‘MTN is Unfair to Nigerians’

Ik Ekejiuba

IK Ekejiuba, member, Association of Licensed Telecom Distributors of Nigeria (ALTDON)
What are the problems you have been facing as distributors of GSM products?
The major problems we have been facing as distributors of major GSM networks service providers products in the country is initially the movement and logistics for the physical products. For instance, we face a serious problem of theft. We have been having serious problems with that, especially recharge cards, obviously because of the volume of goods such incidents usually result in the loss of millions of naira. Most of our premises have become a place of harvest for thieves. Because of that, there is a lot of investment in insurance and security. But there is a limit to what we can do with security because a determined thief will still harass you. This sadly, has been eroding whatever margin we would have had.
What has been the relationship between you the distributors and the major Networks in the land?
The major problems with the service providers especially... okay, let me take them one after the other. The V-Mobile has been relatively the best in terms of how they respond to their distributors, they listen. The Globacom and MTN have been the worst. MTN has been fiddling with our commissions, virtually pocketing the money themselves, telling us that it is because they have a lot of distributors and they have to meet a particular target. In 2003, they introduced a system whereby they said they will pay bonus based on turnover. But that is not happening because there is a difference from what our commissions were and what it is today. I give you an example, our commission was 14 per cent when we started but today it is five per cent. What we fail to get now is the difference between five and 14 per cent. They changed management and they reneged on that agreement and meanwhile we are supposed to pay the NCC 2.5 per cent of our turnover, which leaves us with a gross profit of 2.5 percent of our turnover which is not obtainable. That is the major problem we are facing and as you know MTN is the biggest Network that also has the biggest turnover in the sector.
In comparism, do you know what is obtainable in other countries where MTN operates?
Let's use South Africa for example, today the market in South Africa and the market in Nigeria are evenly matched. The difference is not too much, and Nigeria in terms of time scale has been a more profitable market for MTN. In South Africa, they use to pay 28 per cent to their distributors. They started with 21 percent, moved it up to 28 and they also give what is called loyalty commission. Whenever you buy a line in South Africa, what they do is that the customer belongs to the distributor that sold the line. What that means is that a percentage of every call made by that customer comes to the distributor because he is the one that got the customer to patronise the service provider. That doesn’t obtain here in Nigeria. What obtains here is that once you sell MTN product, the commission you get is the one you make on the sale, you sell the sim pack, you sell airtime and nothing comes to you as royalty, so the distributor is actually short- changed.
In South Africa, they give distributors airtime commission. The argument has been that South Africa is a more mature market, but the difference between maturity and immaturity cannot be the difference between five per cent and 21 per cent. And Nigeria is the most profitable market, so how will you pay the least commission in a market you make so much?
Does NCC know about these discriminatory policy?
Yes, they do, there are all in the petition we sent to them.
Going by the contract you distributors entered with MTN, what will you say are the breaches?
Obviously the major breach is that of the commission. In fact, when the company started in 2001, when they just got the license, there was an agreement that they will pay 14 per cent commission on airtime products. It was agreed that if the business is profitable– and subsequently the business has been profitable; there is no doubt about it as the company has announced increase in profit year after year. Ninety-nine per cent of their revenue comes from the distributors. But surprisingly, the distributors’ commission has been reduced, from what it was when there was no profit to a mere peanut that it is today.
Today, we are in court because what there are paying is not even up to one per cent of what was agreed on. We are demanding the difference between the five per cent and the 14 per cent that was agreed on initially. We even want that to be increased to 21 per cent that they pay in South Africa because we make more money for them here than in South Africa. At least as a minimum, they should give us the same amount they pay in South Africa.
In your view, do you believe that the NCC is not doing enough?
Let me not say at the moment that NCC is not doing enough. NCC as far as I am concerned is very slow to come out with any solution to solve the problems of GSM subscribers in Nigeria. They need to ensure fairness so that the industry would thrive. They need to ensure that there is fairness between the service providers, subscribers, distributors, suppliers and others. If there is fairness, then the subscriber becomes the gainer. At the public enquiry organised by the NCC on August 29, 2006, regarding whether customers should be paying for calls made to the GSM operators customer care lines, we complained to the NCC that there was no reason to conduct a public inquiry for that purpose. As far as we are concerned, customer service calls emanate from the inefficiency of the networks. So, you cannot be asking whether customers should pay for making such calls which ordinarily they would not have made if they have had satisfactory service. Moreso, customer service calls are intra-network calls so therefore I have to have an MTN line to call MTN customer service line. MTN is not paying anything for such calls, it is wrong to charge money for such calls.
What have you achieved by coming together to form the Association of Licensed Telecom Distributors of Nigeira (ALTDON)?
We have achieved cohesion. We have achieved one voice. We have also been able to discuss our problems together towards finding a common way of solving our problems.