Scandal At NBC Over ‘Secret N2.5 Billion’ Payment To Pinnacle Communications (DETAILS)

Scandal At NBC Over ‘Secret N2.5 Billion’ Payment To Pinnacle Communications (DETAILS)

By Doyin Ajayi | Sub-Editor on June 21, 2017
Lai Mohammed, Buhari
Nigeria's Information Minister, Alhaji Lai Mohammed

Scandal has enveloped the National Broadcasting Commission, NBC, following reports that the government agency made a payment of N2.5 billion to Pinnacle Communications Limited in what inside sources in the government agency say is a “secret deal that didn’t follow due process”.

According to DayLight, an online news platform, the secret deal on the digital television switchover was sealed two week ago and Lai Mohammed, Nigeria’s information and culture minister, to whom the NBC reports, approved the payment which is beyond his lawful limit of N50 million. According to the financial rules of the federal government, the minister cannot approve a payment of more than N50 million.

Pinnacle Communications Limited is owned by  Lucky Omoluwa and is one of the three licensed signal distributors for the digital television switchover appear.

Inside sources confirm that the billions being shared was raised by the former director general of the NBC, Emeka Mba who is ironically now being prosecuted by the Economic and Financial Crimes Commission, EFCC, for what his supporters say are politically motivated charges.

Below are excerpts of the report by DayLight which was published on Sunday, June 18, 2017.

Whilst the digital television switchover project appears to be in limbo, It appears that the focus of the current NBC leadership is how to share the money that was raised by the former DG of the NBC, Mr. Emeka Mba, who ironically is facing criminal charges for the legitimate he adopted in raising the money for the DSO, despite seemingly securing all requisite board, ministerial and presidential approvals.

Going by reliable insiders information available to us, the current DG, Mallam Is’haq Modibo Kawu and the Minister of Information, Alhaji Lai Mohammed, were alleged to have secretly approved N2.5 Billion to be paid to Pinnacle Communications Limited, owned by Abuja businessman Sir Lucky Omoluwa.

Pinnacle Communication won the bid for the second signal distribution license in 2014 and is currently operating that license as one of the three licensed broadcast signal distributors who are to provide the technical infrastructure services that will be used to distribute digital terrestrial television signals across the country.

Whilst the NBC is yet to set appropriate rules and conditions with regards to carriage of licensed TV channels on the infrastructure of the signal carriers, such as carriage rates and geographical coverage areas, as well the thorny issue of conflicts over areas of operation, since all three Broadcast Signal companies have the same license to operate across the country.

The commission allegedly went ahead to secretly and very curiously pay Pinnacle Communications, a licensed private operator, the sum of N2.5b.

According to reliable sources, the decision to pay Pinnacle Communications was based on the mistaken belief that since NTA own signal distribution company ITS was given a grant of N1.5b by the previous management, Pinnacle should also be paid even though it is a privately owned company which during its licensing bid confirmed its financial capability to roll out operations across the country. It is rather curious now, how such a company is being paid monies that should otherwise be used to finance the DSO roll out, which once again failed to meet today’s June 17, 2017 deadline.

However, ITS (the first Broadcast signal distributor which is an offshoot of NTA) was specifically carved out by the government to serve as the government owned signal distributor given the strategic importance of broadcasting to national security interests, and the funds allocated to it by the former DG was government’s share of the financial burden needed as take off grant for signal distributor; and formed part of the larger DSO budget which was vetted and approved by the former president.

In this case, it is understood that the approval for the payment allegedly came from the Chief of Staff to the President, Alhaji Abba Kyari.

Interestingly, the current DG’s appointment was allegedly facilitated by the boss of Pinnacle Communications Limited, Lucky Omoluwa and the Chief of Staff.

Some nagging questions begging for answers in the wake of the nation’s failed DSO

How a private company that is a licensee of the NBC is receiving N2.5 Billion from government remains extremely curious and unclear.

As a licensee, Pinnacle Communications is supposed to pay the NBC license fees and other regulatory charges and certainly not be paid by government for any reason.

What justification can exist for giving N2.5 Billion to a company that competed in a licensing round, got its initial N2 Billion license fee reduced by the former DG to N600 Million for a 15 year license on grounds that the winner would have significant roll out obligations?

Why is this same company receiving 2.5 Billion from the Government, and in secret? How was the sum of N2.5 Billion computed, based on what parameters, and for what purpose?

What happens to the other signal distributor MTS which ostensibly is owned by the entire licensed private and state owned broadcasters under the auspices of the Broadcasting Organisation of Nigeria (BON) currently chaired by Chief John Momoh.

Will they also be getting N2.5billion? Most importantly, why is the process top secret even within the NBC management.

Pinnacle Communications made technical and financial undertakings to deploy infrastructure to run DSO and it was upon the basis of those undertakings that it was screened, evaluated and approved to be granted the license as a broadcast signal distributor in the first place!

