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Director, Policy and Competition
NCC
Mrs. Lolia Emakpore
CONFIRMATION OF REASONABLENESS OF SERVICES FOR FOREIGN EXCHANGE TRANSACTIONS IN THE TELECOMMUNICATIONS INDUSTRY: TRENDS, CHALLENGES & WAY FORWARD
Presented by
Mrs. Lolia S. Emakpore Director, Policy and Competition Nigerian Communications Commission November 05, 2013 OUTLINE Types of Intangible Telecommunication Services Trends Subsisting Guidelines & Industry Dynamics Challenges Way Forward Conclusion INTRODUCTION The CRS is based on CBN Regulations on International trade transactions NCC provides expert advise to CBN on Reasonableness of Transactions and remittances for intangible goods. CRS commenced in 2002 with focus on telecom intangible INTRODUCTION INTRODUCTION ..Contd. Encourage Development of Telecom Software Skills and Local Contents in Nigeria Ensure efficient utilization of Forex by the Telecoms companies. Control of Forex Round Tripping Bridge the gap between Telecoms Foreign Direct Investments (FDI) and CRS remittances TYPES OF INTANGIBLE TELECOMMUNICATION SERVICES These include: International Roaming traffic service for voice and SMS Bandwidth Service for internet and data traffic Interconnection Services Software Purchases for Network Expansion and System upgrades Software License renewal and Network integrity Maintenance Blackberry Services and arrangements with Research in Motion. TRENDS TRENDS Software remittances accounts for over 40% of the total cost of CRS processed over the last three years as shown in the Table above. NCC processed and approved over 5,580 Invoices in the Telecoms Industry between 2010 and 2013. Over 745 applications were declined due to integrity tests, ranging from over-invoicing, expired contract agreements, as well as duplications of invoices, etc. GUIDELINES ON CRS PROCESSING Invoice authentication (duly signed, dated and numbered) Invoices submitted must not be dated beyond(6 months) at the time of presentation to the NCC Early commencement of expiring contract agreements Provision of Job Completion Certificates & Site Inspection(where necessary) Separation of software and hardware components in the invoices, etc Independent verifications and third party confirmation of prices The processing time line of 14 days from the date of receipt of CRS applications from the Banks. INDUSTRY DYNAMICS There is a need to Review the current CRS Guidelines and Procedures to reflect industry dynamics The reviewed CRS guidelines would address emerging challenges. CHALLENGES Over due invoices – over six months from date of issue. Submission of invoices with Job completion date that is over two or three years Expired Contract Agreements Lumping invoices for software and the associated hardware elements Operators distributing same set of CRS invoices applications to two or more different Banks for processing Bankers requiring the NCC to approve Contract Agreements between Operators and Vendors CHALLENGES.. Contd. Invoices do not reflect amounts stated in the contract agreements Incomplete Documentations Invoices not duly signed by Operators and vendors (signature, date, name of signatory, company stamp, etc) by both parties. Arithmetic errors in Bank letters and invoices Aggressive follow-up of CRS applications by Vendors PROPOSED AMENDMENTS Extension of the initial 14 days processing cycle to 15 working-day cycle Basic Operating Software with associated Hardware components does not qualify for CRS processing. PROPOSED AMENDMENTS Invoices submitted on expired contract agreements shall be declined. Submission of same set of invoices by Operators to multiple Banks shall be sanctioned PROPOSED AMENDMENTS CONCLUSION THANK YOU |
Tuesday, 5 November 2013
Paper by Director, Policy and Competition
Paper on CONFIRMATION OF REASONABLENESS OF SERVICES FOR FOREIGN EXCHANGE TRANSACTIONS IN THE TELECOMMUNICATIONS INDUSTRY: TRENDS, CHALLENGES & WAY FORWARD Presented NCC
CONFIRMATION OF REASONABLENESS OF SERVICES FOR FOREIGN EXCHANGE TRANSACTIONS IN THE TELECOMMUNICATIONS INDUSTRY: TRENDS, CHALLENGES & WAY FORWARD
Presented by
Mrs. Lolia S. Emakpore
Director, Policy and Competition
Nigerian Communications Commission
November 05, 2013
OUTLINE
Introduction
Types of Intangible Telecommunication Services
Trends
Subsisting Guidelines & Industry Dynamics
Challenges
Way Forward
Conclusion
INTRODUCTION
The Central Bank of Nigeria (CBN) requested for regulatory collaboration and support from the NCC for the Confirmation of Reasonableness of Services (CRS)
For Telecoms related transactions, since 2002.
