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NCC’s New ITR To Reposition Telecom Operators Revenue Margin

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Executive Vice Chairman (EVC) and Chief Executive Officer (CEO) of NCC, Prof. Umar Garba Danbatta

YEMISI IZUORA at Oriental News, in this analysis looks at current efforts by the Nigerian Communications Commission, NCC, determination to provide opportunities for telecom industry operators to maximise their revenue, and their customers’ marginal utility rate with the review of the mobile international termination rate (ITR).

Nigeria’s Telecom industry remains on a steady growth trajectory as risen Investment in Mobile internet networks support a shift towards data driven growth models.

In the IT sector government effort to boost broad band penetration had began to gather momentum, but industry watchers have observed that the country would likely face a number of challenges in achieving it’s ambitious midterm expansion target owing to issues in deploying new fibre-optic infrastructure.

Also, rapid mobile growth entails a series of new regulatory challenges as the Nigerian Communications Commission, NCC moves to implement reforms aimed at improving consumer protection, national security and equitable distribution of Telecoms economic benefits.

The regulator has been committed in regulatory oversight functions and has developed a number of policy initiatives aimed at improving industry activities.

Precisely, in September 2020, the Commission launched a cost-based study to set the new pricing regime for mobile international termination rate (ITR) for inbound international voice calls in the country.

Prof. Umar Danbatta, Executive Vice Chairman of NCC.

The ITR is the rate paid to local operators by international operators to terminate calls in Nigeria.

As part of the process for the rate determination, the Commission organised a virtual stakeholder engagement forum with relevant industry stakeholders to intimate them with the ongoing cost-based study and the need to cooperate with Messer’s Payday Advance and Support Services Limited, the consultants engaged to carry out the study.

The Executive Vice Chairman of NCC, Prof. Umar Danbatta, notably informed the industry of the imperative of the study.

Danbatta, said the study followed various implementation constraints arising from contending industry and market dynamics that met previous efforts at finding an optimum price for the termination of international voice services in Nigeria.

Through the new ITR pricing, the Commission will be able to balance the competing objectives of economic efficiency and allow operators the latitude to generate reasonable revenue.

In its view with the new ITR pricing, the NCC will be able to balance the competing objectives of economic efficiency and enabling operators to generate significant revenue.

Oriental News Nigeria, recalls that in 2013, the NCC had issued a determination that stated that mobile termination rate (MTR) rates remain the same irrespective of where the call originated.

But unfortunately this was largely misconstrued by operators at that time to mean that ITR should bear the same rate as the MTR.

This however led to operators ignoring the international cost portion, where ITRs were agreed at MTR level without a positive residual to cover the costs of the international leg for local operators.

“As a result of this, the ITRs continued to decline, in line with the MTR glide path and as the ITR was set in Naira, it suffered a further downward slide in dollar terms following the currency devaluation.

Ironically, the Nigerian operators paid the international operators in dollars to deliver international calls which created an imbalance of payments as the ITR in Nigeria declined,”Danbatta said.

Due to this, the EVC commented that the pŕofitability of and commercial results of Nigerian operators were negatively affected by placing Nigeria’s ITR below that of most countries with which it exchanges the most calls, thus subjecting Nigerian operators as perpetual net payers.

“This has, therefore, led to undue pressure on the nation’s foreign reserves, which continue to get depleted by associated net transfers to foreign operators on account of this lop-sidedness.

Hence the need for Nigeria, with volatile currencies, to regulate the ITR to prevent or mitigate the imbalance of payments with international operators,” Danbatta stressed.

According to the EVC, in cases where ITR isn’t regulated properly, there is a tendency for a significant effect on a market like Nigeria having major supply-side challenges and associated socio-economic implications.

Experts equally, argues that economically efficient ITRs, set at cost base levels would maximise economic benefit, but NCC’s choice will depend on the weight placed on the competing objectives of economic efficiency and allowing operators to generate revenues.

“So, setting a rate substantially above the MTR has resulted in a number of repercussions. One of such is the consumer shift to online channels as calls are increasingly made through Internet Protocol (IP)-based technologies such as Skype and WhatsApp because of high international call prices. To this end, an economically-efficient ITR that is cost-based will maximise economic benefits to all stakeholders,” said the EVC

The NCC during the period organised an engagement forum for stakeholders to share perspectives and insights enlisting their collective support in relation to the inputs and requirements towards the determination of a mutually- realistic ITR in Nigeria.

