The decision by the Nigerian Communications Commission (NCC) and the Corporate Affairs Commission (CAC) to require regulatory approval for significant changes in telecom company ownership raises concerns about whether the measure will strengthen market transparency or create fresh hurdles for investors.
Under the new framework announced on June 21, any transfer of shares amounting to 10 per cent or more in an NCC-licensed company must receive a Letter of No Objection from the NCC before the change can be registered by the CAC.
The requirement also applies to multiple transactions that collectively exceed the 10 per cent threshold.
The two regulators said the measure was aimed at protecting competition and strengthening oversight in the communications sector.
“The requirement is designed to preserve a fair and competitive market structure within the communications sector by preventing direct or indirect anti-competitive practices, while strengthening regulatory oversight of significant changes in ownership and control,” they said.
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While the regulators have presented the move as a governance and competition safeguard, the policy has also raised questions about its implications for investment activity, mergers and acquisitions, and the ease of doing business in one of Nigeria’s most capital-intensive sectors.
A New Layer of Oversight
One of the key concerns emerging from the directive is the expanded role it gives the NCC in corporate ownership transactions.
Traditionally, share transfers have largely been treated as corporate matters handled through the CAC, except where sector-specific approvals were required.
The new framework effectively places the NCC at the centre of significant ownership changes in telecommunications companies.
Industry observers note that the rule goes beyond a single transaction. It also captures multiple smaller transactions that cumulatively exceed the 10 per cent threshold.
This suggests that the regulators may be seeking to prevent situations where effective control of a company changes hands gradually without attracting regulatory scrutiny.
The approach mirrors practices in other heavily regulated sectors where regulators seek visibility into major ownership changes and the sources of funds used in acquisitions.
However, the NCC has yet to publicly explain what developments prompted the policy shift or why the 10 per cent threshold was selected.
Efforts by Pinnacle Daily attempts to obtain clarification from the commission’s director of public affairs, Nnena Ukoha, were unsuccessful as of the time of filing this report, despite agreeing to respond through the WhatsApp platform.
Transparency or Regulatory Burden?
The bigger question for investors is whether the additional approval process will improve confidence in the sector or introduce another layer of bureaucracy.
For private equity firms, strategic investors and companies pursuing mergers, acquisitions, or capital raises, the new requirement adds an additional regulatory step before transactions can be completed.
Such requirements can potentially affect transaction timelines, especially where deals involve multiple stakeholders or foreign investors seeking certainty on regulatory approvals.
Some analysts believe that the concerns may be overstated.
Ayokunle Olubunmi, Head of Financial Institutions Ratings at Agusto & Co, said the requirement is consistent with practices already in place in other regulated industries.
“I don’t think it’s strange. I think it’s what is done in most regulated industries,” he told Pinnacle Daily.
According to him, regulators typically seek to ensure that investors acquiring significant stakes are fit and proper persons, while also verifying that the funds used in such transactions are legitimate.
“The reason is straightforward: regulators do not want people using illicit funds or money obtained through unlawful means to acquire significant stakes in critical industries,” he said.
Olubunmi also dismissed fears that the policy could become an obstacle to investment activity.
“I do not see this creating any bottleneck,” he said. “It is not a major burden. It is largely about notifying the regulator and allowing the necessary checks to be conducted.”
His view highlights the central tension surrounding the new framework. While investors may worry about additional compliance requirements, regulators appear focused on increasing transparency, monitoring changes in control and ensuring that ownership of critical communications infrastructure remains subject to scrutiny.
Whether the policy ultimately boosts investor confidence or slows deal-making may depend largely on how efficiently the approval process is implemented and how quickly the NCC responds to applications from investors and telecom operators.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X