Telecom: Of risks, investment and fair profits (2)

If we use MTN as a case study again (it’s the only one of the operators whose figures are readily available), we would appreciate the kind of investment that the GSM operators have made to get them to where they are today. Figures released by the company indicate that it invested over N218 billion in network growth in 2012 alone and is investing over N270 billion in 2013. To put matters in perspective, the entire 2013 budget of Niger State is N83.8 billion, and Ekiti State N93.6 billion.

In the last decade or so, MTN has pumped a whopping N1 trillion into its network in Nigeria. Surely, it’s legitimate for investors and financiers providing such financing to expect some profits in return. The huge potential of the country and the promise of huge returns on investment are some of the reasons that Nigeria was recently listed among the world’s top four investment destinations by KPMG. The exploits of the operators in the telecom sector in the last decade have more than demonstrated this. Their resolve to invest in Nigeria when other investors were scared of the country’s challenges, and their subsequent success in the country have showcased the immense opportunities in the Nigerian economy and sent more Foreign Direct Investments (FDI) flying into Nigeria in the last few years.

And like the globally renowned management expert and business advisor, Ram Charan, said during his visit to Nigeria recently, the country needs as much FDI as it can muster to accelerate economic growth and development. According to Charan, no country ever got built without FDI. With FDI comes the development of local human capacity and empowerment of the local workforce.

When GSM service commenced in Nigeria, there was virtually no local capacity in that whole area. However, since then strategic skills-transfer programmes have seen the number of expatriates diminish steadily across the networks, as they are replaced with their Nigerian peers. According to an executive of MTN recently, local talent development at the company is currently at such a stage that Nigerians are now being sent to other operations of the MTN Group in and outside the continent to man strategic positions. This aptly demonstrates the point often made by experts that FDI is much more than the funds ploughed into a country.

It is gratifying to note that Umar admits this much in his piece. His only irritation seems to be the propensity of investors to seek to enjoy the dividends of their investment. But as unpleasant as it may seem, this is an idea that people need to accommodate if only for the sake of integrity. If an investor braves the odds of investment in a particular environment, he deserves to enjoy the dividends of his investment. And the reward of investment varies from country to country, depending on the risks involved and associated challenges. Comparing the reward of investment in Nigeria with the reward of investment in the US, as Umar did in his article, is simplistic and misleading.

As a corollary to this, seeking to demonise telecom players who have led the so-called telecom revolution is wrong. And if Nigeria is seeking to re-enact the telecom magic in other sectors, this is the kind of thinking that should be strongly dissuaded. A question to ask Umar is: When an indigenous company, NITEL, was the dominant operator, what did the Nigerian in the street gain? Holding on to sentiments that add no value to the life of the man on the street will not take Nigeria forward but backward. The very reason the telecom sector could record the success it did was that those at the helm of affairs did not permit such sentiments as this to becloud their sense of judgement. They were only interested in performance and fair competition. And contrary to Umar’s claim in his piece, all the licensees enjoyed the same privileges and obligations. The only operator which enjoyed some exemptions was the state-owned Mtel. Yet, it fell by the wayside.

In the final analysis, what Nigeria needs to worry about is not the so-called dominant status, but what the dominance is being used for. The regulator has a responsibility to ensure that the consumer is fairly treated and that no operator uses undue advantage over another. Once that is ensured, the sky is the limit for the Nigerian economy. 

Oguntimehin writes from Unity Estate, Alimosho, Lagos.

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