The project indeed commenced on Tuesday, March 10, 2020, with a meeting but was slowed down by the COVID-19 pandemic challenges, which necessitated the need to explore emerging channels of engagement in moving forward and ensuring the completion of the project.

The Commission in determination to achieve its objective had continuously provided a conducive environment and level-playing ground for the effective interplay of factors that would meep up market development and growth, while ensuring the provision of qualitative and efficient telecommunications regulatory services for the benefit of consumers and licensees.

IRT Now Ready To Roll

With the conclusion of the study by Messrs Payday Advance and Support Services Limited, the NCC is on the path of unveiling the outcome for a robust and acceptable ITR regime.

To gain acceptance, the NCC, has against convened an industry-wide forum asking for input on the study on cost-based pricing of Mobile International Termination Rate, ITR.

The process aimed to ensure healthy competition on traffic handling for voice services between local and international operators in Nigeria.

Along the line of its engagement process the NCC, on Tuesday June 8, held a virtual Stakeholder meeting with Management Staff of the Commission physically in attendance during which it formally presented the findings from the study, which commenced in March, 2020.

The meeting solicited further perspectives, insights and other input on the findings towards a mutually realistic termination rate for international voice traffic in Nigeria.

Speaking at the forum, the Executive Vice Chairman of NCC, Prof. Umar Garba Danbatta, said the cost-based study became imperative, following previous efforts at finding an optimum price for the termination of international voice services that will be beneficial to all relevant industry stakeholders.

Danbatta said that the “overriding need for regulatory options and intervention in relation to the international termination rate in the voice market segment is predicated on some intractable challenges, most common with economies with severe macroeconomic volatility such as ours.”

Going down memory lane with respect to MTR determination in the Nigeria’s telecom industry, the EVC said, in 2013, the Commission issued a Determination stating that mobile Termination Rates (MTR) are the same irrespective of where the call originated. He, however, stated that this was misconstrued by operators at that time to mean that ITR should be the same rate as the MTR, consequently ignoring the international cost portion.

“Arising from these is the persistent fact that Nigeria’s ITR is below that of most countries with which it makes and receives the most calls, making Nigerian operators perpetual net payers. The obvious implication of this is seen in the attendant undue pressure on the nation’s foreign reserves, which continue to get depleted by associated net transfers to foreign operators on account of this lopsidedness,” Danbatta explained.

Also, a PwC study corroborated NCC’s position that Nigeria’s ITR was below average for countries (in Africa) with similar GDP, population, number of operators and technological readiness.

The report also noted that following the October 2006 intervention the ITR is still below average for these countries.

Danbatta further stated that regulating the ITR is imperative for developing countries, such as Nigeria, with volatile currencies in order to prevent or mitigate the imbalance of payments with international operators. He also said the Commission was faced with the challenge of arriving at a rate that will balance the competing objectives of economic efficiency while, at the same time, allowing operators the latitude to generate reasonable revenues.

He informed the forum however, that “where ITR is not regulated, it tends to converge to the MTR and for a market like Nigeria with major supply side challenges, the socio-economic implications and attendant backlash can only be imagined.”

In her comments, the Director, Policy, Competition and Economic Analysis, NCC, Yetunde Akinloye, corroborated the EVC, noting that the study was intended to compliment and consolidate the initial work done by the Commission which had also culminated in the MTR Determination published in June 2018.

According to her, the ITR previously determined was based on actual benchmarking with countries of similar characteristics to Nigeria, but the findings from that study were faced by major national macroeconomic management challenges, ultimately pointing to the need for an ITR that is cost-based, consistent with the MTR.

Meanwhile, Danbatta has reiterated the NCC’s commitment “to continuously provide a conducive environment and level playing field for the effective interplay of factors that would engender sustained market development and growth, while ensuring the provision of qualitative and efficient telecommunication services to the consumers”.

The Nigerian Communications Commission (NCC) has concluded the process of determining the cost-based price of Mobile International Termination Rate (ITR) to ensure healthy competition on traffic handling for voice services between local and international operators in Nigeria.