NCC provides expert advise to CBN on CRS Transactions remittances
The CRS is based on CBN Regulations on International trade transactions
INTRODUCTION
NCC took over this regulatory oversight to support the Central Bank of Nigeria (CBN).
NCC developed the initial Guidelines for CRS application processing 2003, highlighting the expectations from the Bankers, Operators and the Vendors in respect of the CRS invoices.
INTRODUCTION ..Contd.
The imperative of carrying out the CRS function includes:
To Check Capital Flights
To Encourage Development of Telecom Software Skills and Local Contents in Nigeria
To Ensure efficient utilization of Forex by the Telecoms companies.
To Control of Forex Round Tripping
To bridge the gap between Telecoms Foreign Direct Investments (FDI) and CRS remittances
TYPES OF INTANGIBLE TELECOMMUNICATION SERVICES
These include:
International Roaming traffic service for voice and SMS
Bandwidth Service for internet and data traffic
Interconnection Services
Software Purchases for Network Expansion and System upgrades
Software License renewal and Network integrity Maintenance
Blackberry Services and arrangements with Research in Motion.
TRENDS
Over the years, the NCC processed CRS invoices applications running into billions of dollars and millions of pounds sterling and euro currencies as follows.
TRENDS
Increase in Software Purchase for Network Expansion and Upgrades
Software remittances accounts for over 40% of the total cost of CRS processed over the last three years as shown in the Table above.
NCC processed and approved over 5,580 Invoices in the Telecoms Industry between 2010 and 2013.
Over 745 applications were declined due to integrity tests, ranging from over-invoicing, expired contract agreements, as well as duplications of invoices, etc.
GUIDELINES ON CRS PROCESSING
Sequel to the 2009 forum, the NCC developed the following guidelines:
Invoice authentication (duly signed, dated and numbered)
Invoices submitted must not be dated beyond(6 months) at the time of presentation to the NCC
Early commencement of expiring contract agreements
Provision of Job Completion Certificates & Site Inspection(where necessary)
Separation of software and hardware components in the invoices, etc
Independent verifications and third party confirmation of prices
The processing time line of 14 days from the date of receipt of CRS applications from the Banks.
INDUSTRY DYNAMICS
Due to Global Trends and Rapid Technology Changes
There is a need to Review the current CRS Guidelines and Procedures to reflect industry dynamics
The reviewed CRS guidelines would address emerging challenges.
CHALLENGES
The current challenges experienced in CRS invoices processing:
Over due invoices – over six months from date of issue.
Submission of invoices with Job completion date that is over two or three years
Expired Contract Agreements
Lumping invoices for software and the associated hardware elements
Operators distributing same set of CRS invoices applications to two or more different Banks for processing
Bankers requiring the NCC to approve Contract Agreements between Operators and Vendors
CHALLENGES.. Contd.
Delay in receiving responses from operators on queries raised during processing.
Invoices do not reflect amounts stated in the contract agreements
Incomplete Documentations
Invoices not duly signed by Operators and vendors (signature, date, name of signatory, company stamp, etc) by both parties.
Wrong calculations and arithmetic errors in Bank letters and invoices
Aggressive follow-up of CRS applications by Vendors
PROPOSED AMENDMENTS
we propose the following amendments to the existing CRS procedures:
Invoices submitted to the NCC must not be dated more than 6 months from the date of Job completion.
Extension of the initial 14 days processing cycle to 15 working days
Basic Operating Software with associated Hardware components does not qualify for CRS processing.
PROPOSED AMENDMENTS
Bank should reflect each Vendor invoices rather than multiple Vendors’ invoices combined in one application/letter.
Invoices submitted on expired contract agreements shall be declined.
Submission of same set of invoices by Operators to multiple Banks shall be sanctioned
PROPOSED AMENDMENTS
Operators to submit certificate of delivery and installation of software within three months of completion specifying:
(i) Location (ii)Date of Installation (iii)Expiration date (iv)Specification of the intangible products
NCC will monitor from time to time the installation and deployment of approved software and other related intangible services on the operators’ networks
NEED TO DEVELOP LOCAL CONTENT
Need to develop local content and skills on imported Telecom Software, such as:
VAS, BSS software among others.
Propose a 3-year Plan
Reduce Forex Remittances
CONCLUSION
The NCC would therefore appreciate inputs from this forum towards the development of new CRS Guidelines.
