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MTN Must Pay the Fine, Says Nakande

Since the commencement of GSM operations in Nigeria in 2001, the country’s telecommunications landscape has become both the attraction for huge investments from within and outside the country, and a topic of intense even if divergent commentaries by keen watchers, active players, regulators, governments and the academia as well as direct beneficiaries of the industry’s runaway success. It is therefore always a privilege to have one who has played as an insider and a top government functionary at ministerial level, comment on the sector, as our guest, in this special interview.

Alhaji IBRAHIM DASUKI NAKANDE, former Minister of State for Information and Communication, was not entirely new to the telecommunication sector when he was appointed to superintend the communications sector in the then merged information and communications ministry. Alhaji Nakande retired as General Manager, Lagos Territory, of the Nigerian Telecommunications Limited (NITEL). He sat down with MKPE ABANG for an hour for an interview that has taken months to finally agree. He touched on a number of national issues pertaining to the industry in a manner peculiar to him; and, in such a frank and frontal way reflecting both his passion for the telecommunications sector and desire to see Nigeria get it right. Excerpts:

Question: Thank you for welcoming me to your office. Let’s go a bit down memory lane on your time at NITEL. You were GM of NITEL in the Lagos Territory. Tell me how you fared; how was it possible for some people to get phones despite the lack of lines, how was it impossible for some other people to get phones? What were the challenges and what were the potentials?

Nakande: Thank you very much. NITEL unfortunately is no more; but NITEL should still have been around till this very day. If it were still here now, it would have helped to deepen the technology space we have in the country. At the time NITEL came into being in 1985, there was the P & T (Post & Telecommunications Department), which was purely a Civil Service oriented monopoly; and then there was the Nigerian External Telecommunications arm, that is NET that was doing more of international calls, into and out of the country. Government in its wisdom, around 1985, decided to set up NITEL. And so the T of the P&T, that is in the Post & Telecoms Department of the Ministry of Communication was removed and then NET was brought in and that NITEL was formed as a company. Of course there have been many challenges. One, the policy thrust of government at that time was to do commercialisation of the company. That is to allow the company to run on its own; even though as a monopoly but without any government funding. And that was how NITEL started to run as a commercialised government entity. Of course, there were a lot of challenges. The network was not as robust as it should be across the country. And then of course the orientation that those who were in the ministry brought into the company itself made expansion in the network quite slow. There were knowledgeable people, no doubt about that; all the engineers that came into NITEL from P&T were very knowledgeable. But there was no value orientation especially in terms of say, look, this is a commercial company now owned still by the government that should be run on a profit basis. So it was still the same slow space, both in terms of service delivery as well as in the way the company itself was run.

But invariably you would understand that there were other companies like that across the world; because most of what we were doing was tailored around the British Telecom model. And of course at that time also, we had the likes of France Telecom, they were also part of the consultants to NITEL; we had the Italian Telecom. These were all government companies that till this day, are still in operation as they were, still owned solely by the governments. But they were run differently, and they became very dynamic. As the technology space changed, they also changed to meet the demands of the industry and of course the generality of the people. But in our own case, it was slow.

Today we have the National Development and Investment Company Limited (NATCOM), which bought NITEL. With your knowledge of what happened in the past and what we have now, what advice do you have for NATCOM to help them succeed?

Let me still go back the history of NITEL. It went through a lot of challenges. I remember that during (President Olusegun) Obasanjo’s administration, NITEL was ready to do an expansion programme in terms of its network connectivity, to deploy fibre; to do everything, using their own internally generated revenue. But because at that time, the BPE (Bureau of Public Enterprises) felt that they (BPE) were going to bring in a new management (consultant) company, called Pentascope, that NITEL as they were, should not embark on that expansion. That they should let the new management come. And when they (the new management, Pentascope) came in, they could not even do it, because they suffered, through other regimes that came into play, from NCC (Nigerian Communications Commission). If you recall when NCC started, there were very senior technocrats of the telecom industry that were members of the NCC board. I can talk of the former Managing Director of NITEL, Engr. (Augustine) Otiji, the former deputy managing director, Technical, Engr. Isaac Mohammed, and others, were all there. But you know, at one go, they were all asked to leave. Because then even the current Communications Act governing NCC was not yet in place; but for whatever reason, their board was dissolved. And then the law later came in.