However, PwC recommend the NCC to set an ITR floor at an economically efficient level based on costs (including the costs of international transmission) and still leave room for operators to negotiate with international carriers the total compensation for the international termination:

This would enable Nigerian operators to maximise their revenue, and their customers’ marginal utility rate and also enable NCC to minimise grey market, as it would remove cost-driven incentive for the activity

The approach rationale is to ensure Nigerian operators are compensated for international transmission and enable them to strike the right balance between higher revenue per minute and higher risk of grey traffic (illegal bypass).

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MTNN Launches Public Offer To Retail Investors At N169

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the telecom company informed the investing public and the Nigerian Exchange in a statement.

“Our journey to become the largest network in Nigeria has been humbling, but we still have a long way to go

Olushola Okunlade Writes

MTN Group Limited said Tuesday that it is launching a public offering for the placing of up to 575 million shares held in MTN Nigeria, which will be priced at N169 a share.

The telecom giant said this in a regulatory filing, two years after MTN Nigeria became a listed entity in the local bourse. The telecommunications company based in South Africa said the offer will open on December 1 and close on December 14, 2021.

The decision on pricing was taken via book building that lasted for a week to institutional investors, after which retail price was determined. Recall that MTN was listed at N90 2 years ago by way of introduction and the stock has gained more than double its initial opening price.

According to its filing, the minimum subscription is for 20 shares and a lot of 20 shares thereafter. MTN said the offer includes an incentive in the form of one free share for every 20 shares purchased, subject to a maximum of 250 free shares per investor.

The company said this incentive is open to retail investors who buy and hold the shares allotted to them for 12-months, post allotment date.

Commenting on the price announcement, Karl Toriola, Chief Executive Officer of MTN Nigeria Plc said, “the success of and growth of MTN is intrinsically linked to that of Nigeria and Nigerians.  Therefore, we are very excited to offer Nigerians the opportunity to own shares in MTN Nigeria”.

“Our journey to become the largest network in Nigeria has been humbling, but we still have a long way to go. There is much more to do to support the evolution of an inclusive digital economy and we continue to invest as we evolve into a truly digital operator, capable of seamlessly integrating value across evolving telecommunications, digital, and fintech segments”, Toriola added.

“With this offer, we will contribute to the further deepening of Nigeria’s equity capital markets. It is the first in a series of transactions as the MTN Group implements its plans to ensure broad-based ownership by reducing its shareholding in MTN Nigeria to 65% over time,” President and Chief Executive Ralph Mupita said.

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NCC TTTR 2021: Continuous Dialogue Critical To Tackling Telecoms Industry Challenges – Danbatta

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L- R: Engr. Bako Wakil, Director, Technical Standards and Network Integrity, Nigerian Communications Commission (NCC); Mr. Yakubu Gontor, Director, Finance Services, NCC; Mrs. Tolulase Omodele-Rufai, Assistant Director, NCC Lagos Zonal Office; Mr. Adeleke Adewolu, Executive Commissioner, Stakeholder Management, NCC; Mr. Babajika Mohammed, Director, Licensing and Authorization, NCC; Mr. Chidi Ibisi, Executive Director, Business Development, Broadband Communications Limited; Mrs. Chinwe Maduabum, 2021 Chairman Committee on Talk to the Regulator; Mr. Damian Udeh, Associate Director, Regulatory Affairs, IHS

…as Danbatta charges regulators to find lasting solutions to issues negatively impacting the licensee’s compliance

Olushola Okunlade Writes

The Executive Vice Chairman and Chief Executive Officer of the Nigerian Communications Commission (NCC), Prof. Umar Garba Danbatta, has said that continuous dialogues between the regulator and its various licensees are central to finding lasting solutions to issues negatively impacting the licensee’s compliance with extant regulations and challenging the growth of the telecoms industry.

Danbatta stated this during the second edition of NCC’s 2021 Talk to The Regulator (TTTR) forum held at Four Points by Sheraton, Lagos, over the weekend. The theme of the discourse is, “Improving Stakeholders Satisfaction”.  

The Lagos edition of the programme followed the successful hosting of a similar dialogue in Kano on 16th October, 2021.

