The framework for accounting separation for the Nigerian communications industry will help to avert probable issues of regulatory overlap arising from the convergence in technology.
According to the Nigerian Communications Commission, (NCC), the quest for a framework for accounting separation became necessary following the need to create an enabling environment for competition among Operators in the industry.
Speaking at the kick-off of a four day workshop on operators’ capacity building on the framework for accounting separation for the Nigerian communications industry in Lagos, South-West Nigeria, the Director, Policy Competition and Economic Analysis, Ms. Josephine Amuwa said that the Accounting Separation Framework outlines the key principle and guidelines required for the preparation and submission of Regulatory Financial Statement, (RFS).
According to Amuwa, the Accounting Separation Framework will provide an environment which fosters open and transparent financial reporting within the industry and also assist in ensuring that charges for telecommunication services are cost based, transparent and non-discriminatory.
She disclosed that the Accounting Separation Framework will assist the Commission in the monitoring of Operators’ compliance with other regulatory obligations.
She said that the NCC is confident that when operational, the AS will help Identify and prevent an undue discrimination or practices that substantially lessen competition such as cross-subsidization and margin squeezes.
She also noted that the operators will reap strategic benefits of gaining a better unit costs, cost drivers and profitability of different services from the preparation of RFS.
“While we understand that Operators within the ‘Telecommunications Industry already prepare arid file financial statements as required by the law, reporting at the corporate level presents aggregate information which may not provide sufficient detail to the Regulator for analyzing the performance and competitiveness of the markets within Industry”, she explained.
It is also expected that Operators will also reap strategic benefits of gaining a better unit costs, cost drivers and profitability of different services from the preparation of RFS.
The Accounting Separation Framework issued by the NCC provides a comprehensive set of policies and guidelines for generating detailed Regulatory Financial Statements.
She said: “The statements will enable us independently analyze revenues, costs and capital employed across different businesses, products and services of operators. These will further provide the Commission with a basis for judging the success or otherwise of its existing regulations such as interconnect obligations, tariff control.”
Amuwa also disclosed that Accounting Separation is a well-established practice followed by national telecom regulator across the world stressing that it is considered to be an effective, least invasive and less costly solution to implement to meet regulatory objectives.
She added that regulators across several jurisdictions have made it mandatory for one or more service providers in Fixed and/or Mobile mark to submit RFS noting that the NCC recognized the importance of mandating Accounting Separation within the Nigerian Communications industry given the dynamics and increasing complexity of operations within the industry, and the need to ward off anti-competitive behavior amongst industry operators.
She said that the KPMG Professional Services was to engage to assist the NCC in the actualizing the AS implementation.