Nigerian Communications Commission picture
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Members of staff Nigerian
Communications Commission (NCC) at the event.
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Telecoms operators spend about N270bn on foreign software in three years
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From left:
Director New Media and Information Security Nigerian Communications Commission (NCC),
Dr Sylvanus Ehikioya; Director, Policy and Competition Mrs. Lolia Emakpore and Secretary Felix
Adeoye at the event in Lagos.
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Chuks Udo
Okonta
About N270
billion ($I.8 billion) has been spent by telecommunications operators on the
purchase of foreign software, Inspentech
has learnt.
The
Executive Vice Chairman Nigerian Communications Commission (NCC) Dr Eugene Juwah,
who was represented by the Director, Policy and Competition
NCC Mrs. Lolia Emakpore, disclosed
this at the Stakeholders’ Forum on the Confirmation of Reseasonableness of Service
(CRS) its organised in Lagos.
He said
the operators spent $281.2 million in 2010, $624.6 million in 2011 and $894.5
million in 2012. He added that software remittances abroad accounts for over 40
per cent of the total cost of CRS processed over the last three years, and that
NCC processed and approved over 5,580 invoices in the telecoms industry between
2010 and 2013.
He said over 745
applications were declined by the commission due to integrity tests, ranging
from over-invoicing, expired contract agreements, as well as duplications of
invoices.
Juwah canvassed
the need to develop local capacity and skills in software
development to reduce forex remittances, increased local content and create
employment as well as entrepreneur opportunities.
He
called on telecoms operators to support the commission through encouraging development
of local content, adding that the repatriation of money abroad is inimical to
the nation’s development.
Oyo State Governor lauds Airtel's efforts on job creation
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| From left: Lanre Adepoju of Airtel; Ms Titilayo Olusanya; Head of CSD, West Region; His Excellency, Senator Abiola Ajimobi; the Governor of Oyo State; Chairman of Juli Pharmacy; Adelusi Adeluyi; Chairman Odua Group of Companies, Chief Sharafadeen Alli and Ekundayo Fatoki, Zonal Business Manager, West-West, Airtel, at the commissioning of ‘Airtel Express Shop Plus’ located inside the new Heritage Mall in Ibadan, Oyo State.
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Airtel signs definitive agreement to acquire Warid’s Congo Brazzaville Operations
Bharti Airtel ("Airtel"), a leading global telecommunications services provider with operations in 20 countries across Asia and Africa, today said that it has entered into a definitive agreement with the Warid Group ("Warid") to fully acquire Warid Congo SA. The agreement is subject to regulatory and statutory approvals.
The agreement marks the second in-country acquisition by Airtel in Africa. It had acquired Warid’s Uganda operations earlier this year. The latest acquisition will make Airtel the largest mobile operator in Congo Brazzaville with around 2.6 million customers. At present, Airtel is the second largest operator in the country with over 1.6 million customers, while Warid is the third largest with around one million customers.
The agreement aims to bring together the strengths of Airtel and Warid in Congo Brazzaville and benefit customers in the form of affordable tariffs, superior 2G/ 3G network, affordable voice and data services and superior customer care. In addition, existing Warid customers in Congo Brazzaville will join Airtel’s global network of over 280 million customers and enjoy the benefits of ‘One Airtel’ network with affordable roaming rates across Africa and South Asia, besides other exciting bouquet of innovative 2G and 3G services.
Speaking on the agreement, Mr. Manoj Kohli, MD and CEO (International), Bharti Airtel said, "This acquisition is in line with our stated strategy of strengthening our market position through in-country acquisitions, as and when suitable opportunities come along. We are at an advanced stage of successfully integrating Warid’s Uganda operations with that of Airtel and look forward to a similarly swift transition in Congo Brazzaville as well. As already demonstrated in Uganda, the merger will bring more value for the customers in the form of affordable data & roaming tariffs, innovative products, Airtel Money, world-class networks and customer care. We would like to express our deep gratitude to the Government and look forward to its support to this deal. "
Speaking on the agreement Sriram Yarlagadda, Board Member, Warid, Congo Brazzaville said, "This agreement creates a win–win situation for the customers and provide them with an opportunity to be part of one of the largest mobile services providers in the world. The customers can look forward to enjoy affordable voice tariffs and 3G data services on the most extensive network. On this occasion, we would also like to express our sincere gratitude to the Government for its support and look forward to its continued cooperation towards a successful transaction"
With presence across 17 African countries, Airtel is the largest telecom service provider across the Continent in terms of geographical reach and had over 66 million customers at the end of quarter ended September 30, 2013. Globally, Airtel is ranked as the 4th largest mobile operators in terms of subscribers.
