In view of the sale of 9Mobile, some analysts in the telecommunications sector are of the view that the broader interests of the telecom sector and the larger economy may be best served in its ongoing sale if a fresh telecom player with the demonstrated ability to source offshore capital is selected, Of course such a player, according to them, must also possess demonstrable technical competence.
The December 31, 2017 deadline set for the sales may not be feasible due to some issues that must be sorted out; however, those privy to the process said the curtain is expected to be drawn on the sale of 9mobile in mid-January, 2018.
The bidding process is currently in its last stage, five major organizations are in the final shortlist in the 9-Mobile bid, these includes Globacom, Airtel, Helios, Teleology and Smile Communications, respectively.
Globacom possesses a Second National Operator license, obtained in 2003, while Airtel is the Nigerian subsidiary of Bharti Airtel. Smile Communications operates a 4G/LTE network while Helios is a private equity firm. Teleology is made of a number of professionals with several dozens of years of international telecom experience, including experience in Nigeria, mainly under the auspices of MTN.
While some analysts believed that the experience of Globacom and its financial war chest in the Nigerian market could serve as a major advantage, others believed that a Greenfield operator, without a current presence in Nigeria may be best placed to add value to the industry and economy at large, because it would be forced to source financing internationally in order to successfully compete with existing ones.
The telecom industry in Nigeria is indeed passing through a difficult period, perhaps the very worst since 2001. For instance, in 2016, MTN, the biggest of the operators posted a financial loss on the back of the fine that had been slammed on it by the NCC for purportedly failing to disconnect some SIMs within a specified deadline. In addition, in the last few years, the Forex regime in Nigeria has been fairly difficult and complicated with telecom operators repeatedly protesting about the difficulties of accessing Forex to fund their operations. Not unsurprisingly therefore, capital expenditures by the telecom firms have been declining sharply over the years. It was down by 40 percent (in dollar terms) in 2016, for instance, even though this decline was also partly due to fluctuation in the local currency.
Despite these pressures, revenues are fast falling. Whereas voice used to be regarded as “king” in the telecom sector, this no longer holds. Consumers have found a way to by-pass paying for voice calls on telecom networks by making calls via the data networks going through other-the-top applications like WhatsApp, Facebook, Skype and others. What used to be SMS revenues are also lost via free chat services provided by the same OTT operators.
To make matters worse, operators are experiencing huge operational difficulties in the local environment.
Gbenga Adebayo, the Chairman, Association of Licensed Telecoms Operators of Nigeria, regularly complained about multiple taxation across the country where every tier of government has come to see itself as a bonafide regulator of the telecom industry which is imagined to be a cash cow.
Based on the latest figures released by the NCC, active subscriber numbers of all the operators have declined considerably from over 110 million subscribers in October 2016 to about 100 million subscribers a year later, while internet subscriptions are practically stagnant, having been on the same level over the same 12-month period, despite the gaps in the broadband industry.
9mobile ran into financial trouble some months ago after it defaulted in the servicing of a syndicated loan which it had obtained from a consortium of lenders. Before then, it had given a good account of itself, competing aggressively with older telecom operations. In the wake of its financial crisis its erstwhile technical partners, divested from the operations, departing with the franchise for the trading name, “Etisalat”, and forcing a hurried re-branding of the company to 9mobile.