THUR, FEB 13 2020-theG&BJournal– In deciding the new National Identification Number stipulation, the Federal Government press conference touched mostly on security considerations, the need to have a National Identity Number compulsorily before SIM card registration and SIM cards updated with the identity number before 1st December 2020. Buried in there also is the requirement that foreigners will either use their passport or visa numbers to register SIM cards.
Unfortunately the policy is not getting enough mark and the exuberance of the pronouncement contrasts with the mood of Telecoms operators in the country and analysts are not chewing it because ‘’the policy did not take into consideration the country’s sobering economic news and the near term implication for telcos’ bottomline.
‘’In our view, this will have a neutral effect on telecoms companies (telcos) earnings in the near-term. However, there are risks to the long-term earnings potential of the telcos,’’ says Cordros Securities analysts.
‘’We see the NIN stipulation as a risk to mobile money adoption and potential revenues (expected to reach USD889 million by 2023) for telcos, and financial inclusion targets (95% by 2024) for the government. The unbanked population (60 million), which is the target of mobile money services, will be most affected by the NIN stipulation due to the significant challenges surrounding registration process.’’
To recap, the Federal Government of Nigeria (FGN) last week, through the Minister of Communications and Digital Economy, issued a directive to the regulator of the telecommunications sector, the Nigerian Communications Commission (NCC), to revise the policy on SIM card registration and usage. The Minister said that the policy update was based on the need to combat the spate of insecurity in Nigeria.
Analysts quickly noted that this not a new policy. The NCC made same policy statement as far back as October 2019 and enforcement has been weak, with customers still given the option of using any of the range of “National IDs” to register.
‘’The second stipulation, however, is where our concern lies’’ says Cordros Securities analysts. ‘’ Mandating that all SIMs are updated with the NIN effectively re-starts the entire SIM registration process from square one, especially if done in the same manner as the initial phase.’’
In their view: Although the NIMC Act was passed in 2007, the National Identity Management Commission (NIMC), the body in charge of issuing NINs and maintaining the database, was not established until 2010. Worse-still, the commencement date for the enforcement of the NIN was on 1 January 2019, 6 years after the initial SIM registration process ended. This implies majority of all registered SIMs in the country do not have NINs attached.
Nigeria is the largest dual SIM market in the world with at least two-thirds of active lines among two or more numbers shared by a single user, according to OpenSignal. Cordros analysts reckon that two key reasons explain this – first is the Quality of service, and second is price competition.
Nigerian telcos have historically struggled to maintain quality service, and in order for subscribers to keep themselves connected and minimize downtime, they subscribed to multiple network providers. Also, price competition has been historically intense as various telcos offer myriads of deals and promotions of which subscribers wished to take advantage. As a result of the proliferation of SIM cards, the percentage of active lines as a percentage of total connected lines has fallen from 82.5% in 2011 to 68.7% in 2019.
SIM card ownership limits are commonplace across the world, especially in developing countries, as various governments attribute high crime rates and even terrorist activity to the proliferation of multiple unregistered SIM cards. With a 3 SIM limit, Nigeria is line with Cuba, Lebanon and Singapore.
At this time, it is unclear if there will be exemptions, for example for corporates with large numbers of SIMs registered. Revenues from corporates made up about 12.0% of MTNNs revenue as at 9M-2019.)
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