About Bharti Airtel:
Bharti Airtel Limited is a leading global telecommunications company with operations in 20 countries across Asia and Africa. Headquartered in New Delhi, India, the company ranks amongst the top 4 mobile service providers globally in terms of subscribers. In India, the company's product offerings include 2G, 3G and 4G wireless services, mobile commerce, fixed line services, high speed DSL broadband, IPTV, DTH, enterprise services including national & international long distance services to carriers. In the rest of the geographies, it offers 2G, 3G wireless services and mobile commerce. Bharti Airtel had over 280 million customers across its operations at the end of September 2013.
The agreement marks the second in-country acquisition by Airtel in Africa. It had acquired Warid’s Uganda operations earlier this year. The latest acquisition will make Airtel the largest mobile operator in Congo Brazzaville with around 2.6 million customers. At present, Airtel is the second largest operator in the country with over 1.6 million customers, while Warid is the third largest with around one million customers.
The agreement aims to bring together the strengths of Airtel and Warid in Congo Brazzaville and benefit customers in the form of affordable tariffs, superior 2G/ 3G network, affordable voice and data services and superior customer care. In addition, existing Warid customers in Congo Brazzaville will join Airtel’s global network of over 280 million customers and enjoy the benefits of ‘One Airtel’ network with affordable roaming rates across Africa and South Asia, besides other exciting bouquet of innovative 2G and 3G services.
Speaking on the agreement, Mr. Manoj Kohli, MD and CEO (International), Bharti Airtel said, "This acquisition is in line with our stated strategy of strengthening our market position through in-country acquisitions, as and when suitable opportunities come along. We are at an advanced stage of successfully integrating Warid’s Uganda operations with that of Airtel and look forward to a similarly swift transition in Congo Brazzaville as well. As already demonstrated in Uganda, the merger will bring more value for the customers in the form of affordable data & roaming tariffs, innovative products, Airtel Money, world-class networks and customer care. We would like to express our deep gratitude to the Government and look forward to its support to this deal. "
Speaking on the agreement Sriram Yarlagadda, Board Member, Warid, Congo Brazzaville said, "This agreement creates a win–win situation for the customers and provide them with an opportunity to be part of one of the largest mobile services providers in the world. The customers can look forward to enjoy affordable voice tariffs and 3G data services on the most extensive network. On this occasion, we would also like to express our sincere gratitude to the Government for its support and look forward to its continued cooperation towards a successful transaction"
With presence across 17 African countries, Airtel is the largest telecom service provider across the Continent in terms of geographical reach and had over 66 million customers at the end of quarter ended September 30, 2013. Globally, Airtel is ranked as the 4th largest mobile operators in terms of subscribers.
About Bharti Airtel:
Bharti Airtel Limited is a leading global telecommunications company with operations in 20 countries across Asia and Africa. Headquartered in New Delhi, India, the company ranks amongst the top 4 mobile service providers globally in terms of subscribers. In India, the company's product offerings include 2G, 3G and 4G wireless services, mobile commerce, fixed line services, high speed DSL broadband, IPTV, DTH, enterprise services including national & international long distance services to carriers. In the rest of the geographies, it offers 2G, 3G wireless services and mobile commerce. Bharti Airtel had over 280 million customers across its operations at the end of September 2013.
Saturday, 2 November 2013
From Left: Akinsola Omoniyi, Area Business Manager, Lagos North, Airtel; Mrs. Ojuade Oluwaseun, Education Officer, Ifako-Ijaye LGA; Winner of one million naira in Airtel Red Hot Promo, Aremu Akeem Adewale and Fatuade Ayobanji, Area Business Manager, Lagos North, Airtel, during the presentation of cheques to the first set of winners in the on-going Airtel Red Hot Promo at Airtel Express Shop, Ogba, Lagos.
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| From Left: Akinsola Omoniyi, Area Business Manager, Lagos North, Airtel; Mrs. Ojuade Oluwaseun, Education Officer, Ifako-Ijaye LGA; Winner of one million naira in Airtel Red Hot Promo, Aremu Akeem Adewale and Fatuade Ayobanji, Area Business Manager, Lagos North, Airtel, during the presentation of cheques to the first set of winners in the on-going Airtel Red Hot Promo at Airtel Express Shop, Ogba, Lagos. |
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