So for Ntel that has now come, with all the challenges that one can speak about, the first thing that Ntel will do to succeed is to concentrate on data. Because voice has become saturated; voice is no longer profitable. It is now the question of data; how do you deploy it. Secondly, in doing that I am really happy to note that Ntel has already restored the SAT-3 Cable in Lagos that was destroyed as a result of land reclamation over the building of the Atlantic City. So I believe that now that they have restored it and terminated it properly now in Lagos, the major challenge they have now is to carry that chunk of data across the entire country. Because by now due to the various developments that have taken place across the country in terms of road constructions and other kinds of developments, all fibre networks to various parts of the country have already been destroyed. So it will be good for Ntel for instance, to come up with a strategy to do some of those linkages of those fibre links especially in cities that have very high traffic or value in terms of usage, such as Lagos, Port Harcourt, Warri, and then Abuja, Kano, Kaduna and so on. And of course there are other issues of network in terms of the ducts that they have across the various states. Those too have been destroyed because of development of roads especially in the state capitals; those too need to be restored. I think they really need to look at the issue of data very strongly, because that is where everybody is going towards in terms of broadband; there is no other way.

You just mentioned two things: data and broadband, which seem to be the in-thing for now. The four mobile operators, would you say they are putting enough attention on broadband, on delivering broadband to Nigerians?

I don’t think so. What I see is that they’ve killed all the other companies. Before people had independent ways of getting their data facilities or access; now the mobile operators came, they’ve killed all the cybercafés, as we know it; because the cybercafés helped to deepen broadband access. Because the mobile operators are now offering data services on their networks across the country that these cybercafés used to offer. I think one of the challenges of even the quality of service that we are talking about is the fact that all the gains that the country so-called made as a result of the licensing regime of that time for the GSM to roll out in the country has now been lost or eroded. There are no more gains; because there should be gains in terms of employment, in terms of expertise, which they are supposed to pass on to our people. But by the time they were rolling out, all the operators were building their own networks – which was costly for them too at that time. Because if NITEL were still in place, by the time the first set of licences were issued at $285 million for each licence, it was until the last one that came, that is Etisalat, they were the ones that paid $400 million. But the same period that Nigeria auctioned the initial GSM licences for $285 million each, Morocco sold the same licence for $1 billion. The reason was because their own national carrier, the equivalent of NITEL, had already put in place their network of optic fibre spread across the country. That’s one. Secondly, they had power (electricity) in place. So anybody (operator) who was coming was only coming to do plug and play. That’s where you still have the fixed network, the telephone services that we used to know, with facsimile services, telegram services and all the other services that go along with it, still intact in those countries. And in fact in those countries where they have this stability of network and power and the rest of them, GSM lines as we know them, actually are supposed to be the back-up. But here it’s a different thing.

So I think that the major challenge that we have, why I said we’ve lost all the gains (that we thought we had from the onset of the telecom revolution by the auction and issuance of mobile licences), is because all the networks, all of them, they’ve stopped building those (cell) sites they’ve sold all the networks. We have some companies, two or three, that own all the towers in the country. And so, all of them have come up with a new business model of now leasing services. So all the crop of people that have been trained, that were building these networks have now gone completely out of employment because the networks have been sold. They’ve sold all the network of cables that have in terms of fibre optic cables. Therefore we’ve lost; because they have asked all their engineers to leave. There are no engineers that are working in these networks now. Again, they have all outsourced the entire networks to a particular Chinese company. So even for security reasons, it is dangerous for the country; that all the networks with the exception of one, have all outsourced their networks to just one particular Chinese company! And the regulator, the NCC, is there and seeing all this.

And so no matter all we say, no matter all the grammar we speak about quality of service, there is just no way we can achieve this quality of service. We will just continuously fining them, and even when you fine them, usually it’s just like a drop of water in the ocean; nothing will change. Nothing will change until we ask the question that why should three of the nation’s networks all be outsourced to one company. If, heavens forbid, one Boko Haram suicide bomber sees the network operating centre and then enters there and blows up the network, the entire country will come down. It will be a major disaster for us as a country and as a people that our network goes down.

You just mentioned fine; and, we’ve been having issues with fines, the biggest being the N1.04 trillion fine on MTN Nigeria. From the industry perspective and the security angle, do you think that amount was justifiable?

