Scarcity of Foreign Exchange Stifles Operations In Telecom Industry – ALTON

Scarcity of Foreign Exchange Stifles Operations In Telecom Industry – ALTON
By Patrick Aigbokhan
The Association of Licensed Telecommunications Operators of Nigeria (ALTON) has lamented the grave effect of scarcity of foreign exchange on the operations and growth of the telecommunications industry in Nigeria.
Engr. Gbenga Adebayo, Chairman, ALTON, who spoke Friday at a breakfast meeting of the Nigeria Information Technology Reporters Association (NITRA) held at the Nigeria Union of Journalists (NUJ) secretariat, Lagos, also noted that the prevailing scarcity of forex has occasioned a situation where the Banks are unable to obtain FX for an upward period of six months.
He noted however that, in spite of the challenge, the revolution in the telecommunications sector is one of the most far-reaching achievements of Nigeria in the past sixteen years.
“The industry is facing major challenges in purchasing Foreign Exchange to fulfil contractual obligations to Equipment Suppliers and Foreign Vendors.  This situation is adversely impacting our network operations and also some recent developments in the industry have alluded very clearly to the risks at hand.
“Nigeria has been described as one of the fastest growing telecommunications market in Africa. It is therefore a matter of great concern the current state of health of our industry, with the devaluation in the value of our currency, to lack of access to foreign exchange to the issue of data floor price’” Engr. Adebayo said.
The ALTON Chairman also pointed that Telecommunications Service Providers are similar to manufacturing firms and therefore, deserve to be treated in the same manner.
“The core network equipment and other auxiliary equipment procured for providing Voice and Data Services are equivalent to plant and machinery acquired by the manufacturing firms for the production of goods and services in the country,” he added.
Engr. Adebayo classified the items procured and imported into the country by the Telecommunications Service Providers as plants and machinery. He listed the items to include, RF Coverage Equipment (BTS, BSC, Node B, RNC); Core Equipment (MSC, Media Gateway, RMC, CCN, EMM, Packet Core, MPLS Nodes, etc.); Transmission Equipment (Microwave, Optical Fibre, RF Planning Tools); Customer Contact Equipment (SIM Cards) and Network Tools (Planning tools, Monitoring tools, etc.)
He explained that the aforementioned equipment is subsequently integrated to form a network to provide services of Voice/Data/SMS/VAS/Enterprise solutions/leased lines, which are regarded as finished goods in the Telecommunications Sector.
Speaking further, Adebayo said, “Telecommunications Sector is termed “infrastructure of infrastructures” and Social Overhead Capital which propels productivity in other sectors of the economy.  The multiplier effects of efficient and reliable telecommunications services on other spheres of the economy, such as banking, aviation and hospitality cannot be overemphasized.
“ALTON is of the opinion that Telecommunications Sector deserves to be supported through direct FX allocation from the CBN interventions.  This will facilitate the deployment of pervasive broadband network nationwide and ensure that the country retains its prime position, as the largest Telecommunications market in Africa”.
The ALTON chairman lamented that exemption of Telecommunications Equipment and Services from items to be accorded priority in the allocation of FX by the Banks has adversely affected the industry by Increased Operating Cost; Unfavourable Credit Terms; Delayed implementation of Network Enhancement and Improvement Initiatives, among others.
“In the light of the foregoing, ALTON respectfully requests the CBN to include Telecommunications Equipment and Invisibles among the list of items/Sectors to be allocated from the 60% FX availability by the Banks. This is to ensure the continued provision of world-class telecommunications services to the consumers,” Engr. Adebayo said.