The objective of the forum is to get direct feedback from licensees on how the Commission, as a regulator, is meeting licensees’ expectations.

The programme was also designed to identify areas for regulatory improvement, highlight areas where licensees are defaulting as well as address critical industry challenges undermining full accomplishment of the set objectives for consolidating the gains in the telecoms sector.

According to Danbatta, who was represented at the forum by NCC’s Executive Commissioner, Stakeholder Management, Adeleke Adewolu, the forum is orgainsed in keeping with the Commission’s commitment to continually ensure regulator-licensee interactions to develop collaborative solutions and implementation programmes to the challenges of the telecom ecosystem.

Continuous Dialogue Critical To Tackling Telecoms Industry Challenges - Danbatta
Emilia Nwokoro, Deputy Director, Licensing and Authorization Department, NCC giving her presentation on the ‘Review of Licensing Trends’.
Continuous Dialogue Critical To Tackling Telecoms Industry Challenges - Danbatta
Group picture of participants at the Talk to the Regulator Forum.
Continuous Dialogue Critical To Tackling Telecoms Industry Challenges - Danbatta
Adewolu giving the opening remarks.
Continuous Dialogue Critical To Tackling Telecoms Industry Challenges - Danbatta
Mohammed while giving his remarks at the Forum.
Continuous Dialogue Critical To Tackling Telecoms Industry Challenges - Danbatta
Mohammed; Mr. Abdulazeez Salman, Member NCC Board of Commissioners; Adewolu; Gontor.

“The Nigerian Communications Act (NCA, 2003) invests the NCC with powers and responsibilities for the regulation of both the technical and market-related aspects of telecoms infrastructure and services in Nigeria. We consider our role as a regulator very vital to ensuring industry sustainability because NCC considers consultation as the lifeblood of regulation” the EVC emphasised.

The EVC also declared that “we have consistently deployed stakeholder engagement tools like public enquiries, private investigations, written information requests, one-on-one discussions as we are having it now and diverse consumer engagement platforms.

These tools enable us to ensure that our interventions are well-grounded and that our decisions are based on a clear understanding of stakeholders’ perspectives”.

Danbatta said that such interactions fit squarely within the five pillars of the Commission’s Strategic Management Plan (2020-2024), which include Regulatory Excellence, Promotion of Universal Broadband Access, the Development of the Digital Economy, Facilitation of Market Development, and Strategic Partnering.

“Through regular interactions with our licensees, the Commission is able to gain valuable insights to enhance our regulatory output and enabled us to drive excellence in consonance with the five pillars of our strategic vision for the industry as streamlined in the Commission’s Strategic Vision Plan (SVP), 2021-2025,” he said.

Continuous Dialogue Critical To Tackling Telecoms Industry Challenges - Danbatta
Wakil while giving his presentation on ‘Short Code Assignment, Type Approval Obligation, and the Commission’s Expectations’.
Continuous Dialogue Critical To Tackling Telecoms Industry Challenges - Danbatta
Gontor giving his presentation on the ‘Implementation of Annual Levy Regulations’.
Continuous Dialogue Critical To Tackling Telecoms Industry Challenges - Danbatta
Joe Emeshili, Principal Manager, Spectrum Administration Department, NCC giving his presentation on ‘Maximising the Potentials of Telecommunications Operations’.
Continuous Dialogue Critical To Tackling Telecoms Industry Challenges - Danbatta
Olumide Samuel, Chief Executive Officer, Priority Communications Ltd asking questions at the Forum.

The EVC also reinforced the Commission’s belief that only through optional performance by the licensees will Nigeria be able to achieve the national objectives and targets in the National Digital Economy Policy and Strategy (NDEPS) 2020-2030, the Nigerian National Broadband Plan (NNBP), 2020-2025 and other national policy instruments targeted at developing the nation’s digital economy ecosystem.

He said on this basis that the Commission is, “Therefore, we intend to use this forum to seek support for many initiatives that the commission has carefully developed in our quest to enhance market opportunities for all our licensees,” Danbatta said to emphasise NCC’s faith in collaboration with stakeholders and its licensees in order to address any concerns that may impede the attainment of the relevant policy objectives.

The NCC CEO also emphasised that the Commission will continue to roll out forward-thinking and all-inclusive regulatory initiatives to provide market opportunities for all its licensees.