Yes! I think it’s justifiable. Because series of meeting had been held earlier, both from the regulatory point of view and then from the security aspect of it; and they (MTN) have been part of those meetings. And this issue had been tabled; the regulation about anybody violating the law within a particular space of time. Mark you this is not the first time that MTN Nigeria had been fined. They had been fined for certain other infractions and violations, and they have gone to court. I cannot immediately remember the details of that particular one; the matter is still in court. And so, if you want to stop this impunity and you want to show that really change is here, I think there is the need for us to maintain the momentum and ensure that they pay. But I am happy that having discussed with President (Jacob) Zuma (of South Africa), President Muhammadu Buhari has seen the need to say, okay, we can now look at it differently, grant you a small discount and then stagger the payment. But believe me, if you want to sustain the self-respect that Nigeria deserves we must ensure that they should pay this fine; so that all other companies from abroad that are already operating in Nigeria will take a cue from that; know that you cannot just come in and violate our laws with impunity and think you can get away with it.

Don’t you think the amount itself is too much; that if they should pay that amount the company runs the risk of collapsing?

It will not collapse, now that we are giving them a lifeline that says okay, pay over this period of time (staggered). The question of collapsing does not come in; they just have to pay. What about the various other infractions that they have committed? What about all these young boys that they have sacked? Who bears the responsibility for the social problems that will arise as a result of the young people that they have sacked? Today as I speak with you, if you tell MTN, leave Nigeria, believe me, they will just pick only their briefcase and leave. The only thing they are doing now is just printing of recharge cards and some other small social responsibility projects through their MTN Foundation. But beyond that what else are they doing? Nothing! They don’t maintain any network; they are leasing and outsourcing. Everything they are doing they are leasing, including their headquarter office. So where are all those gains that we thought will follow the licensing? And you will recall that it is this same company and the others that followed them that killed all the other CDMA companies that you reported very aptly in one your recent editions of your magazine, where you asked – where are the CDMA operators? Where is Intercellular, where is Starcomms, where is even the latest, in fact, last one to go under and was bought off by MTN, Visafone? And all this while even the Visafone that MTN bought, it was not because MTN had any interest in Visafone; because they had sacked all the 2,000 staff in the company, plus all other indirect staff – suppliers of various items to the company. They sacked all of them. They were more after the frequency. And NCC is there. That frequency as Visafone is going, should have been reverted to NCC, so that it can be auctioned again. But for somebody to come and buy the frequency is wrong. Because every frequency in a country is national resource. So if you are no more using the frequency, it should revert to the regulator so that proper licensing of that particular frequency through a transparent auction can be done. If you then win, fine and good; if they don’t win, fine and good.

So in other words, you are saying that the frequency Visafone was using, as the company had been bought by MTN, the frequency should revert to the government?  

Yes; it should be reverted to the country, to the regulator; so that it can be re-auctioned. Look, by deregulating the sector, we ran away from the monopoly position that NITEL had before over issues of telecommunication in the entire country. And now we are creating a very strong, dominant player by selling all these frequencies to them. Mark you MTN has gone also to buy about 20 per cent of the frequency through the National Broadcasting Commission that would have been used in the roll out of digitisation programme in the broadcast sector. So why is MTN Nigeria piling up all these frequencies? That is like creating strong oligopoly situation, but with one operator being so dominant thereby making nonsense of our laws.

But legally, do you think the regulator can take that Visafone frequency from them being that they bought Visafone?

Yes, they can. Because there was no transparency in the transfer of the frequency. We don’t even know the modalities in which MTN acquired Visafone.

But they had approval of the NCC, the regulator….

It’s possible; but even if you have an approval, was it transparent? Was it open? Did stakeholders in the industry and civil society organisations know about it? Were they brought in to show that this thing is done as openly and as transparently as possible? Because this frequency is owned by Nigeria and Nigerians.

NCC is licensing Infrastructure Companies, called Infracos. What’s your assessment of that approach?

