Telecom firms want tariffs slashed to 2.5 per cent
By Sonny Aragba-Akpore,
Asst. Communications Editor
TELECOMMUNICATIONS operators in Nigeria have called for the fine-tuning of some fiscal policies to prevent the industry from dying in its infancy.
They particularly singled out the 25 per cent tariffs charged by the Nigeria Customs Service (NCS) on imported equipment, multiple taxes paid to state and local governments and infrastructural decay as inimical to the industry's growth.
In a letter to President Olusegun Obasanjo, the firms under the umbrella of the Association of Telecommunications Companies of Nigeria (ATCON) advocated a 2.5 per cent duty on equipment and the streamlining of other taxes paid to the three tiers of government.
At the weekend, the co-ordinator of the Equipment Manufacturing Group of ATCON, Mr. Gerry Ekesiani, told journalists that the policies were stifling the development of the sector.
Ekesiani who represented the association's president, Charles Alaba Joseph at the just concluded three-day workshop for Information and Communication Technology (ICT) reporters in Lagos, added that their operating cost were not falling. The event was organised by the Nigerian Communications Commission (NCC).
Ekesiani stated that "many operators may not be able to sustain the tempo of growth experienced in the last three years," if the trend persisted.
ATCON members, according to him, resolved to explain their plight to the President because customs duties on telecommunications tools were among the highest in the world.
He cited the 25 per cent duty on imported telecom equipment to buttress his stance.
Ekesiani said that the tariff was initially five per cent until August last year when it was raised to 25 per cent.
The firm chief listed the multiple taxes as those paid to the industry regulator (the NCC), the banks, state and local councils and communities where base stations are located.
"These taxes are huge and such sums that should have been ploughed back to the networks to improve services to end users end up as taxes. This is not good for the sector," Ekesiani said.
The association, he hinted had also taken its predicament to the International Finance Corporation (IFC) team, which visited Nigeria recently.
Ekesiani further explained that if these identified lapses were not redressed urgently, several companies might shun the importation of telecommunication equipment for their network expansion.
The networks under such circumstance, he feared would suffer and the services provided by them would significantly dwindle.
The looming crisis, he added would also stifle the inflow of Foreign Direct Investments (FDIs) while local banks might be unable to give loans to keep the operators afloat.
Ekesiani also said that the telecom operators were also reeling under inclement operating environment caused by inadequate power supply, insecurity and other sundry problems.
The operators, he stated, accommodate part of the high cost and pass the other to the end users.
The firm boss equally said that the new N25 billion capital base for banks would take a toll on the telecommunication sector.
"Even if they do, interest rates will also discourage operators and consequently hamper their network expansion.
"What is essential is for the government to reduce the high tariffs, create an enabling environment for FDIs to encourage telecoms growth, otherwise, the gains recorded may not go beyond the present level".
He said that customs duties in Europe are to be reduced to zero level from January 1, 2005.
The association therefore suggested that the government should peg the tariffs at between zero and 2.5 per cent, so that operators will flourish. Ekesiani is also the chief executive officer of Geosanna Digital Communications Limited.
The NCC spokesman, Mr. Dave Imoko, who represented the commission's Executive Vice Chairman, Mr. Ernest Ndukwe, said "the NCC is determined to sanitise the telecom industry by maintaining a level playing field for all operators".
The commission, he said "shall continue to encourage more investors to invest in our economy so that our people will have choice and competitive pricing".
Ndukwe noted that "the Telecom Act 2003 is explicit enough on what is expected of every participant in the sector, and in line with the Act, the commission has Dispute Resolutions Guidelines; Mediation and Interconnection.
"Indeed, the commission has been empowered to use Alternative Dispute Resolution (ADR) methods in resolving disputes between operators, consumers and other telecoms stakeholders," he said.
Renowned telecoms lawyer, Mr. Paul Usoro (SAN) in his paper Current Legal Challenges, said the Telecoms Act was one of such challenges as there were no fewer than four litigations in various circuits, challenging its provisions.
Usoro told reporters that the NCC had been empowered by the Act and it recently released Enforcement Regulations 2004, which would create a policeman with muscles for the purposes of improving the quality of services.
Also at the forum, the second in the series by the NCC for TIT reporters, an official of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), Chief Sylvester Okonkwo, corroborated ATCON's position, saying for manufacturers of the proposed phone cards, hard times also lie ahead "since no one is sure of the incentives put in place for them by the Federal Government."
Okonkwo runs Chintos Technologies, a prepaid calling cards firm. He said Nigeria has a large market but lamented that the end users were bearing the brunt because of the system.
"The service providers must look for a way to recover their huge investments", he said.