And in the second place, his license fee was reduced from N2b to mere 600m for a 15 year license to support his network deployment.

Having being paid N2.5b by government now, Pinnacle can be seen to have made fraudulent and false undertakings in its license application process with the consequence that the license is now revocable; and secondly the licensee has evidently defrauded the government twice: first getting an unmerited discounted license fee based on fraudulent claims, and now being extended huge amount of money with no justification or merit.

Failure of DSO and double speaking at the NBC

Only weeks ago, the NBC DG announced at the recently concluded Nigerian Broadcasting Code Review in Kano, that the June 2017 Digital Switch Over (DSO) deadline was sacrosanct and that the Commission is committed to meeting the deadline.  Now in June, the same commission is announcing its inability to meet the deadline which it said it would weeks ago. Even to the most casual observer that statement is in league with a Trumpian dystopia.

For starters, the Commission with so much fanfare launched the Abuja leg of the switch over, last November. At an elaborate occasion which the Vice President, Prof. Yemi Osibanjo represented the President.  Since that date, very little has been heard of the exercise.

The public is in limbo about the process so far. How many boxes have been switched on? What is the extent of the digital penetration?  What are the number of new channels and services now available to viewers? How much is a set top box sold? And if there are consumer complaints, where or to whom are they to be addressed? Is there a DSO Help Line?

Role of Pinnacle Communications Limited and other Broadcast Signal Distributors (BSD)

Since the re launch of the Jos pilot in April 2016, the Commission has yet to present a report of the pilot. The standard practice is that after a pilot period the result of the exercise is made known and examined.

The success of any DSO rests on four critical pillars:

Content: where are the new digital TV channels? No new digital television channels are on the service.  Independent content producers who had looked forward to the DSO as a platform to launch new services are now confused at the current state of affairs.  Without the addition of new channels on the digital free to air platform the adoption of digital would be impacted, since viewers would be reluctant to buy set top boxes to view the same channels they already getting for free to air. Besides it lack of access for new channels would also seriously impact fresh investment in the broadcasting industry.

Set top boxes: The NBC DG recently announced that the commission had spent a whopping $26m on set top boxes. It was however not able to say how many of these boxes have been activated, where and when. No current estimate on the actual digital penetration even in the cities where the Commission launched its “pilot” dso project.

How many boxes have been sold and activated so far? Are boxes still being imported or now manufactured locally? What is the ratio of foreign and local boxes?  And for how much are they sold?

Signal distribution:  it is clear at this time, that the Commission has failed or is unable to agree on the critical issues which should underpin a successful DSO with regards to role of broadcast signal distributors. For instance, no known digital coverage targets or obligations have been agreed on; neither the NBC nor the BSDs know the true cost of national or regional roll outs. No agreement on direct or cross subsidy for carriage fees. In other words, it is important to know the cost of roll out, and establish base line for charges to content owners. Again, no one is clear about the current digital terrestrial signal reach and penetration, or the allocation of broadcast spectrum to DTT (pre- and post-ASO), and to free vs pay use.

Public awareness:  Sine the launch of the DSO in Jos and Abuja, there is still no high-profile communications campaign led to educate Nigerian consumers on the advantages of digital television. Large swaths of the country remain clueless about what DSO is about, and how it impacts them.

For example, a national program as important as this has no website that can educate members of the public on what to do, or what to expect. Even the NBC website has very little information on the status of the DSO, and how members of the public can get digital TV services where they live.

Also important is the fact that the legal framework for the DSO is still murky. In other climes, there is usually a legal framework enacted by parliament on which the digital transition is based on. In practical purposed what this means is that content owners who wish to establish new TV channels are unaware of the licensing framework. Whilst the recent Code review would have presented a fresh opportunity to present new regulations and draft digital licensing law, this was squandered. With this level of uncertainty, it would mean very low confidence for new investment in the digital broadcasting ecosystem. Not clear how the new digital platform operates or channel application and licensing processes. Even with the launch of the digital free to air platform Freetv, the commission hasn’t set known guidelines for the operation of the platform, access to capacity for existing and new channels; governance and operating structure, financial relationships, marketing, technology, etc.)

Lack of direction

It appears that the Commission has no defined holistic approach towards the digital switchover which would ensure all the objectives for Nigeria’s digital broadcasting ecology are met. DSO requires broadcasters to invest in new services, signal distributors to invest in transmission infrastructure and manufacturers to invest in a high volume of STBs.

To deliver these commitments, stakeholders will need clear and sustainable benefits (such as exclusivity, access to spectrum).  These should be measurable and clearly understood by all stakeholders. the NBC appears unable to articulate the DSO roadmap, no one within the industry has a clear view of where the DSO is headed, and when it would arrive at its destination.

The payment to Pinnacle Communications, without basis or justification and in secret, is clear evidence that the DSO is seen by some as an opportunity to line their pockets rather than deliver the promise of digital to Nigerians.


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