Establishing a regulatory framework to encourage

investment & innovationI k e n n a I k e m eH e a d , R e g u l a t o r y A f f a i r sE t i s a l a t N i g e r i a

J u n e 2 0 1 5

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contents1. Etisalat Group…………………………………………………………………………………………..

2. Etisalat Nigeria………………………………………………………………………………………..

3. State of broadband in Nigeria today………………………………………………..

4. Application of broadband in Nigeria………………………………………………….

5. Factors driving broadband growth…………………………….………………........

6. Benchmarks…………………………...…………………………………………………………........

7. Threats to broadband investment & innovation...…………………........

8. Recommended regulatory & policy actions…………………………………...

9. Expectations……………………………………………………………………………………………..

10. Conclusion………………………………………………………………………………………………..

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etisalat group19 countries 173 million

subscribers$19bnaggregate revenue

Over 40,000 employees

Founded 1976, in the UAE

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Network launched October 2008

Over 70% Population coverage

Over 70% Population coverage

Over 2000km of

fiber deployed

Youthful innovative

brand

22.5m subscribers

Rated best QoS in voice

& data

etisalat nigeria

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state of broadband in nigeria today

10.1% Broadband penetration

44% Internet penetration

82millionInternet users

50, 000 kmTerrestrial & aerial fibre deployed

12-15%Smartphone penetration

Source: NCC, Ministry of Commtech,GSMA

Nigeria has recorded appreciable gains in broadband deployment

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application of broadband in nigeriaEven at a relatively underdeveloped state, broadband is already transforming life in Nigeria

Online retail

Elections

Banking

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Mobile payments

Local Apps

Mobile health Apps

factors driving broadband growthBroadband development has been driven by clear policy directions, proactive regulatory regime and operator investments.

• Over 50,000 km ofterrestrial & aerial fiberconstructed. Submarine fibercables landed (over 100Gbpslit).

•Over 30, 000 base stations

• 3G & 4G deployment acrossNigeria.

•Discounted smartphones

•Investments in datacapacity and speed(Backhaul spectrumpurchases)

• Introduction of technologyneutral licenses

•Wholesale Wireless AccessService Licence (2.3GHz)

•InfraCo licensing underOpen Access Model

•Wholesale Leased Line pricecontrols and accountseparation (being developed)

•USPF subsidies

• Nigerian NationalBroadband Plan 2013-2018(Penetration targets, Policy &regulation, CNI, local content,adoption & utilization etc)

•Smart States initiative (RoWreductions, standardizationon levies and reduction ofcharges on telcoinfrastructure (Lagos,Bayelsa & Anambra Stateshave signed up).

Investments by operatorsNCC InitiativesMinistry of Commtech

Policies

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Benchmarks

Nigeria

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*South Africa, Egypt, Morocco, Ghana** average includes estimate for Ghana based on 2013 data***source: McKinsey analysis****lower value is better

When benchmarked against peers, Nigeria’s broadband performance appears to be below par…

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Peer averageMobile broadband penetration

30%*

9.8% 4.3%****Mobile broadband affordability (% of average GDP per capita required)

Source: Internet Society, McKinsey & Co, inMobi

Investment level (ICT investment as % of GDP) 2.6% >5.5%***

Smartphone penetration( % of population)

12-15% 26%**

Addressing issues with Availability and Affordability will promote innovation and investment in broadband. Access and Affordability are effects of other challenges

Multiple Regulation and Taxation & RoW

Spectrum availability & Industry structure

•Myriad of taxes at all tiers of government. Overlapping regulations.

•Exorbitant RoW fees in some states.

•Inadequate spectrum to support broadband deployment

•Many sub scale operators lacking resources to deploy broadband

threats to broadband investment & innovation

Security of infrastructure •Vandalisation of infrastructure

Smartphone penetration•Relatively high cost of smartphones resulting in low adoption and increased cost of access

Barriers to Availability & Affordability

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Naira Devaluation•Increased payments on US dollar denominated contracts for network infrastructure purchases.

recommended regulatory & policy actionsRegulatory and policy interventions are required to create a favorable environment for further investment and protection of broadband assets

Harmonise taxes - ImplementNEC resolution on multipletaxation/– encourage adoption ofsmart state initiative by morestates of the Federation.

Pass CNI Bill- pass CNI Billcurrently in Natl. Assembly toafford it protection fromvandalisation, unauthorised siteclosures and fiber cuts.

Downward review of taxesand levies- Reduce taxes forbroadband equipment. (Over 70%of ICT investment paid out asRoW fees and levies)* Reduceduty on imported SIMs.

Policy Actions

10*Commtech Minister-SME summit, WEF Abuja, 2014

Identification of additionalIMT bands – push forconsideration of spectrumallocations within 470 – 694MHz, L Band (1350 – 1518 MHz)and C Band (3.4 – 4.2GHz) and2.7 – 2.9 GHz bands for IMT.

recommended regulatory & policy actionsFurther policy & regulatory intervention is required to drive broadband in Nigeria and achieve the goals set out under the National Broadband Plan

Spectrum- Refarming of700Mhz and 800Mhz spectrum/ensuring efficient use ofspectrum by assignments toviable players with sufficientscale and expertise to utilize.

Multiple Taxation/RoW-continue to provide supportthrough the IWG on multipletaxation/ continue to assertauthority as primary regulatoryauthority for the sector.

Industry structure - Review ofindustry structure to ensureoptimal number of licensees thatcan operate viably given limitedindustry value available/ driveoptimal use of industry resourcesthrough consolidation, passive &active infrastructure sharing,national roaming.

Subsidies- subsidies to providelast mile fiber, subsidies to drivelocal content development/apps/smartphone adoption

Regulatory Actions

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Expectations when challenges are addressed

Description

Network Infrastructure

Triple Play Services

Local Content/App Development

Access & Affordability

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Enterprises5

▪ Increased deployment and upgrades/enhancements to network infrastructure.

▪ Improved network resilience and quality of service due to protection given telecommunications infrastructure with CNI legislation.

▪ Enhanced broadband speed will enable video, data and voice to be provided over the same network infrastructure.

▪ Broadcasters can now focus on content development enhancing competition.

▪ Affordability and resulting consumer demand for broadband services will drive development of local content services/apps relevant to the needs of the local broadband user.

▪ Better access and affordability to telecommunications services driven by access to more efficient spectrum, reduction/elimination of illegal taxes and USPF subsidies.

▪ LTE will provide the speed and resilience the large enterprises require to desist from building communication networks to support their services e.gbanks.

Conclusion

Some progress with broadband development

in Nigeria

Major challenges impacting broadband

investment and innovation in Nigeria

include multiple regulation and taxation,

inadequate infrastructure and spectrum availability

Passage of the CNI bill, provision of adequate spectrum and efficient

use of industry resources are key interventions required to facilitate broadband growth in

Nigeria

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Thank you

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