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Blurb

Then and now: Nigeria’s telecommunication history 

Nigeria’s telecommunication history takes its roots from the colonial era in 1886 when telegraphic submarine cable lines were laid.

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Telecommunication companies, Telecoms, Call tariffs, Taxes and levies, Then and now: Nigeria's telecommunication history , Nigerian Telecoms Connectivity Offerings Impact Nigerians More than Ever

Nigeria’s telecommunication history started from the colonial era in 1886, when telegraphic submarine cable lines were laid by the British firm, Cable & Wireless Ltd, connecting Lagos to London. This led to the installation of phone lines, connecting the famed commercial hub to Jebba, Ilorin, Calabar, Ibadan and other parts of the country.

It is worthy of note that the establishment of telephone lines aided other forms of communication in Nigeria like the radio, television, and internet.

The era of NITEL

Nigeria Telecommunications Limited (known as NITEL) was established in 1985. NITEL was owned by the government and given monopoly status in the communication sector. The firm was formed through the welding together of two government entities – the telecoms arm of the Posts and Telecommunications (P&T) department under the Ministry of Communications, and the Nigerian External Communications (NET).

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[READ MORE: Improve service quality or risk sanction – NCC warns Telcos]

Posts and Telecommunication dealt with internal communication services in Nigeria. Services rendered by P & T were telegraph services and a manual telephone exchange service with a magneto switchboard of 100 lines introduced in Lagos by 1908.

On the other hand, Nigerian External Communications was for external purposes as colonisation had done a good job of connecting Lagos and London through a telegraph service. The company, which produced these services, African Direct Telegraph Company, became Imperial and International Communications after a merger. It transformed into Cable and Wireless later.

Nigeria sought a partnership with Cable and Wireless. This led Nigeria into acquiring an interest in the Nigerian arm of Cable and Wireless and renaming the company Nigerian External Telecommunications (NET). NET did well by providing international telephone, telex and telephone services to major cities in Nigeria like Ibadan, Enugu, Kaduna, and Port-Harcourt. It was credited with the introduction of international Direct Dialing Services.

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Poor services

P&T and NET had their fair share of ineffective services. They were mostly run with analogue infrastructure and needed a wave of digital transformation. Also, the lines were congested, the billing system was inefficient and the call completion rate for long-distance calls was below 50%. Generally, NITEL was plagued by a list of complaints, so reforms for better communication services began.

Telecommunication reforms

The deregulation of the sector heralded the establishment of the Nigerian Communications Commission (NCC) as prescribed by Decree 75 of 1992. The decree establishing the NCC helped to liberalize terminal ends equipment, and gave room for competition and private sector participation.
The deregulation meant that the NITEL regime, which was characterized by poor communication service, was over. Even though NITEL retained its monopolistic rights, new players were introduced into the industry.

[READ ALSO: Will there ever be a day the NCC withdraws a Nigerian telco’s license?]

The era of GSM

Nigerian telecommunications received a great boost with the coming of the Global System for Communication (GSM) in 2001. Econet (now Airtel) has been said to be the first telecommunication service to launch its services in Nigeria on August 8, 2001, going head-to-head with MTN which also began operations in August of the same year.

They were given renewable GSM licenses, which had a 5-year expiration date, and allowed them to operate within the 850 MHz and 1900 MHz spectrum bands. Specific targets were set for the operators by the NCC. Some of the targets were a minimum of 100,000 subscribers each in the beginning year of operations, 1.5 million subscribers in the next five years, and a minimum of 5% geographical coverage within each of the country’s geopolitical states.

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The goal was efficiency and NCC was committed to achieving a secure and efficient mobile network.

Then and now: Nigeria's telecommunication history 

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One important feature of the initial era of the GSM was the prestige accorded to phone owners. At that time, only the wealthy could own phone, as it cost N80,000 – N100,000 and not many could afford it. The popular phone brands were Nokia, Sagem, and Samsung.

MTN, which kept innovating at the time, brought about the SIM (Subscriber Identity Module) which helped to enhance call rates. Registering a line was as costly as having a phone. Line registration was pegged at N40,000 to N50,000, however phone billing rates were charged on the minute basis (N50 per minute).

Globacom, established by Mike Adenuga, brought per second billing as its unique offering. The entry of MTN, Glo and Airtel helped the evolution of Nigeria telecommunication and created better services for Nigeria.

Some of those old phone models were Nokia 3310, Nokia 1200, Nokia 1208, Motorola XT1032, Samsung C140.

An overview of industry players 

Globacom

As of December 2018, GLO had over 45 million subscribers, making it the second-largest network operator in Nigeria. It introduced lower tariffs and other value-added services.

