Do’s and Don’ts of a Licensed Telecommunications Service Provider in Nigeria (Part 3) – Sandra Eke

Telecommunications

24th December 2020.

Sandra Eke

 

DO’S AND DON’TS OF A LICENSED TELECOMMUNICATIONS SERVICE PROVIDER IN NIGERIA (PART 3)[1]

 

A good understanding of the scope, requirements, terms, and limitations of a telecommunications licence is an essential factor for every telecoms service provider. Oftentimes, licence conditions and regulations are breached largely because of an inadequate comprehension and knowledge of the regulatory requirements governing such licence. The excuse of ignorance cannot serve as a defence or protection for a licensee since the regulations make no such accommodations. The Nigerian Communications Commission (NCC), which is the body responsible for the issuance of licences, actively undertakes enforcement activities against licensed entities that breach any provision of the regulations or fail to undertake an action required of the entity under the issued licence, as part of its obligations.[2] It is the individual responsibility of every licensed entity to avail itself with the relevant licence template, laws, regulations, and directives governing the issued licence and properly examine these in order to gain a proper understanding of the nature of the licence and the regulatory compliances expected of them. This paper shares some useful tips and pitfalls to be avoided and which a licensed telecoms service provider should take cognizance of, to ensure the smooth running of its operations.

 

  1. Do your legal due diligence

Oftentimes the nature of telecommunication services often requires licensed entities to partner with other entities for the effective actualisation of their business objectives. However, it is vital for licensees to conduct a proper due diligence on their potential partners to ascertain whether they have obtained the necessary licenses and authorisations needed to provide the requisite communication services. It is important that the legal due diligence be done before entering such partnerships and not after progressing halfway into the partnership.[3]

  1. Pay your licence fees and all other associated fees

After a successful application for a communications licence, the next step is usually to pay the requisite licence fees and other associated fees required for the operation of the licence. A licensed entity could have its licence revoked or suspended for failure to pay any required or imposed fee.[4]

  1. Ensure spectrum assigned is effectively utilized

The purpose for the assignment of a spectrum is for facilitating the optimal provisioning of communication services. A licensed entity which has been assigned a spectrum is required to effectively utilize it. The NCC is empowered to review the usage of a spectrum and if it finds that it is under-utilized or not even utilized at all, it can refuse to renew the spectrum at its expiration or impose time-bound obligations or sanctions on the licensed entity.[5]

  1. Don’t provide telecommunication services without a licence

Telecoms service providers are prohibited from providing telecommunication services without a licence.[6] It is a punishable offence for any person to operate a communications system or facility or provide a communications service in Nigeria without the requisite licence.[7] The NCC usually embarks on enforcement activities against entities providing telecommunications services without a licence. One of such enforcement actions was taken against Auto Tracker Nig. Ltd., in 2019 for providing communication services without licence leading to the arrest of the licensee who was subsequently directed to obtain the requisite licence, failing which, all numbers in its database will be deactivated by MTN.[8]

  1. Don’t operate outside the scope of your licence

Some licensed entities have developed a costly habit of providing telecommunications services beyond what their licence covers. This could either be because of an incomplete understanding of their licence scope or a deliberate attempt to corner high yielding business deals behind closed doors. Whatever the reason may be, it does not change the fact that it is a breach of a licence condition which could lead to the suspension or revocation of the issued license.[9] In May 2019, the NCC carried out an enforcement action against a popular wealth creation entity, Recharge and Get Paid (RAGP), for operating outside the scope of its license.[10] This led to the deregistration of its Sales and Installation License.[11]

  1. Don’t operate with an expired licence

All individual licences are issued for a particular duration depending on the type of licence.[12] A licensed entity is required to notify the NCC of its desire to renew its licence at least 6 months before its expiration, failing which, the licence would automatically terminate.[13] At the expiration of a license, a licensee who continues to provide communication services would run afoul of the regulations and would face severe sanctions.[14] In 2015, the NCC sealed off the office of Messrs General Data Engineering Services Nigeria Limited (SKANNET) for operating with an expired ISP licence and for failing to fulfil its financial obligations in line with the terms and conditions of the licence.[15]