Additionally, Danbatta said NCC is also committed to constantly reviewing licensing framework as well as key regulatory instruments so as to refresh the Commission’s regulatory frameworks and ensure better service delivery for consumers and efficient attainment of other national interest objectives.

However, Danbatta said some licensees are not doing as much as they ought to be doing. “Several licensees are struggling to pay their staff, many are unable to comply with basic licence obligations, some are defaulting in the payment of their Annual Operating Levies (AOL) while the level of interconnect and other inter-licensee indebtedness is still unacceptably high.

Therefore, we are required to ensure regulatory interventions are put in place to address challenges, bottlenecks, and grievances that may arise among the licensees in this regard,” he said.

Continuous Dialogue Critical To Tackling Telecoms Industry Challenges - Danbatta
Another cross-section of participants at the Forum.
Continuous Dialogue Critical To Tackling Telecoms Industry Challenges - Danbatta
Cross-section of participants at the Forum.
Continuous Dialogue Critical To Tackling Telecoms Industry Challenges - Danbatta
Attah Ogbadu, Senior Manager, Public Affairs NCC compering the event.
Continuous Dialogue Critical To Tackling Telecoms Industry Challenges - Danbatta
Maduabum in her session ‘on what can the NCC do to ensure the survival of smaller licensees’.

Also addressing the gathering, the Director, Licensing and Authorisation at NCC, Mohammed Babajika, said the forum was intended to foster a harmonious relationship with licensees, identify their challenges and provide feedback on licensees’ fulfillment of their license obligations, and re-emphasize the role of licensees in ensuring good quality of service (QoS) and quality of experience (QoE) for the consumers.
While intimating the licensees of some regulatory initiatives focused on licensing issues, Babajika said despite the impact of the Covid-19 pandemic and its resultant challenges, the Commission was taking measures to further liberalise the telecoms industry by finalising the framework for Mobile Virtual Network Operators (MVNOs) while also reviewing existing licensing regulations.

In addition, the Director also informed the licensees that the Commission was finalising work on Information Memorandum (IM) for Fifth Generation (5G) technology deployment, which will promote emerging technology trends such as Internet of Things (IoT), Artificial Intelligence (AI), Over-The-Top (OTT) Services and Big Data Analytics, Blockchain, among others. 

At the event, presentations were made by the Management staff of the Commission to the licensees and others, who participated actively through listening, making observations and suggestions, as well as seeking clarifications to improve the quality of discourse and the expected outcomes. 

Continuous Dialogue Critical To Tackling Telecoms Industry Challenges - Danbatta
Titilola Edu, Assistant Legal Manager, Caricare Development Nigeria Limited asking questions at the Forum.
Continuous Dialogue Critical To Tackling Telecoms Industry Challenges - Danbatta
Emeshili; Olasumbo Olawaiya, Assistant Director, Universal Service Provision Fund.

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NCC’s Special Consumer Advocacy, “Shine Your Eyes, No Fall Mugu”, Debuts In Benin

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The Advocacy banner for the Roadshow.

…“Shine Your Eyes, No Fall Mugu”

Olushola Okunlade Writes

The Nigerian Communications Commission has again given expression to its commitment to reach all categories of telecom consumers, with the launch yesterday in Benin, of a consumer-centric outreach programme tagged, “Shine Your Eyes, No Fall Mugu”, which literally translates to, “Be alert, Don’t be a victim of fraudsters”.

An initiative of the Commission’s Consumer Affairs Bureau (CAB), the programme is specially conceived and implemented using Nigerian pidgin. It’s intended for a segment of the telecom consumer population who are more comfortable with localised communication that resonates with their reality.

The two-day programme, implemented in three phases, started with a roadshow yesterday. The Show featured local artists and comedians who displayed musical and other performances to amuse and entertain people to create awareness and sensitise telecom consumers about how cybercriminals may use telecom platforms to defraud unsuspecting members of the public.

