenditure (capex) in the year was N298.6 billion, up 19.4%. Excluding right of use assets, capex was up 15.2% to N240.1 billion. We accelerated site rollout in H2 following a slowdown in H1 due to foreign exchange paucity and port congestion. As a result and in line with our guidance, we were able to increase our 4G population coverage to 60.1% with the delivery of 5,724 sites during the year, of which 74% are 4G sites.

We expanded the scope of our service agreement with IHS Holding Limited (IHS) and amended the currency conversion provision for tower services in view of the long-term benefits. This led to the movement of the reference rate for conversion to Naira, from the CBN’s official rate to the NAFEX rate. We reviewed the treatment of non-recoverable VAT on lease payments to account for it as an expense over the lease period. These, together with the effects of Naira depreciation, put upward pressure on lease rental costs in the period. In addition to these, the combined effect of the 2.5pp increase in value-added tax (VAT) and COVID-19-related costs led to a 27.2% increase in operating expenses with a knock-on effect on EBITDA margin.

EBITDA rose by 9.7% and the EBITDA margin was 50.9%. We delivered a healthy free cash flow of N387.1 billion, up 3.2%. Depreciation and amortisation rose by 11.7% because of exchange rate and VAT impacts, while net finance cost rose by 25.4% arising from higher borrowings and lower yields earned on our investments in government securities.  As a result, we recorded a PBT growth of 2.6%. In H1, we issued a N100 billion commercial paper, which was oversubscribed, at a blended rate of 5.7% per annum. This allowed us to broaden our sources of funding and lower our overall cost of funding, which reduced by 3.3pp in 2020.

PAT and EPS each rose by 0.9%, reflecting an increase in taxation mainly due to lower investment allowance and exempt income.

COVID-19 and the impact on the business

The pandemic caused unprecedented disruption to businesses and impacted lives and livelihoods. Although the operating environment remains challenging, the easing of lockdown restrictions led to an improvement in economic activity and market conditions into H2. Our response to the pandemic and its impact can be categorised into four broad areas, namely social, commercial, network and supply chain as well as funding and liquidity considerations.

In terms of the social impact, we launched various initiatives to provide support for our people, customers and the various levels of government as part of our Y’ello Hope packages. We empowered our people to work remotely and implemented health measures and monitoring to ensure their safety and business continuity. We continue to provide welfare support to them through the MTN Global Staff Emergency Fund.

Our customers, particularly lower-income earners, benefitted from the free SMS initiative introduced in Q2. This provided customers with 300 free text messages for three months to ensure that they remained in touch with friends and family. Over 4.3 billion text messages were sent by more than 75% of our subscribers. We zero-rated access to a range of health and education sites, enabling our customers to access vital information at no cost to them. Fees for local money transfers via the MoMo Agent Network were waived for a month, during the lockdown, to support our customers.

We rolled out a number of interventions to support the thousands of small businesses that rely on us for connectivity. These included the relaxation of payment terms at the beginning of the crisis as well as designing and delivering the multi-faceted REVV programme. These initiatives were aimed at supporting MSMEs amid the economic disruptions resulting from the COVID-19 pandemic. Over 20,000 MSMEs registered for our masterclass sessions and we provided support for the 200 MSMEs (Y’ello 200) that emerged from the programme, helping them to adapt to a digital marketplace.

To support government’s efforts at combatting the pandemic, we donated N1 billion to CACOVID and delivered N250 million worth of personal protective equipment (PPE) to the Nigeria Centre for Disease Control (NCDC), through the MTN Nigeria Foundation. This is in addition to the logistical and communications support provided to the Nigerian Governors Forum, NCDC and State Governments. We made an early payment of our taxes ahead of established deadlines to support the Federal Inland Revenue Services’ (FIRS) revenue acceleration efforts.

From a commercial perspective, we saw encouraging trends in our traffic patterns as COVID-19 restrictions eased. Demand for voice services, which initially came under pressure in April 2020, has fully recovered and voice traffic reached new highs by Q4. Demand for data and digital services grew significantly as lockdowns were imposed and remained resilient at elevated levels due to shifts in consumer spending patterns. There was also an increased uptake of our fintech services with transaction volume in April 2020 rising by more than three times above the March 2020 level to 4.3 million, and the momentum has continued to increase.

In terms of network and supply chain, our immediate response when COVID-19 restrictions kicked in was to enhance network capacity to maintain service quality following an unprecedented surge in data traffic. We were only able to rollout a limited number of sites in Q2 due to the constraints on movement, paucity of foreign exchange and port congestion. However, we accelerated site rollouts in H2 as restrictions and logistical bottlenecks eased. As a result, we achieved a 60% 4G population coverage in 2020, which is in line with our target.

Our funding and liquidity remain well-managed, supported by strong cash flows and approved funding facilities. Our headroom to leverage is comfortably within banking covenants and is able to meet our operational, investment and financial requirements. The foreign currency exposure of our borrowings is within comfortable limits, with 94% of our debt in local currency, which positions our balance sheet well to withstand currency volatility. We plan to use the bond market to further diversify our funding sources and optimise funding costs, while mitigating exposure to market risks.