I think the concept itself is good; that you allocate certain zones in the country to particular companies to develop the entire network. The advantage of doing that is one you are now saving the country the degradation of its environment through creation of multiple ducts by the various networks. Because the concept is such that if company A is given let’s say Lagos, it is that company that will have the right of way, one single right of way, and will develop the network, lay backbone cables, that is 96 Core cables, and then any player who will come into that zone will just come in there and lease fibre or space within the ducts, because there will be specifications within the ducts. You won’t create the ducts only for your own use; you will be required to create extra ducts for other players to come in and use. With that you are also reducing cost of entry, because all the new companies that want to come in don’t have to go the whole hog looking for right of way, and digging here and there, argue with local governments and so on. And then all these issues of multiple taxation also would have gone. So that is one of the advantages you have with the concept of Infracos.

The second one, in order also to be open and to be fair to the companies that have won the bid for the various zones, is that they should be given exclusivity, to say that if I have taken this cost of building the infrastructure, in the processing, not just digging the ground, you pay compensation to various stakeholders in the environment, settle water boards for their facilities, power facilities, and so many others; that I should be given exclusivity for a particular period of time. So that no other company will come within that particular zone to also do the same projects. Rather, anybody who wishes to come in would have to negotiate with the company on ground, so that at the end of the day it will be a win-win situation for both the pioneer and the new entrants.

Some of the mobile operators already have optic fibre across various parts of the country. Will they have to forgo what they have so as just to lease from the Infracos?

Some of them have already built their own fibre; it is already there. This is a new concept. Let’s take the North Central Zone for instance, we have like seven states including the Federal Capital Territory, Abuja. If you check those fibres, they are mostly terminated into the state capitals. So in discussing this concept, they will be able to accommodate those that are already there.

Let’s go back a bit to this MTN fine. President Buhari made a comment on that issue when President Zuma was visiting. Do you think it was necessary for him to make a comment regarding that fine?

Yes, because President Zuma came in with a lot of people to come and hold a lot of economic discussions. You have to understand that South Africa, beyond MTN, has a lot of presence in Nigeria; airways, malls that are expanding everywhere across the country, for instance, and many others. But everybody knows that after all, the common knowledge of the visit of President Zuma was that he came because of the MTN issue, because MTN as a company is a major player in the economic life of South Africa, in terms of what they take back to the country. So since that is the main thing, the whole two-day visit that he came, there was nothing wrong for President Buhari to have commented on that. And, for the fact also that this vexed issue of Boko Haram, has been a major stumbling block for the entire country in terms of foreign direct investment into Nigeria. Because if you look at, if a bomb explodes in a part of the country and kills one person, you and I are here in Abuja, safe and comfortable; but to the foreign investor, what he will see in the media will be that bomb has gone off in Nigeria, whether you are in Lagos or Calabar or any other part. Meanwhile, this bomb may have gone off in far away, maybe on the border with Chad where we’ve not even gone to. The foreign investor will see ‘bomb blast in Nigeria’. So even if he was making a decision to go today, he will pull back a little. And you know of course for foreign investor, the cost of going into any foreign country is borne by the insurance that they take. So, the insurance cost also goes up; because the risk becomes higher due to security issues. So these are the challenges. And this is why the president himself would find it necessary to speak, because when now MTN complied, this terrorism and insurgency, there is always a symbiotic relationship between the terrorists and communication. And that’s why everywhere in the world where insurgency takes place, including Syria where this fighting is taking place, nobody touches telecom towers. Because even the terrorist needs it to communicate to know where they are at the right place where to throw the bomb; so they also need the communication. So, government was saying MTN, please help us; register everybody, so that we can know who uses what phone at what time. And they (terrorists) don’t want to be identified. They don’t want their pictures to be taken, or their biometrics. And MTN because of the money they were making they didn’t find it comfortable to comply until the issue of this fine came in.

Interestingly the National Assembly, in particular the House of Representatives said because the fine was pronounced, they had already captured it for the budget, and so it must not be reduced. Is that reasonable?

No; it is not. The budget itself is always hinged on the basis of certain assumptions. You do a budget of say 6 trillion; you are assuming so many things. That’s why the main supplier of our revenue, which is oil, the benchmark is always there. You want to do a benchmark that is a little bit less, so that you don’t have another challenge. So you say two million barrels of oil per day at $36, if it continues to flow, this is what you get per day over the year. The Inland Revenue will bring their own; and so on. And there is no guarantee that everything you say in those assumptions you will collect all that money. That’s why they are assumptions; you are making positive assumptions, other things being equal.