In 2011, GLO became the first telecommunication company to build an $800 million high-capacity fibre-optic cable known as Glo-1, a submarine cable from the United Kingdom to Nigeria. It is the first successful submarine cable from the United Kingdom to Nigeria.

MTN

MTN built 3,400 kilometres Yello Bahn cable which gives it a wider coverage all over Nigeria. The telco paid $285 million for one of four GSM licenses in Nigeria in January 2001. It has spent more than $1.8 billion in strengthening its mobile telecommunications infrastructure in Nigeria.

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Since its launch in August 2001, MTN has steadily deployed its services across Nigeria. It now provides services in 223 cities and towns, more than 10,000 villages and communities and a growing number of highways across the country, spanning the 36 states of Nigeria and the Federal Capital Territory, Abuja.

Then and now: Nigeria's telecommunication history 

Airtel

Airtel Africa is a leading provider of telecommunications and mobile money services, with a presence in 14 countries in Africa, primarily in East Africa and Central and West Africa.
It has gone through several rebranding regimes from Econet to Vmobile, Zain, Celtel, then Airtel. As of March 2019, Airtel had over 99 million subscribers in the continent. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.

Etisalat

Etisalat Nigeria launched in 2008 as one of the first major broadband services in the country. The company is known for its innovative products and services such as the Eco Sim and  being the first network to offer special numbers to Nigerians as their mobile numbers via the 0809uchoose campaign

In 2013, Etisalat Nigeria signed a $1.2 billion medium-term facility with 13 Nigerian banks, which it used to refinance an existing $650 million loan and fund modernisation of its network.

The banks that were involved in the loan deal include Zenith Bank, GT Bank, First Bank, UBA, Fidelity Bank, Access Bank, Ecobank, FCMB, Stanbic IBTC Bank and Union Bank.

However, Etisalat struggled to repay the loan. While the banks pushed forward to acquire Etisalat, the NCC intervened and waded into the troubling water.The intervention by NCC led to Etisalat withdrawal from the market after its debt was not repaid or rescheduled. The local operator then renamed itself 9mobile in July 2017.

[READ FURTHER: NCC moves to track cybercriminals]

Then and now: Nigeria's telecommunication history 

Ntel

Ntel is a spinoff from the defunct telecoms company, NITEL. The Nigerian government handed over NITEL/Mtel assets to NATCOM (Ntel’s parent company) in a deal worth $252 million last year. This was after the company went through a period of botched sales and divestment. Established in 2016 with offices in Lagos and Port Harcourt, and a plan to come back bigger and better, Ntel has begun to rejig its services.

Conclusion

One thing about Nigeria’s telecommunications industry is the improvement of its services over time. It has gone from the era of analogue phone lines to the digital era of smartphones and wireless connections. The current state of the sector may not be perfect but Nigeria’s telecoms development has come a long way indeed.

Reincarnated as a lover of stocks, Angel investors, seed funds, and anything aligned to tech or startups raising money, Joseph's work at Nairametrics involves following the money to wherever it leads. Before joining Nairametrics, he won an investigative journalism fellowship with ICIR, appeared in several national dallies, with hard-hitting opinions, features and investigative pieces. He has also engaged in content marketing and copywriting for a top e-commerce firm in Nigeria.

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Blurb

Dangote Sugar, sweet in more ways than one

Significant growth in gross revenue was driven largely by sale to Nigerian Bottling Company Limited and Seven-Up Bottling Company Limited.

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Quick take: Sustained cost pressure weighs on profit, Dangote Sugar Refinery: Revenue recovers but cost pressures remain

By refining capacity, Dangote Sugar Refinery Plc (DSR Plc) is acknowledged as the largest Sugar Refinery in sub-Saharan Africa and one of the largest in the world. With up to 60 percent market share, it is also clearly, the most dominant player in the Nigerian sugar market.

DSR Plc recently released its audited Financial Statements for the year ended December 31, 2020 and overall and year-on-year group performance results were very good.

Despite the impact of the Covid-19 induced lockdown which curtailed distribution across the country and resulted in decreased revenues from income generated from freights, gross revenues increased by over 33 percent year-on-year to ₦ 214.3 billion. The significant growth in gross revenue was driven largely by a rise in revenue from the sale of its 50kg sugar, with the two main customers being the Nigerian Bottling Company Limited and Seven-Up Bottling Company Limited who operate principally from Lagos.

READ: Dangote Sugar completes acquisition with Savannah Sugar Company Limited 

Year-on-year, gross profit increased by over 40 per cent to ₦ 53.75 billion, Profit before tax increased by almost 53 per cent to ₦ 45.62 billion, and Profit after tax increased by 33 per cent to ₦ 29.78 billion.

