The Nigerian Communications Commission (NCC) has said it is working on additional guidelines for its corporate governance code for the telecoms sector.
Specifically, the telecoms regulator said the guidelines to be added would address the lingering issue of interconnect debt among operators and the issue of multiple directorships. Interconnect debt among the operators is said to have risen to over N70 billion as of last year.
A recent audit of the financial health of the telecom operators by NCC was said to have raised more concerns about the capital structures and unsustainable debt to equity ratios of a substantial number of the operators.
While noting that the Nigerian Code of Corporate Governance requires sector regulators, in conjunction with the Financial Reporting Council of Nigeria (FRCN), to issue additional guidelines, NCC said the additional guidelines being worked upon would address the issue of interconnect debt among the operators. This, it said, became imperative to avoid a collapse of any of the telecoms businesses under the weight of indebtedness.
According to the Commission, at the outset of telecoms liberalisation, the regulator paid more attention to the pervasive deployment of telecoms infrastructure, access to telecoms services and technical regulation. “In this regard, the Commission issued regulations and guidelines in the areas of Quality of Service, Mobile Number Portability, Numbering, Frequency Pricing, Installation of Masts and Towers, and Interconnection.
The technical regulation approach led to phenomenal and well-documented successes in the industry,” the Commission said However, to sustain the growth, the Commission, at a meeting with the industry players in Lagos, said more attention is now being paid to corporate governance to prevent the boom and bust cycle already witnessed in other sectors.
NCC had, in 2016, revisited the telecom industry Code for Corporate Governance and allowed telecom operators the liberty to operate it as a nonmandatory code for a period of one year. In 2017, NCC made the code, which is designed to create transparency and business growth in the telecoms industry, mandatory.
One of the key items in the Code is that the offices of the Chairman and that of the CEO shall not be occupied by one person concurrently in any telecom company in Nigeria. In addition, no one can serve as a director in any telecom company for more than 15 years. The Executive Vice Chairman of the Commission, Prof. Umar Garba Danbatta, had recently said that the Commission believed that sound
corporate governance was essential for meaningful growth and economic development, particularly for an industry as dynamic and complicated as telecoms. According to him, this was why NCC issued the Code of Corporate Governance for the telecom industry in 2014 and made it mandatory for its larger licences in 2017.
Aside from the industryspecific code, the Financial Reporting Council (FRC) had also, last year, released the Nigerian Code of Corporate Governance (the Code). The Code highlights key principles that seek to institutionalise corporate governance best practices in Nigerian companies. The FRC Code takes effect from January this year.
According to NCC, while the two codes have the same primary objectives of enhancing corporate performance through adherence to best practice, it was natural that there would be areas of divergence, which the Commission and FRC would work harmoniously together to address for the overall benefits of the country.
“It is our understanding that the national code will exist simultaneously with sectoral codes such as the NCC Code, which will now be described as ‘Guidelines.’
“Where conflicts exist between the two codes, the stricter provisions will apply and the National Code of FRC gives flexibility for sector regulators such as NCC to adapt governance principles to suit the peculiar needs of the sector,” the EVC said.
Also speaking on the need for collaboration for the implementation of the two codes, the Executive Secretary/Chief Executive Officer, FRC, Mr. Daniel Asapokhai, said: “While we have the national code, having sectoral code is also recognised; we only need to work harmoniously to ensure we collectively achieve our objective of ensuring that more Nigerians businesses survive by making them more resilient through corporate governance codes and ultimately ensure that we make our economy more attractive to investors; as such, we need to collaborate more as organisations.”