Access Bank, others, take over Etisalat Nigeria- Here's what went wrong

Etisalat Nigeria, Nigeria’s fourth largest telecom operator, ran into trouble with the consortium of banks, led by Access Bank PLC, following its failure to meet its obligations in respect of a $1.72 billion (about N541.8 billion) loan facility it obtained in 2015.

The loan, which involved a foreign-backed guarantee bond, was for the mobile telephone operator to finance a major network rehabilitation and expansion of its operational base in Nigeria.

After the repayment of the loan failed in 2016, the consortium, with the backing of their foreign partners, threatened to take over the company and its asset across Nigeria.

The intervention of the NCC and the CBN persuaded the banks to give Etisalat a chance to renegotiate the loan repayment schedule.But, the company also reneged on the pledge to pay up by May 31, resulting in a final default note and enforcement notice issued on June 9, 2017.

EMTS has already announced the commencement of the process to unveil a new shareholding structure and new trading name for the company during the transition phase.

Etisalat Group, the parent company of Etisalat Nigeria, on Tuesday announced the changes to Etisalat Nigeria’s shareholding in a letter filed to the Abu Dhabi Securities Exchange in Abu Dhabi, United Arab Emirate.

UAE’s Etisalat (Etisalat Group), with a 45 per cent stake in the Nigerian arm, also said it had been ordered to transfer its shares to a loan trustee by June 23, after negotiations failed, Reuters reported. It added it was carrying the stake at nil value.

The Emerging Markets Telecommunication Services Limited, also known as Etisalat Nigeria, has up to June 23, 2017 to complete the transfer of 100 per cent of the company’s shares in Etisalat Nigeria to the United Capital Trustees Limited, the legal representative of the consortium of 13 banks.

While assuring its subscribers that the latest development would not affect its normal operations and the continued delivery of quality services, Etisalat Nigeria Vice President, Regulatory & Corporate Affairs, Ibrahim Dikko, said the company would mobilise its workforce to build a stronger business.

The NCC has reassured the over 21 million telephone subscribers on the Etisalat Nigeria network that it is committed to exercising its full regulatory powers to guarantee stable and quality services by the operator.

“The Commission has taken proactive steps to cushion the impact of the takeover,” Mr. Ojobo said. “This is without prejudice to the ongoing effort between Etisalat and the banks toward negotiated settlement.

“In view of the recent development, NCC wishes to reassure all stakeholders in the telecommunications sector in particular the subscribers on the Etisalat Network that the Commission will ensure that the integrity of Etisalat Network is not compromised.”

He also drew the attention of the consortium of banks involved in the planned takeover of the terms and conditions that guided the award of an operational license to Etisalat Nigeria, indicating that they would need the permission of the NCC before the license is assigned or a new operator comes on board in compliance with the NCC Act 2003.

Why the proposed 9% Communication Service Tax is all shades of wrong for Nigeria

The Federal Government recently proposed a Communication Service Tax Bill which will impose additional charges on users of electronic communication services in Nigeria. By virtue of the bill, the tax will be charged at the rate of 9% of the fees payable by users of electronic communication services in Nigeria and will be borne by the customers. Electronic communication service in the Bill include service providing electronic communication, close user group, private electronic service, radio communication service and valued added service.

The extra tax will be applied on voice calls, SMS, MMS, Data from telecommunication service providers and internet service providers and Pay TV viewing etc. This means that asides from VAT charged on these services, you will also pay for your data for browsing on your phones and devices, for cable services like DSTV and even for value added services like purchasing caller tunes, sms alerts, mobile newspaper services, bank alerts etc. It is interesting to note that the Bill also gives a wide net to the Ministry of Communication and the FIRS which are vested with the powers to make administrative directive and policy to give effect to the bill to add extra categories of operator and persons liable to pay CST. So with digitisation of broadcast in Nigeria, this may be expanded to include other services. The conferment on this power on the Ministry of Communication Technology for PayTV providers rather than the NBC or Ministry of Information also seems to be some subtle form of convergence of telecommunications and media via the tax law

Service providers will collect this tax from the subscribers and remit to the Federal Inland Revenue Service on a monthly basis. The proposed law stipulates penalties for failure to remit the tax to the government coffers. A fine of N50, 000 is to be imposed on any service provider that fails to remit the funds by the prescribed date, plus an additional N10,000 per day until remittance is confirmed.

The aim of the Bill is to act as a tool to help diversify the economy and contribute to economic development. Considering the multiple taxes already levied on the telecommunication industry, this bill may rather achieve the reverse. Nigeria’s telecommunication sector, one of the most lucrative sectors in the country, already has about 26 different taxes and levies according to the Association of Licensed Telecommunications Operators of Nigeria (ALTON). This includes 5% VAT on purchased devices and communication service, 12% import duties paid on ICT devices, and 20% tax levied on SIM Cards. In view of the afore-mentioned taxes, it therefore means that in addition to paying VAT for instance a recharge card bought, the consumer will still need to pay additional 9% for voice calls, SMS and MMS. This clearly amounts to double taxation. The legislature should be working to make the business climate more conducive for operators and investors and not more difficult.

 Ultimately, the cost of these taxes is borne by the consumers in Nigeria who are already disadvantaged in terms of internet connectivity and affordability. According to a report by Alliance for Affordable Internet (A4AI), the proposed 9% CST will reduce the ability of approximately 20 million Nigerians to afford broadband. Broadband penetration in Nigeria stands at just 12% which is way off the mark of the target of 30% broadband penetration by 2018 set by the ITU.

The CST will additionally reduce the rate of internet penetration in Nigeria. Affordability as defined by the UN Broadband Commission is where the price of a broadband plan is less than 5% of income. Currently in Nigeria, 500 MB costs about 5.4% of average monthly income. Nigeria is therefore yet to become one of the countries with affordable internet and imputing a further cost via CST will only serve to further reduce affordability.