  1. Don’t transfer or assign a licence without seeking approval

The nature of the licences granted by the NCC are such that they are personal to the licensed entity and a prior written approval from the NCC must be obtained before a licensee can transfer, assign or sub-licence its licence.[16]An assignee/transferee of an issued Licence needs to obtain prior authorisation from the NCC before operating the said license.[17] As part of its enforcement activities, in the second quarter of 2019, the NCC carried out an enforcement action against DCC Satellite Limited’s (DCC) for transferring its Licence to CWG contrary to section 38 of the NCA, and condition 10 of its IDA License without obtaining prior authorization from the NCC.[18] Consequently, an administrative fine of N25, 000.000 was imposed against CWG to serve as deterrence for such actions.[19]

  1. Don’t undertake a joint venture without approval

The licence conditions of most telecommunication licences require the licensee to obtain prior written approval from the NCC before going into a joint venture with another entity.[20] It would be a move in the wrong direction for any licensed entity to enter any kind of business partnership with another entity for the purpose of providing communication services under its licence, without obtaining proper authorisation from the NCC. In the recent past, the NCC has undertaken enforcement activities against defaulting licensees found to have entered unapproved joint ventures. For instance, the NCC issued a warning and desist order to Arctic Spatials Limited and Vodacom Business Africa Nigeria Limited for a breach of the terms and conditions of Automated Vehicular Tracking Services Licence (AVTS) on this score.[21]

  1. Don’t encumber, pledge or use licence as security

It is important for a licensed entity to know that it is prohibited from encumbering its licence in any form, whether by using it as a pledge or security without obtaining a prior written approval from the NCC.[22] Licensees found to be in breach of this requirement are liable to the revocation of their licence or payment of a fine not exceeding N10,000,000.[23]

  1. Don’t transfer control, ownership or shares without obtaining approval

It is not uncommon for licensees to decide to change their ownership or shareholding structure for the benefit of their business or other strategic reasons. However, there is a regulatory requirement for licensed entities who intend to transfer shares exceeding 10% of their total share capital to send a written application to the NCC seeking for approval, at least 90 days prior to the proposed date of transfer or as stipulated under their licence conditions.[24] As part of its enforcement activities, the NCC sanctioned Comviva Technologies Nigeria Limited (Comviva) with an administrative fee of N2, 000,000 for the change of its company shareholding structure without approval.[25]

  1. Conclusion

The secret to the smooth running of every business lies in its ability to comply with regulatory directives. Severe regulatory sanctions have led to the liquidation and collapse of many profitable businesses around the world. The telecommunications sector in Nigeria is closely regulated, largely because of its strategic importance to the country and vast potentials. As has been discussed above, there are several requirements and conditions intended for a licenced entity to satisfy, to avoid running afoul of the regulations. As organisations plan to make profit, significant attention needs to be given to the effective compliance with licence conditions and telecommunications regulations. Since this can be an onerous task, it would be a wise business decision for any telecoms service provider to retain the services of a knowledgeable telecommunications law expert in this regard.

 

 

For further information on this article and area of law, please contact

Sandra Eke at: S. P. A. Ajibade & Co., Lagos by telephone

(+234 1 472 9890), fax (+234 1 4605092)

Mobile: +234.7033857874 or + 234.811.249.1286

Email: seke@spaajibade.com

www.spaajibade.com

[1]       Sandra Eke, Associate Intellectual Property & Technology Department, SPA Ajibade & Co., Lagos, Nigeria.

[2]       Section 89 of the Nigerian Communications Act (NCA) mandates the NCC to monitor all significant matters relating to the performance of all licensees and publish annual reports thereon at the end of each financial year of the Commission.

[3]       See Sandra Eke, “Introduction to Licensing in the Nigerian Telecommunications Industry (Part 1)” available at: http://www.spaajibade.com/resources/introduction-to-licensing-in-the-nigerian-telecommunications-industry-part-1-sandra-eke/ accessed 18th December 2020.

[4]       Section 45(1) & (2) NCA.

[5]       Section 40 Licensing Regulation.

[6]       Section 31(1) NCA.