Sir, you’ve been a federal minister in this country. When these huge monies from licensing are collected, they usually go into the Federal Account. Why has government never deemed it fit to use that money to develop the telecom sector rather than leave it to the companies to do it themselves?

There was no deep thought in it. In fact right from the time we issued the first licences for $285 million each, if those funds were used to develop the fibre network across the country, this challenge that NCC has now in trying to broaden the broadband infrastructure across the country would not have been there; so they would have faced other challenges for the country. There was no deep thought about that; they were just looking at the entire revenue in a very simplistic manner instead of reinvesting it back into the sector. Instead they shared it among the three tiers of government. I think that there was no deep thinking about that; but I hope that subsequently such monies will be used to develop the sector. Because even if you develop a sector like that any sector for that matter, it is still the entire three tiers of government that will still benefit from such development. It’s like taking money from the sovereign wealth fund, which they are trying to do now, to build Niger Bridge at Onitsha. So it’s investing back into all the tiers of government. So for the telecom, I pray that subsequently government will look seriously at investing such monies to develop the sector. And whatever sector they get money from, part of it should be used to develop that sector.

You mentioned the spectrum NBC sold to MTN, and with the current aggression with which NCC is pursuing broadband, do you think we have enough spectrum to meet the broadband demands for the country?

You have to understand that if there is any space that is developing at very, very fast rate, it is the ICT sector. You would recall that when these technology developments started, we heard 2G, then 3G, now they are talking of 4G and so on and so forth. So, I think as the technology itself improves, the same spectrum, so many will come into play. Before anybody worries about 2.3GHz, 2.5GHz, 2.6GHz; because the pieces of equipment required to roll out for those particular frequency spectrum areas are available. Even when have frequencies of 5G, nobody was touching them; some were reserved for medical use. There is a lot of thought process going on in the ICT sector; people are really thinking more, so I’m sure there will still be enough space. The ITU (International Telecommunication Union) is seeing to that; and a lot of research is going on across the world.

And I will be glad, because the new generation of young ones that are all coming up now, we must understand that it is the ICT sector that will deliver us; because we’ve lost out in so many aspects in the world. We lost out in the world in the Industrial Revolution, we’ve lost out in the Agrarian Revolution; this one, we cannot lose out in the ICT Revolution. So I pray that NCC will use their regulatory powers to ensure that there is sufficient spread across the country. Because each time you talk about the ICT in Nigeria, you see more practical activities taking place in Lagos and the South West only. We actually need to have a holistic focus and target on these things, to ensure there is spread across the country for the development of all our youths across the length and breadth of the country.

Government is looking at sectors where it can diversify the economy for revenue generation to replace oil. Does ICT come in at all?

Yes, of course; ICT is the fastest way you can develop to diversify the economy. Of course government keeps talking about the focus about agriculture; surely security is there. But I think ICT is the fastest to it. The training required for our young ones to develop is faster with ICT, if you take the Indian model for example. All those young boys and girls in India who are into ICT, possibly by categorisation of certification that we have in the country here, most of them are diploma holders. But it’s the opportunity and the space that they have got there that help them to achieve what they are achieving. And I think another strategy also is that government should also attract those big companies, the multinationals in the sector through pioneer status. And that’s what the Republic of Ireland did. That’s why you have all the big ICT companies having production and controlling headquarters there, because they look at the taxes and tax regimes and they tell them, please come here and establish. And by establishing these big companies there, they help to train that country’s population. The country has no oil, they have no natural resources; but they have been so developed because of the attraction they have created.

Or course it is not as easy as we are saying it; because there are other things that must come into play, for instance, the issue of security, which I know this government is addressing. And then, the issue of power; once we have these, because we already have political stability, people who want to come in, when they look at our laws and arbitration and agree that their investment would be secured, because if there are breaches there are sufficient laws that will help them to recover whatever they lose. I think the next issues are power and security; then we will up and doing. But certainly ICT is the fastest, because it will empower everybody; you don’t need to be employed. You will be self-employed, or you end up employing two or three people. Because it is not about big and huge factories; it is about small scale businesses. Italy had gone into some kind of recession; Greece is going through all kinds of economic problems. But believe you me, if you go to those countries, you will never believe anything is going wrong with them. Because in Italy alone for instance, they have over six million small companies, that employ just two people, could be a man and his wife; or employing five people or there about. And this is the type of employment we are talking about, which ICT can offer the empowerment. And that is why more efforts should be put in towards giving our young boys and girls skills. They must have skills; whether it is in welding or in carpentry, or in fashion or in electrical aspect. Unfortunately the state and local governments are not reciprocating the efforts of the federal government in this direction. That’s why you don’t see the immediate impact. We need people with skills; once you have a skill, you don’t need to worry. For instance, now my son has graduated; why should I want to put him in a government white-collar job, where he could stay for six months without being paid? If I say look you must go and work in a particular ministry, where he will not even be adequately utilised for whatever knowledge he has acquired; then something must be wrong with me as a parent.

