Job losses loom in telecoms industry

A telecoms base station.
| credits: www.james.seng.sg

Some engineers and other employees of telecoms companies in the country may be thrown into the labour market as a result of the decision of the firms to sell off their base stations and towers.

The sale of the assets is part of the outsourcing model implemented by the telecoms firms to cut costs following dwindling revenues.

Although the outsourcing of tower services is a global phenomenon as far as the telecoms business is concerned, operators in Nigeria are, however, leveraging on the business model now to cut down on their cost of operation.

Experts are of the view that this may be the second time that the sector will experience huge job losses, following the outsourcing exercise for the customer service section of the major operators four years ago, which saw a lot of employees in the industry losing their jobs.

With the outsourcing model, telecoms firms are expected to hands-off their involvement in the provision and maintenance of towers and instead allow companies with core competence in the area to manage such services.

This is intended to make telecoms companies to concentrate on their core business processes.

Tower companies like ATC, IHS, Eaton and Helios have been identified as possible beneficiaries of the deals, which are currently being adopted in most African countries.

The tower firms have all been competing for assets across the continent, with operators such as MTN, Vodacom, Millicom, Etisalat, Airtel and Orange disposing their towers across Africa.

Technically, this arrangement is termed Business Process Outsourcing.

The deals are struck in partnership with strong financial institutions, and banking sources said the tower companies would continue to get finance on a transaction-dependent basis, as there were several more deals in the pipeline.

According to the Chairman, Association of Licensed Telecoms Operators of Nigeria, Mr. Gbenga Adebayo, the BPO involves the contracting of the operations and responsibilities of specific business functions or processes to a third-party service provider.

He said the main advantage of the BPO was the way in which it helped to increase a company’s flexibility.

Adebayo said, “Most services provided by the BPO vendors are offered on a fee-for-service basis. This can help a company to become more flexible by transforming fixed into variable costs.

“A variable cost structure helps a company to respond to changes in required capacity and does not require a company to invest in assets, thereby making the company more flexible. Outsourcing may provide a firm with increased flexibility in its resource management and may reduce response times to major environmental changes.

“Another way in which BPO contributes to a company’s flexibility is that the latter is able to focus on its core competencies without being burdened by the demands of bureaucratic restraints.”

The Chief Marketing Officer, Helios Towers Nigeria, Mr. Azuka Ndulewe, said the companies had the expertise to manage day-to-day tower management issues as this was their core strength.

“We actually add value to our customers by our business model. We also expect that since the operators have tried and tested the excellent and professional service delivery of co-location service providers, they can now move to the next level by selling and transferring their tower sites to professional infrastructure co-location providers and devote their time to running their networks and acquiring customers,” he said.