The Bill also contains some onerous provisions. It gives very burdensome provisions of a monthly interest rate of 150% in default of the payment. This same rate is payable as interest on the unpaid interest if default persist for more than a month. This provision is highly punitive and has the potential to scare away investors. It also makes the directors or partners of a body corporate personally liable for the service provider’s tax default after a written demand contrary to principles of corporate personality. It gives powers to 'a monitoring agency' for unfettered access to service providers network nodes and it also gives blanket powers of data retention and analysis to the agency which may lead to unnecessary surveillance and increased operation cost.

These provisions smack of a bill that was improperly thought out and ill-considered. Tax can be assessed and collected as done with other taxes such as the Petroleum Profits Tax Act (PPTA) without such active monitoring and data retention. All of these onerous provisions will increase the operational and compliance cost of operators in Nigeria.

The CST is clearly going to work at cross purposes with the stated intention of helping the economy. The additional tax and increased operational cost will ultimately also be borne by consumers which will affect affordability and access to communications services in Nigeria. The government should instead fashion out creative ways to make the tax system more efficient for telecommunication operators. They should also find ways to use fund accrued in the Universal Service Fund which these operators contribute to, for developmental projects in ICT and ensuring access which may be a better path for spurring growth.

MTN Drops Don Jazzy, Davido, Tiwa Savage As Ambassadors

 MTN has released a Press statement on its brand ambassadors for 2016-2017. The telecoms giant has dropped big names like Tiwa Savage and Don Jazzy and retained Tekno, Falz and Skales, thereby confirming ongoing speculations. 

The press statement release reads in part: “In line with its commitment to supporting Nigerian musicians by providing alternative platforms through which they can receive lucrative value for their intellectual property, MTN has announced brand ambassadors for 2016-2017.

“Music ambassadors for 2016-2017 are: Praiz (Praise Adejo); Iyanya (Iyanya Mbuk);Chidinma(Chidinma Ekile); Falz (Folarin Falana); Tekno Miles (Augustine Kelechi) andSkales (Raoul Njeng-Njeng)

“Four other ambassadors are – Saka, (Hafiz Oyetoro); Nedu (Steve Onu); Osuofia (NkemOwoh) and Adamu Zango.

Whatever the reason for dropping the big names, MTN is keeping it close to its chest.

MTN Executive, Amina Oyagbola said

“We specially thank all our former ambassadors for their immense contributions to building our brand and also making us the network of choice in Nigeria. We will definitely continue to maintain the strong and mutually beneficial relationship with them through the monetisation of their content on all our digital platforms – MTN Music+, CRBT and VAS.

MTN retained the services of some of its newly-signed brand ambassadors. These include like Falz, Skales and Tekno who are the faces of its youth segment proposition – MTN Pulse.

TELECOM COMPANIES BRING OUT CODE TO STOP UNSOLICITED SMS

Mobile network operators have created means by which subscribers can stop unsolicited messages from being sent to their phones. Etisalat recently sent tweets to its subscribers of the code which runs across all telcos.

This is in compliance with the Nigerian Communications Commissions (NCC) directive and June 30 deadline to telecommunication companies to create short-codes for subscribers who want to opt-out of unsolicited messages.

The short code is 2442 and the service is free and available to subscribers of all telecommunications companies. All you need to do is to text 'Help' to the short-code and your privacy is protected.

NCC deadline to Telcos on unsolicited messages elapses today

Today is the deadline for telecom operators to comply with the implementation of measures to tackle unsolicited messages. The NCC had issued telcos a June 30, 2016 deadline to start implementation of ‘Do-not-Disturb’ code. Telcos were mandated to dedicate a short code, 2442, on their networks for use by subscribers to opt-in to ‘Do-Not-Disturb’ database to register their numbers against unsolicited messages

We do hope that this deadline would be met and insisted on because Nigerians especially myself are tired of the annoying messages from all sorts of persons. However, we as consumers also need to be careful to services we opt-in to while filling forms online, giving out our data or agreeing to terms and policies. Make sure you read the fine print. As the saying goes, ‘the devil is in the detail’.

NCC, MTN Reach Agreement on Fine

The Nigerian Communications Comission (NCC) has reduced the N1.04 trillion fine imposed on telecommunications giant MTN to N330 billion. This was contained in a statement released by Tony Ojobo, Director of Public Affairs, NCC.

Following months of negotiations, the reduced sum also includes the N50 billion goodwill paid by MTN to the government. The balance will be paid in 6 tranches to the Federal Government. The agreement was signed on the 10th June 2016 and MTN is required to pay N30 billion Naira into NCC's account within 30 days of the date of the signature of the agreement

MTN is also required to tender an apology and take steps to list on the Nigerian Stock Exchange soon.

MTN FINE: FG SUSPENDS NEGOTIATIONS

Nigeria has allegedly put negotiations with MTN on hold over the record US$3.9billion fine imposed on it pending the outcome of an investigation by the House of Representatives.

According to Bloomberg, Spokesman of the Communications ministry, Victor Oluwadamilare said that until the lawmakers “are through with their investigation, nothing can be done.”

The Nigerian Communications Commission (NCC) imposed a $5.2billion fine (reduced to $3.9billion) against MTN Nigeria last year for failing to disconnect more than 5million unregistered SIM cards.

MTN will hold its annual general meeting of shareholders on Wednesday afternoon, where the interim Executive Chairman, Phuthuma Nhleko, is expected to provide an update of developments not only in Nigeria but across the group, which operates in 22 countries across the Middle East and Africa.

MTN’s share price has fallen by 43 per cent year-on-year as a result of impact of the fine.