ATCON claims Nigerian operators need FX to deepen CAPEX
While telecommunications operators have largely risen to the challenge of withstanding surge in network demand during the COVID-19 pandemic, pressure to maintain infrastructure resilience and expand reach emerges as the most pressing issue in the sector.
This is according to EY report, “Top 10 risks in Telecommunications 2020,” which combines industry insights and consumer survey data to shortlist the most urgent threats facing today’s telcos.
With initial pandemic lockdowns across the globe triggering traffic spikes of up to 70 per cent, EY noted that telcos have successfully assumed an elevated societal role as connectivity providers.
But with 42 per cent of UK consumers stating that telcos should focus resources on maintaining broadband quality, and 32 per cent of US consumers citing concerns about home Internet reliability, speed and connection, since the pandemic began, EY said telcos need to do more to sustain positive customer perception about the service they receive.
EY Global Telecommunications Leader, Tom Loozen, said: “Overall, networks have withstood a sharp increase in home working, entertainment and schooling during the pandemic and telcos have commanded favourable customer opinion as a result. However, revenues are set to decline across most product categories and telcos must not become complacent. The journey to recovery will require new thinking and competencies, shifting the customer promise from speed to reliability, so telcos can thrive in the ‘new normal’.”
The study showed that the inability to scale digitisation initiatives ranks second on the risk radar. The COVID-19 pandemic is accelerating this drive, with 78 per cent of telcos now either re-evaluating or adapting the speed of automation and digital transformation programmes. Despite this reappraisal, EY said historical barriers remain – including inadequate skills in analytics and AI.
According to EY, failure to mitigate escalating geopolitical and competitive disruption lists ninth in the ranking and is a theme that underpins all of the top 10 risks. With network equipment supply chains increasingly being disrupted by global trade forces, there are concerns that 5G rollouts could be delayed. Meanwhile, technology players are moving to exert more control over value chains and new mobile entrants continue to drive down pricing to gain market share.
EY Global Telecommunications Lead Analyst, Adrian Baschnonga, said: “We are facing a perfect storm of geopolitical upheaval, with the COVID-19 crisis dampening global trade amid intensifying competition around 5G technology and on-going trade disputes. As a result, country-level operating environments are diverging, and it is becoming ever more essential that telcos adopt agile risk frameworks that can adapt to specific market scenarios.”
Speaking with The Guardian on the issue, the President, Association of Telecommunications Companies of Nigeria (ATCON), Olusola Teniola, said the investments made for the explosive voice market, defined as mobile telephony in Nigeria, was on the back of light-handed regulation.
This was in line with OFCOM, the UK regulator, and assisted the Nigerian Communications Commission (NCC), to supervise the exponential growth in voice penetration on investments totalling $58 billion over a 12 year period.
Teniola, an engineer, said to sustain this, “more investments are required to build upon this infrastructure to cater to resilient networks, a national backbone network, sharing of infrastructure in the wholesale market where capacity exists. Also required is increased spectrum capacity in the way of additional contiguous bandwidth to keep up with data and bandwidth hungry application demand, and most importantly the diversification of cable landing stations along the coastal line of Nigeria. This is to avoid Single Points of Failure at Lagos, and intra-traffic going into the hinterland that are landlocked.”
According to him, these are issues that have been exposed during the COVID-19 pandemic and post, which underscores the need to accelerate and expedite implementation of the Nigerian National Broadband Plan 2020-25.
EY Global Telecommunications Lead Analyst, Adrian Baschnonga, said: “We are facing a perfect storm of geopolitical upheaval, with the COVID-19 crisis dampening global trade amid intensifying competition around 5G technology and on-going trade disputes. As a result, country-level operating environments are diverging, and it is becoming ever more essential that telcos adopt agile risk frameworks that can adapt to specific market scenarios.”
Speaking with The Guardian on the issue, the President, Association of Telecommunications Companies of Nigeria (ATCON), Olusola Teniola, said the investments made for the explosive voice market, defined as mobile telephony in Nigeria, was on the back of light-handed regulation.
This was in line with OFCOM, the UK regulator, and assisted the Nigerian Communications Commission (NCC), to supervise the exponential growth in voice penetration on investments totalling $58 billion over a 12 year period.
Teniola, an engineer, said to sustain this, “more investments are required to build upon this infrastructure to cater to resilient networks, a national backbone network, sharing of infrastructure in the wholesale market where capacity exists. Also required is increased spectrum capacity in the way of additional contiguous bandwidth to keep up with data and bandwidth hungry application demand, and most importantly the diversification of cable landing stations along the coastal line of Nigeria. This is to avoid Single Points of Failure at Lagos, and intra-traffic going into the hinterland that are landlocked.”
According to him, these are issues that have been exposed during the COVID-19 pandemic and post, which underscores the need to accelerate and expedite implementation of the Nigerian National Broadband Plan 2020-25.
Teniola also noted that all operators are in need of fair and favourable access to foreign exchange (FX) to support their capital expenditure (CAPEX) programmes for infrastructure builds (both towers/base stations and optic fibre), to address the gaps that are required to be filled to address resilience and improvements in Quality of Service (QoS).
Ranked fifth in the EY report are risks associated with changing imperatives in privacy, security and trust. Less than half (47 per cent) of UK consumers feel they are in control of their online data, and reports of privacy issues relating to contact tracing apps and video call platforms have heightened concerns during the pandemic.
The report highlighted that the sector typically underestimates the link between trust and revenue growth, with nearly half (46 per cent) of telcos perceiving cybersecurity as either compliance- or crisis-driven rather than as a proactive endeavour. In the seventh is ineffective engagement with industry verticals and the public sector, often due to low awareness of the benefits of 5G.
The report stated that while different industries are at varying stages of their 5G investment journey, they all need support to realize the opportunities on offer.
Indeed, 80 of enterprises across verticals want 5G providers to articulate a more coherent 5G vision, underlining the need for clearer dialogue. The report also highlights the opportunity for the sector to strengthen its societal position more broadly.
EY’s Loozen added: “Telcos’ relationships with government are deepening, with operators playing a pivotal role in pandemic response and recovery, positioning telecoms’ status as a national strategic asset more so than ever. Making the most of this more intimate relationship will require on-going focus.”
Other risks listed include: failure to redesign workforce purpose and inclusion (third in the ranking); failure to improve capex efficiency and network returns (fourth); poor management of investor and stakeholder expectations (sixth); inability to adapt to a changing regulatory landscape (eighth); and failure to take advantage of changing market structures (tenth).
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