Vodafone may be headed for the Nigerian telecoms market

Vodafone may be heading for the Nigerian telecoms market as indications have emerged that Mubadala Development Company of the United Arab Emirates, which was granted a $400 million licence by Nigeria, is in talks with the UK’s biggest mobile operator.
Technology Times checks revealed that both parties may sign the dotted lines of a pact for Vodafone to acquire 51 per cent equity in the proposed business which will effectively become Nigeria’s fifth GSM service. The licence was awarded to Mubadala’s Emerging Market Telecommunications Services Limited.

The fast-growth Nigerian telecoms market which peaked at over 38 million lines and teledenity of 24 per cent, July, this year, has come under international attention from investors exploring emerging market stakes.
This comes just as the management of Transcorp weekend unfolded a 100-day project to turn around the fortune of what it cited as it “dead” assets—the Nigerian Telecommunications Limited (NITEL) and its sister mobile business unit, the Nigerian Mobile Telecommunication Limited (Mtel).
Vodafone’s foray into Nigeria may seal a premium deal for Mubadala and is seen as the UAE’s masterstroke to profoundly shake the local telecoms market controlled by the ‘big three’ of MTN, owned 82 per cent by South Africa’s MTN Group; Celtel Nigeria, a local subsidiary of MTC/Celtel owned by MTC of Kuwait; and Glo mobile, owned by Nigerian entrepreneur, Mike Adenuga Jnr.
The fourth GSM network operator, Mtel, the mobile business unit of pioneer national operator, NITEL, owned 51 per cent by Transnational Corporation (Transcorp), has been losing market share in recent times due to lack of funding to expand and upgrade its network.
Under the talks, Mubadala’s $400 million paid to the Nigerian government for the unified access service licence (UASL), bundling the nation’s last and fifth GSM frequency, will count for equity stake in the planned network which may run under the Vodafone brand, sources told Technology Times.
If ongoing talks sail through, Vodafone is billed to take 51 per cent equity stake in the telecoms business while bringing to the table its world-class competence in the mobile business to push an aggressive rollout plan that may see the fifth GSM service go live by first quarter of 2008.
Beyond partnering Vod-afone, another masterstroke that Mubadala hopes to hedge its bet on is number portability, a proposed policy initiative which the telecoms regulatory authorities in the country may be considering to assuage the effects of operator ‘lock-in’ of their subscribers.
Under a regime of mobile number portability, subscribers literally ‘take’ their numbers with them when they sign off a network as they are allowed to exercise their choice to retain their numbers while migrating to the service of rival network providers to the one that originally allocated their SIMs.
Effectively, that enables existing and new entrant operators to aggressively push competitive offerings and enhanced value to retain subscribers who can easily vote with their feet to cross over to rival players if they reckon they are not getting a good deal.
It was also learnt that Vodafone, which owns 50 percent stake in South Africa’s Vodacom (which has made a series of futile efforts to enter the fast-growing Nigerian market) is flying on its own wings this time out.
Rather than coming in with Vodacom, it is understood that Vodafone will drive its Nigerian operation on its own, if the deal with Mubadala is signed.
Industry analysts reckon that it is too early to see the market as saturated as players that unfold innovative market strategies and offering stand a good chance to change the market the way the late entrant, Glo mobile did in August 2002, when it entered the mobile business two years after MTN, Celtel (then Econet) and Mtel began commercial operations.
Two new entrants into the telecoms market, Mubadala and Alheri Engineering owned by businessman, Aliko Dangote, have been speculated to be in talks to acquire Mtel but the latter which recently acquired a 3G licence is yet to seal a deal with the ailing mobile company.
Group Managing Director of Transcorp/CEO, Tom Iseghohi and self-styled “transformation expert”, says the Transcorp will begin counting 100 days in a fortnight to revive what he cited as ‘dead’ companies through aggressive sale of services on Nitel’s fixed line and fixed wireless service on its CDMA network. The aggressive push is also going to see the pushing out of an estimated 1.2 million lines on the Mtel network under a bid to make the companies regain market share.
Counting the gains of six years of mobile revolution in the country following the January 2001 GSM auctions that led to the rollout of commercial GSM services in Nigeria, the Nigerian Communications Commission (NCC) says investments have grown from $50 million in 2001 to over $9.5 billion, a huge share coming from foreign direct investments.
According to NCC’s spokesman, Dave Imoko, an additional $3 billion inflow is expected before the end of 2007 as existing and new players explore market stakes.
Additionally, NCC says the Federal Government has earned over $2.5 billion in frequency spectrum licence fess between 2001 and now with import duties and taxes also contributing substantially to public coffers.

Source: this Day