Notwithstanding the good result, the group operating results showed some issues and headwinds. First, during the year, DSR Plc wound up Dangote Niger Sugar Limited (one of four companies that had been set up to acquire large expanse of land and locally grow sugarcane as part of its concerted backward integration project). The winding-up was sequel to continued community dispute over land acquired in Niger State for this purpose. This winding-up event cost DSR Plc approximately ₦ 100 million.

Second, there continues to be a heavy reliance on Lagos for its gross revenues as revenues generated from Lagos State increased significantly from circa 33 per cent at the end of 2019 to over 50 per cent by the end of 2020. The share of the Lagos segment in gross revenue thus continued to grow and currently represents a significant market concentration risk for DSR Plc.

READ: Nigeria’s biggest oligopolies: Who are the real beneficiaries?

Third, provision for impairment on financial assets or in simple terms, receivables that are unlikely to be collectable, also trended upwards from ₦ 1.3 billion in 2019 to ₦ 1.45 billion by end of 2020 with net financing expenses also rising significantly from ₦ 516.2 billion in 2019 to ₦ 1.92 billion by the end of 2020. This rise in expenses was largely driven by a significant rise in exchange losses incurred in the ordinary course of business, rising from about ₦ 7 million in 2019 to over ₦ 1.57 billion at the end of 2020.

Finally, administrative expenses represented mainly by employee salaries grew year-on-year by over ₦ 1.2 billion.

With the recent reopening of land borders, we expect that revenues and margins will become squeezed as sales and production volumes become constrained by the influx of largely smuggled, lower quality, and much cheaper sugar and its substitutes. DSR Plc’s sugar refinery is also strategically located very close to the Apapa port and its logistics operations, distribution of raw materials and delivery of finished goods will continue to be impacted by the infamous Apapa Traffic Gridlock and road diversions/closures around the axis. Although the effort of Lagos state and the recent introduction of the electronic call up of truck by the NPA has eased the issue, still, it needs to be watched closely.

READ: Dangote Sugar yearly revenue surge by 33%, announces a dividend of N1.50

Earnings per share at the end of 2020 was ₦ 2.45 (2019: ₦ 1.87; 2018: ₦ 1.85)

Subject to approval at its forthcoming Annual General Meeting, DSR Plc board of directors have proposed a dividend of N1.50k per ordinary share (2019: ₦ 1.10k, 2018: ₦ 1.10k).

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This performance is sweet in more ways than one.

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CBN “Naira 4 Dollar Scheme” Explained

What the CBN’s Naira 4 Dollar scheme means for your money.

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CBN

In what appears to be an attempt to incentivize dollar remittances by all means possible, the Central Bank of Nigeria (CBN) released a circular to Deposit Money Banks (DMBs), International Money Transfer Operators (IMTO), and the General Public, advising that remittances paid into a bank account will attract an additional credit alert for every USD$1 received!

Yes, you read that correctly. The CBN will facilitate a special additional credit alert of N5 for every USD$1 received. In other words,

  • if someone sends you $10,000, you get an additional special credit alert for N50,000.
  • If someone sends you $100,000, you get an additional special credit alert for N500,000.

Who is eligible?

To be eligible, the diaspora remittances need to be processed and received from one of the registered IMTOs and funds received into a Bank account operated by the DMBs. (So, if you are receiving funds via Crypto sorry you are not eligible).

Additionally, the circular says this “incentive runs from Monday 8th March 2021 to Saturday 8th May 2021″. So, if you have plans to receive dollars, you can plan accordingly.

The circular is not clear how exactly the commercial banks will know which account to pay the extra special credits into. Although, that may be a question diaspora funds recipients will need to ask their DMB accounts officers to clarify for them.

How will this be funded?

The circular notes that the “CBN shall through commercial banks, pay to recipients the N5 incentive for every USD$1”. In other words, it is the CBN funding the cost of this special extra credit.

  • One would argue that given the costs of alternative incentives to attract dollars such as the special OMO window for FPI, this may be a cheaper alternative for the CBN.
  • But we will need to see the volume of expected remittance to be certain of that. Nigeria attracts about $5billion per quarter in remittances and only trails oil in terms of foreign earnings.

Why this matter to Nigerians?

Following the collapse of US Dollar inflows into the country, the CBN initially tried to balance its current account deficits and avoid an official devaluation by tackling FOREX demand (Think ban of 41 items, etc).

Finally, this short-term Naira-4-Dollar scheme will not be called an official Naira Devaluation. But a question is what do we call the new short-term price of N412.50 + N5.00? Maybe we can call it Naira Modulation.

 

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