NCC Special Consumer Advocacy SHINE YOUR EYES, NO FALL MUGU Debuts in Benin
Another stopover on the route.
NCC Special Consumer Advocacy SHINE YOUR EYES, NO FALL MUGU Debuts in Benin
Left-Right: Tunde Akpeji, Senior Manager, Consumer Information and Education; Lisu Mshelia, Principal Manager, Consumer Protection and Advocacy; Isimeme Joseph, Deputy Manager, Media and Public Relations; Dr Omoniyi Ibietan, Head Online Media, Tina Nwachukwu, Principal Manager, Consumer Protection and Advocacy; Charles Alimikhena, Deputy Manager, Special Duties; Masud Adam, Officer, Consumer Protection and Advocacy.
NCC Special Consumer Advocacy SHINE YOUR EYES, NO FALL MUGU Debuts in Benin
Entertainers on the procession.

Today, the last day of the two-day event, will feature a 20-minute radio talk in Nigerian pidgin, to further create awareness and like the roadshow, to invite telecom consumers to an enlightenment forum where presentations will be made about tricks deployed by cybercriminals to defraud people online. The presentations will also capture measures to be taken by consumers and members of the public in order not to fall victim to fraudsters who may use telecom platforms to perpetrate fraudulent acts.

Additionally, at today’s enlightenment forum, drama, audio narratives and other attractions thematised on the centrality of vigilance, alertness and caution in cyberspace by all users, will be featured.

The programme is facilitated by a local partner who supports NCC, by mobilising critical segments of the public through opinion leaders and social groups to participate in the events, in order for them to be armed with the right information they may require to explore the Internet safely. These leaders and members of the public attending the forum are expected to re-diffuse the messages to other members of the public and others in their socio-cultural groups.

This programme, coming on the heels of NCC’s National Cybersecurity Awareness Month (which occurred in October), and the annual National Cybersecurity Conference, which took place on 3rd November 2021, is meant to reinforce the messages of cyber awareness, cyber vigilance, and cyber smartness to telecom consumers whenever they are online.

NCC Special Consumer Advocacy SHINE YOUR EYES, NO FALL MUGU Debuts in Benin
The NCC partner supervising her team.
NCC Special Consumer Advocacy SHINE YOUR EYES, NO FALL MUGU Debuts in Benin
Personnel of the security governance sector ensuring orderliness.
NCC Special Consumer Advocacy SHINE YOUR EYES, NO FALL MUGU Debuts in Benin
The motorcade.

The roadshow yesterday commenced at Ekehuan Road, and the procession drove through Airport Road, to State Secretariat, Sapele Road and through the roundabout to Ring Road, to Akpakpava, Dawson Road and back to Ugbowo and Uselu Market. The motorcade, the music, the displays by artists and the underlying narration of the message of the outreach in Nigerian pidgin caught the attention of residents and passers-by who patiently listened to the messages. Information, Communication and Education (IEC) materials were also shared with the public at every neighbourhood the procession stopped to display and educate the public.

More mobilisation campaigns and awareness creation will be made during the radio component of the sensitization today, happening at Vibes Radio, 97.3 FM at 8.45 a.m. Thereafter, the Enlightenment Forum will take place at Obey God Events Centre at Nova Road, opposite Uwasota Junction, Benin.

NCC Special Consumer Advocacy SHINE YOUR EYES, NO FALL MUGU Debuts in Benin
The motorcade.
NCC Special Consumer Advocacy SHINE YOUR EYES, NO FALL MUGU Debuts in Benin
Left-Right: Tunde Akpeji, Senior Manager, Consumer Information and Education; Lisu Mshelia, Principal Manager, Consumer Protection and Advocacy; Isimeme Joseph, Deputy Manager, Media and Public Relations; Dr. Omoniyi Ibietan, Head Online Media, Tina Nwachukwu, Principal Manager, Consumer Protection and Advocacy; Charles Alimikhena, Deputy Manager, Special Duties; Masud Adam, Officer, Consumer Protection and Advocacy.
NCC Special Consumer Advocacy SHINE YOUR EYES, NO FALL MUGU Debuts in Benin
A stopover.
NCC Special Consumer Advocacy SHINE YOUR EYES, NO FALL MUGU Debuts in Benin
NCC Special Consumer Advocacy SHINE YOUR EYES, NO FALL MUGU Debuts in Benin
NCC Special Consumer Advocacy SHINE YOUR EYES, NO FALL MUGU Debuts in Benin

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