Update on new SIM registration directive

On 9 December 2020, the Nigerian Communications Commission (NCC) suspended the sale and activation of new SIMs, and on 15 December 2020 directed all operators to update SIM registration records with valid NINs with an initial deadline of 30 December 2020. While suspension of new subscriber acquisition continues, the deadline for NIN update has been extended to 6 April 2021 to accommodate logistical challenges.

We are collaborating with the NCC and National Identity Management Commission (NIMC) to ensure our subscriber records are updated, and we have made significant progress in this regard. To date, over 37.2 million subscribers have submitted their NINs, representing 48.7% of our subscriber base. We are working with NIMC to complete bulk verification of the NINs collected. This requires improved integration with the NIMC database, the development of which has reached an advanced stage.

To support the Federal Government’s effort to ensure that every Nigerian has a valid NIN, we have been granted a NIN enrolment licence and have commenced enrolment in 36 centres across the country. We are also working with NIMC and the Ministry of Communications and Digital Economy to expand our enrolment centres and provide an access point for as many Nigerian as possible. To this end, we have acquired over 15,000 enrolment devices, which are being configured for this purpose, and placed orders for additional ones.

The impact on service revenue of the new SIM activation suspension was minimal in Q4 2020, though, we anticipate that subscriber growth will be significantly impacted in Q1 2021 should it remain in place. In the near-term, we expect the service revenue impact of the suspension to be moderate as usage is primarily driven by active SIMs in our base.

Outlook

The operating environment remains challenging and uncertain due to the effects of the pandemic. We remain focused on the safety and wellbeing of our staff, customers and broader stakeholders, as well as mitigating supply chain challenges, while safeguarding our financial and liquidity position. While we continue to manage the attendant risks and support our stakeholders, however, we are also well placed to unlock the opportunities that have risen in the areas of financial inclusion along with the rising demand for connectivity and digitalisation. We continue to refine our strategy to make our operating model future-fit to adapt to a dynamic world for sustainable growth.

In view of the new directive on SIM registration, our immediate priority is to protect our base by collaborating with NIMC to drive NIN enrolment and ensure that our customers’ records are updated with NINs.

We remain focused on our MoMo business given the important role it plays in driving financial inclusion in the country. We continue to engage with the CBN regarding obtaining a Payment Service Bank (PSB) licence, which would help to accelerate this ambition of broadening financial participation and inclusion.  In the meantime, we will continue to expand the agent network through our one distribution model, broaden our service offerings and drive the overall contribution of our core fintech business to service revenue.

We will fast track 4G sites rollout to further increase population coverage, while continuing to expand rural coverage. Although the availability of foreign exchange remains a constraint, we strive to minimise its impact on the business. We will sustain our drive for cost management across the business and strengthen our operations and financial position to unlock efficiency and support margins.

 

 

 


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How Rawa, MTN Top Shot Died

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The family of Oluwole Olanrewaju Rawa, late general manager, Consumer Marketing, MTN, will still be hoping their beloved son and father can come back to life.

How Rawa, MTN Top Shot Died

Oluwole Olanrewaju Rawa, late GM, Consumer Marketing, MTN……..Pix credit…The Nation

An alumnus of Harvard Business School, Rawa reportedly slumped and died on Tuesday on his way to the hospital after he complained about dizziness.

The Nation’s Social Cicuit gathered that on the fateful day, he felt unsteady and complained about chest pain.

A family source stated: “He was in a car going to the hospital still chatting with his friends but then became quiet. His friend thought he was tired since he had a hectic day at work. He was said to have been brought in dead to the hospital.”

With 15 years of experience in the telecommunications sector, the Civil Engineering graduate from the University of llorin, Kwara State, joined Celtel (now Airtel) in 2004 as Manager, Payphone Segment, Marketing Directorate Commercial Group.

He later joined Etisalat where he held several positions until he rose to become Director, Marketing Segments and Strategy. He joined MTN as the Head Group, Consumer Operations, in 2015.

Before death, Rawa was happily married to Jadesola with a daughter, Olayinka.

 

 

 

 


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Pantami Dismisses 5G COVID-19 Conspiracy Theory

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Dr. Isa Ali Ibrahim Pantami, Minister of Communications and Digital Economy, has again dismissed allegations making the round that Fifth Generation (5G) technology was the root cause of COVID-19.

Appearing before the senate committee on communications on Thursday, Pantami stated that there is no link between 5G and COVID-19.

He added that while the only issue being raised is usually about radiation, people don’t realise that the radiation of 4G is more harmful than that of 5G.

Pantami said; “There is no link between 5G and COVID-19.

“There is no relationship between 5G and any disease, the only issue being raised usually is about radiation but people don’t realise that the radiation of 4G is more harmful than that of 5G.

“The radiation of microwave oven at home is more harmful than that of the 5G.”

The minister further said that if there are medical and security concerns linked to 5G, he would have been a victim because he has tested the technology.

With the minister at the public hearing by the Senate Joint Committee on Communications; Science and Technology; Information and Communications Technology (ICT) and Cyber Crimes; and Primary Health Care and Communicable Diseases,  were heads of agencies under the ministry, who were present at the hearing include the Executive Vice Chairman of the Nigerian Communications (NCC), Prof. Umar Danbatta; Director-General, National Information Technology Development Agency (NITDA), Kashifu Abdullahi and the Managing Director of Nigerian Communications Satellites Limited (NigComSat), Dr. Abimbola Alale.


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