Telecommunications operators are today faced with a lot of challenges that have made the business not rosy as it used to be some few years ago.
Although, some may look at the situation as fallout of recent economic meltdown and reform in the banking sector which affected the spending habit of ordinary Nigerians who use telecommunications services thereby reducing Average Revenue Per User of operators.
More so, operators are constantly faced with vandalization and theft of their equipment. All the operators both Global System for Mobile communications (GSM) and Code Division Multiple Access (CDMA) have had fair share of theft of their equipment, it was reported sometime that GSM operators losses an average of four generators on daily bases which approximately means that a total of 12 generators are lost everyday. This excluded Etisalat which does not have as much base stations as the Globacom, MTN and Zain, they are still experiencing theft of their equipment as well.
Other operators such as CDMA report lost of their generators at an average of one generator daily. This situation has continued unabated which has forced operators to seek a way of addressing this problem.
Nay, the operating environment in the telecommunications space of the country’s economy has continued to give operators sleepless night. The Association of Licensed Telecommunications Operator of Nigeria (Alton) recently sought the intervention of the Joint Tax Board on the burden of multiple taxation imposed on its members by the three tiers of government. Speaking at an interactive session with the board in Abuja, Mr. Gbenga Adebayo, the chairman of Alton, urged the board to be concise on the type of taxes stipulated by law, which the companies should pay.
He said; “Alton, once again, brings to the attention of the JTB, persistent attempts by certain states and local government authorities to impose multiple and unjustifiable taxes and levies on our members in their respective jurisdictions. This development threatens the laudable efforts of our members to make further substantial investments on their respective networks and provide world class telecommunications services in Nigeria. Alton respectfully seeks the intervention of JTB in addressing the issue of multiple taxation.”
Adebayo noted that when the members refused to pay the levies, the affected states and local authorities resort to closure of their facilities and infrastructure.
This, according to him, has adversely impacted on the network availability, quality of service and finances of member companies.
He alleged that the policemen and thugs, who complement the drive of the multiple tax imposers, made it difficult to resist them.
Adebayo cited an instance where one state demanded N200m as advert levies, and another local government was demanding N18.6m each year as operation levy, office location permit, development levy and ground rent from 2002 to 2009.
“Unfortunately, and contrary to all known norms, these local authorities utilise the services of the police and thugs to drive their demand; making it difficult and, most times, impossible to engage them meaningfully,” he said.
In view of these challenges which have increased cost of doing business in the country, as well as competition which is gradually defining the direction operators should go in service delivery, that operators are been forced to consider managed services as a way out of this quagmire.
Managed service otherwise known as outsourcing, in literal means sourcing from outside. The term is increasingly used to refer to sub-contracting of a set of functions or processes by one firm to another, or to a group of individuals, whose competent is in the area of which it is to manage.
Managed services are being pursued as an active business strategy in the current economic scenario, since it enables an operator to focus on core-competency areas. It also frees the operator from resources and labour intensive functions, which are now performed by trained personnel at much lower costs.
The processes or activities that are being outsourced could range from customer service and telemarketing to IT management, software development, market research and even financial portfolio management. Telecom players are leaving the technology-related aspects of their business to external consultants as they focus upon providing new services to their customers.
  How it started
When operators in the space, be they global system for mobile communications (GSM) or code division multiple access (CDMA) rolled out service over eight years ago after the liberalization policy of the government, little did they realize that their service believed to be a source of joy and enhancement of the people’s social economic life will be a subject of attack by miscreant, armed robbers and communities. Operators who envisaged that the major challenge they are likely to face in doing business in the country is energy problem are now faced with other challenges that were never thought of. Such issues include, vandalization of operators installed equipment- there has been several cases of operators equipment being vandalized by host communities and government contractors.
Although telcos have adopted managed services option in many other areas of their operations, but the most innovative is the offer Ericsson and Aviat to extend the initiative to management of base stations. This is not different from co-location of site being offered by telecommunications infrastructure building companies such as Helios Towers, IHS, Mti, among others. In the Zain and Ericsson deal, the mobile telecommunications operator, awarded to Ericsson a five year network management contract of its GSM/WCDMA networks, and business support systems. Under the agreement, Ericsson is now responsible for the network operations, field operations including optimization, third-party vendor management for Zain’s GSM/WCDMA networks, and business support systems.
Ericsson is now serving more than 4,000 sites across Nigeria on behalf of Zain. As part of the agreement, about 450 employees are being transferred under their existing terms and conditions of service, from Zain to Ericsson, where they will undergo further training in the latest wireless technologies.
Nigeria CommunicationsWeek gathered that such agreement is going to be the hallmark of business model of new owners of Zain, Bharti Airtel. This is sequel to revelation that the company is an expert in outsourcing, having outsourced over 90 percent of its services that are not core to its operation in India it parent country.
MTN also entered into agreement with Communications Network Support Services (CNSS) to manage and operate its wired line services which the company has competent in.
Nigeria CommunicationsWeek investigations also revealed that telecommunications operators have began move to sale their cell sites to infrastructure sharing operators. It was gathered that the sale of their cell sites is part of effort to reduce capital expenditure in view of dwindling Average Revenue Per Use (ARPU) of telecommunications operators.
Nigeria CommunicationsWeek investigations also revealed that operators are going beyond managed services option for their base stations to outright sale of existing base stations. It was gathered that one of the major Global System for Mobile communications (GSM) operator has finalized agreement with a telecommunications infrastructure building company to sale over 70 percent of its existing base stations in the country. Equipment that are being sold in such agreements are steel towers, generators, and land value. Operators retain the ownership of their transmission equipment as the buyer of those sites turn them to co-location site for several users and manage them. 
Although outsourcing by telcos of their network management is relatively new, a typical network management comprises of 50 to 55 percent of the cost of a telco’s operations. System integrators expect this segment to be among the largest segments that could be outsourced to a third-party.
With the proliferation of technology, and increased competition, telecom operators are looking at partners who can help them reduce cost of doing business and in turn enhance customer satisfaction. The operators will then have sufficient time to focus upon their core aspects of their business and plan for strategic initiatives geared towards improved service delivery, rather than thinking about how to replace stolen generator or refilling diesel tanks or proving security at base stations.
However, companies such as Swap Technologies, IHS Plc, Helios Towers, Mti, CV Comm. among others have positioned themselves to offer managed services to telecom operators. They have already started offering the service to some operators while discussions are going on with many which will see by the end of the year 80 percent of telecom operators’ base stations being managed by third-party, in this case licensed telecom infrastructure provider.
Bayo Banjo, managing director, Disc Communications, agreed that outsourcing of network management by telecom operators is a good idea. He cited example of Virgin the second largest telecom operator in the United Kingdom, which does not have a single cell site. He expressed worry over the ability of the initiative to curb the problem of vandalization of telecom equipment.
Banjo added that outsourcing of network management became necessary in view of shortage of qualified telecom engineers to maintain networks as well as corruption which has left operators with the option of outsourcing. This according to him needs to be urgently addressed as it may jeopardize the growth being recorded in the sector which is battling with poor quality of service.