Take a look at all the mobile operating companies, what main area would you say they have not lived up to expectation?

It is in quality of service; because it has gone so bad to the point of becoming fraudulent. Because if I call you and you don’t hear me and I don’t hear you, the system itself should know that there was no handshake between both us. So why should I be charged? So it’s fraudulent. If you make a call and you see the seconds ticking away; again because of the poor quality of service, you finish making a call, you press the button to end the call; it refuses to go until it has taken another five seconds or more of your money. These five seconds, when you multiply it by the total number of subscribers, and the frequency with which it keeps occurring, you will see that it is a whole lot of money that is being taken off the generality of Nigerians. But one way that this thing can be addressed is the regulator. The regulator must identify certain civil society organisations or stakeholders that in this sector and empower them, through allowing them to bring in monitoring equipment that must be placed at the doorsteps of all the operators so that they can help the regulator to monitor this poor quality of service. Secondly in terms of the social responsibility projects that they’ve been doing; yes, they give computers. But I will like to see these networks establish proper schools that will sharpen the skills of our young ones that have gone to read anything to do with ICT, including of course even those who read other courses like management and so on. So that they can understand the management of these margins; because the entire sector is in margins of one second; every second has a price, so how do you manage these seconds to optimise the turnover of your margins? That’s the point. Yes, they are graduates. But establish a school specifically for this purpose; train them and allow them to go into the field to help other people and help the Nigerian nation.

Since you left government as minister, what have you been doing?

Well, I have gone back to what I had been doing. When I was retired in year 2000, I was one of the few people that set up an internet services provision company in Abuja. We were providing internet access using the E1 facilities that NITEL was providing then; people would dial in through our facilities to access the internet. Secondly, I am still in the telecom sector; we established our company, called Metronet; we are into building infrastructure, we lay fibre optic cables, we can BTSs (build base transceiver stations) across the country. We will be partnering with one of the companies that has won bid for this Infraco, in the northern part of the country. So, I have been in business; and I have also been in politics. I have always been on the other side of the divide (politically). Even when I was appointed a minister, I was appointed as a result of the agreement by the (late President Umaru Musa) Yar’Adua Government to go into a government of national unity. I was in the ANPP (All Nigerian Peoples Party) then when we were nominated; just two of us and were given the portfolios in that regime. After that, I joined the CPC (Congress for Progressive Change). Then from there the merger came in and we came into the APC (All Progressives Congress). I was the pioneer Interim Secretary of the APC in Plateau State, then subsequently I have also been nominated and appointed as the North Central Zonal Secretary presently of the APC. Also I am a member of the National Executive Committee of the APC.

So with the wealth of experience in so many aspects and areas, if you are asked to serve Nigeria again will you oblige?   

That’s what I’m waiting for. We are waiting, and we believe that all the so-called ‘go-slow’ that people talk about regarding this government, I think it is well intentioned. Because from the outside, you are like in a position of a spectator; what the players in the field are seeing and experiencing in terms of those that are attacking them and they are in turn attacking back is completely different from being a spectator. So we think that government is trying its best; and we are prepared to wait and see what happens, especially now that the budget is about being signed. And I think even for the budget, the president is right in saying that he will not sign a budget that is just paper without the details that go with it. Like they say, the devil is in the details. He doesn’t want to be taken unawares; you say this department will spend N100 million; only for you to check and discover that the N100 million is going for tourism advance, and that there is nothing for that particular department to work on. So it is important that the president has submitted a proposal to do a project; and that what he submitted must be there, as in the details for that particular area.

Honourable Minister, thank you so much for giving me this opportunity.

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