[7]       Section 31(2) NCA.

[8]       See NCC’s Compliance Monitoring and Enforcement Report (Quarter 2 – 2019) available at:

https://www.ncc.gov.ng/enforcement-reports/723-compliance-monitoring-and-enforcement-report-2019-q2?ml=1 accessed 18 December 2020. Similarly, in the first quarter of 2018, the NCC carried out enforcement action against Arcelor Networks Limited in Abeokuta, Ogun State, for operating without a license. Their office was sealed off and the company was to obtain the necessary license for their operation. See NCC’s Compliance Monitoring and Enforcement Report
(Quarter 1 – 2018) available at: https://www.ncc.gov.ng/enforcement-reports/341-compliance-monitoring-and-enforcement-report-2018-q1?ml=1 accessed 20th December 2020.

[9]       Section 45(1)(b) NCA.

[10]     See NCC’s Compliance Monitoring and Enforcement Report (Quarter 2 – 2019), available at: https://www.ncc.gov.ng/enforcement-reports/723-compliance-monitoring-and-enforcement-report-2019-q2?ml=1 accessed 17th December 2020. The Commission also published a disclaimer against RAGP in two (2) national dailies warning the general public that any person who deals with the company does so at his own risk.

[11]     Ibid 10.

[12]     The Metropolitan Fibre Cable Network Licence, National Long Distance Operators Licence and International Gateway Licence are valid for 20 years, the Infrastructure Sharing and Collocation Services Licence and Unified Access Service Licence are valid for 10 years. On the other hand, an internet service, paging, prepaid calling card and special numbering services licence are all valid for a term of 5 years.

[13]     Reg. 21 Licensing Regulations.

[14]     Reg. 13(2) Licensing Regulations.

[15]     See NCC’s Compliance Monitoring and Enforcement Report (Quarter 3 – 2015), available at: https://www.ncc.gov.ng/enforcement-reports/140-cmed-report-2015q3?ml=1 accessed 17th December 2020. Similarly, in the 2nd quarter of 2019, 24 companies who continuously failed to renew their licenses after expiration were reported to the NCC. Pre-enforcement notices were sent to the affected companies in which only five (5) responded to the notice. Consequently, enforcement action was approved against the 19 defaulting companies for operating without valid Licenses. See NCC’s Compliance Monitoring and Enforcement Report (Quarter 2 – 2019) available at: https://www.ncc.gov.ng/enforcement-reports/723-compliance-monitoring-and-enforcement-report-2019-q2?ml=1 accessed 20th December 2020.   

[16]     Section 38(1) NCA. See also, Sandra Eke, “Introduction to Licensing in the Nigerian Telecommunications Industry (Part 1)” http://www.spaajibade.com/resources/introduction-to-licensing-in-the-nigerian-telecommunications-industry-part-1-sandra-eke/ accessed 18th December 2020.

[17]     Ibid 16.

[18]     See NCC’s Compliance Monitoring and Enforcement Report (Quarter 2 – 2019) available at: https://www.ncc.gov.ng/enforcement-reports/723-compliance-monitoring-and-enforcement-report-2019-q2?ml=1 accessed 21st December 2020.

[19]     Ibid 18.

[20]     See Condition 11 of the Value-Added Service Licence and Condition 13 of the Unified Access Service Licence. S.48(b) of the Licensing Regulation also prohibits a licensee from entering into any agreement or merging part or all its telecommunications activities with any entity without obtaining approval from the NCC.

[21]     See NCC’s “Compliance Monitoring and Enforcement Report (Quarter 1 – 2016)” available at:  https://www.ncc.gov.ng/enforcement-reports/142-cmed-report-2016q1?ml=1 accessed 18th December 2020.

[22]     Reg. 45(1) & (2) Licensing Regulations.

[23]     Ibid 22.

[24]     Reg. 42(1) Licensing Regulation.

[25]     See NCC’s “Compliance Monitoring and Enforcement Report (Quarter 3 – 2019)” available at: https://www.ncc.gov.ng/enforcement-reports/758-compliance-monitoring-and-enforcement-report-2019-q3?ml=1 accessed 17th December 2020.

 

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