Overview: Will the future look bright for telecoms in Nigeria?

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That no modern economy can be sustained without growth in Information Communications Technology (ICT) is widely acknowledged. The ICT penetration in Nigeria in 1999 when the transition to democratic rule occurred was very low, and less than 1 percent of the population had access to phones.

The government identified this as a major hindrance to development, a situation that paved way for the current ICT revolution.

However, by the year 2000, Nigeria had only 400,000 connected telephone lines and over 25,000 analogue mobile lines, and the total teledensity stood at a paltry 0.4 lines per 100 inhabitants. Connection costs were prohibitively high, and waiting time for fixed lines ran into years.

The Telecom Revolution

Before the advent of the Global System for Mobile Communications (GSM) launched in August 2001, ownership of telephones was the exclusive preserve of the rich and the well connected in the Nigerian society, and eight years after, the growth of the telecom sector is unmatched by any other in the country. It has recorded phenomenal growth both in terms of subscriber’s base and infrastructural development in Nigeria .


The revolution brought into focus GSM companies such as Econet Wireless, now Zain, MTN, Globacom, and Etisalat, the last and recent entrant into the sector.

Conversely, the Licence auction issued by the Nigerian Communications Commission (NCC), paved way for other private telecom operators (PTOs) such as RetelWireless, now ZoomMobile, Starcomms, Multilinks Telkom, and Visafone.

With the Unified Access Service Licences (UASL) and the 3G licences, the Nigerian Communications Commission facilitated the phenomenal expansion of telephone lines in the country.

in order to facilitate the penetration of Internet services, NCC licenced several Internet Service Providers (ISPs), and has further encouraged the spread of its access by initiating a licencing regime to simplify authorization processes for the rollout of cybercafés and tele-centres.

The Nigerian socio-economic landscape has been greatly transformed and has had positive impact on virtually all facets of life in the country.

Ownership of mobile phones now cuts across the various social classes, opening great opportunities for e-banking, e-health, e-security, e-education, etc in the country.

The growth in the telecom sector has resulted in the creation of over 12,000 direct jobs, and hundreds of thousands informally employed through the sector. Today, the sector is a key contributor to the Gross Domestic Products (GDP), and the percentage share from the telecom sector rose from 0,06 in 1999 to 2,39 in 2007 at 1999 basic prices.

Developments

At the rate of network growth, it was predicted that Nigeria would overtake South Africa to become the nation with the largest number of connected lines in Africa , a prediction which became a reality in the first quarter of 2008.

However the nation’s performance in the area of Internet and broadband penetration has remained low, and emphasis is therefore being placed on facilitating more rapid development of Nigeria’s data capability, by promoting large scale broadband Internet deployment and aggressive fiber optic rollout across the country.

The Telecom Operators

MTN Nigeria, one of the earliest entrants into the telecommunications industry in the country after the deregulation process, has gone a long way in boosting telecom services through the roll out of infrastructure in its areas of operation.

The company which currently has landmarks in all the geopolitical zones of the country boasts a subscriber base of 27 million, and in a bid to tackle the network difficulties in its areas of operation, the company has resorted to deploying fibre optic infrastructure, in line with the directives of the Nigerian Communications Commission (NCC).

The telecom company according to the records of the Nigerian Communications Commission (NCC) is at the top of the subscriber base chart, with 7 million more subscribers than its closest rival, Globacom.

Globacom, the third GSM company to emerge has a subscriber base of 20 million according to NCC records, and has recently rolled out the Glo 1 submarine cable, being laid across the West Coast of Africa between Nigeria and the United Kingdom .

The submarine cable has a length of 9,500km with a minimum capacity of 640 GBit per second, and is set to be a strong rival to the South Atlantic Submarine cable (SAT-3), which has been enjoying complete monopoly in the West Africa sub-region.

With this development, Globacom which has been operating the one network connectivity between Nigeria and the Republic of Benin, now has the capacity to offer network services in the area of voice and data communication among its various subscribers.

Coupled with the Glo 1 submarine cable, the telecom company has been engaged in the roll out of fibre optic cables around the country, an initiative applauded by the Nigerian Communications Commission.

Also interested in the 75 percent stake in NITEL, the first national carrier, Globacom has gathered a strong force to get a hold of the lucrative telecom market in a country described as the fastest growing on the continent.

Already, Globacom has announced plans to explore new markets in the West African sub-region, and beyond, such as Cameroun , and Morocco.

Zain, one of the foremost telecom companies in the country is waxing stronger, after entering the market as Econet Wireless in 2001.

After a series of transformations and re-branding from Econet to Vodacom ,Vmobile, Celtel and most recently, Zain, the telecom company is ranked as third in terms of subscriber base.

It was the first to embark on the “One Network” initiative in the countries where it operates.

The concepts allows subscribers to communicate freely across geographical borders and continents without roaming call charges and with a uniform tariff.

In terms of coverage, the telecom company has 3,100 base stations.

With a subscriber base of 17 million, Zain recently completed its 4,000 kilometre microwave transmission infrastructure in order to boost its network capacity.

It has also engaged in expansion of its microwave backbone to 5,00 kilometres in order to boost communication among its subscribers.

It has won a series of awards, one of which was the Pan African Mobile Operator of the year 2008.

Etisalat the last entrant into the telecom sector since its commercial operations in October 2007 has initiated a number of measures to deliver quality service to its subscribers, and also to establish a stronghold in the geo-political zones of the country.

Having launched commercial services in eight states of the federation in its initial network rollout, the telecom company has grown its services across the length and breadth of Nigeria .

Etisalat in December 2008, extended its network coverage to an additional 170 cities, towns, and villages, in its earlier resolve to effectively cover the entire country by the end of 2010.

Telecom in 2010

The telecom revolution has come a long way, with developments which include reforms by the Nigerian Communications Commission (NCC) and restructuring by the operators in their bid to further strengthen communication processes among Nigerian subscribers.

Though the harsh realities of the global recession dealt a hard blow on telecom operators the world over, the network providers in Nigeria still manage to thrive with new initiatives to offer quality service.

The layoffs embarked upon by the parent companies of Zain and MTN for example, may be ascribed to the effects of the global economic meltdown.

Analysts in the sector have pointed out that local telecom operators in the country are fast showing signs of distress, quickly getting to a point of stagnation due to expected saturation in the market as a result of dwindling growth prospects.

The recent banking reforms initiated by Lamido Sanusi, Governor, Central Bank of Nigeria (CBN), has had adverse effects on indigenous telecom operators, a situation that has further slowed growth in the industry.

This is due to the local debt of about N2billion owed telecom companies by the banking institutions in the country.

The situation has on the other hand dimmed the hopes of smaller operators that intended to apply for loans for network expansion from financial institutions.

But according to stakeholders in the sector, the hard times experienced mostly by small operators in the industry could be ameliorated if mergers between the weak and strong operators are embarked upon. This fact was simplified by Dr. Emmanuel Ekuwem, president of the Association of Telecom Companies of Nigeria (Atcon) in an interview on ways of revitalizing the industry for proper growth.

Though the problems of non-availability and high cost of bandwidth persist, the recent efforts by Main One Cable Company and the Glo submarine cable (Glo1) is seen by industry observers as a step in the right direction, aimed at paving the way for increased and cheaper bandwidth required by Internet Service Providers (ISPs).

Also, as power supply remains a problem in the country, operators are bound to experience hard times. For instance MTN spends N500million naira monthly on maintenance of generators in their base stations and in procurement of diesel, a situation that amounts to N6Billion annually.

With the Federal Government failing to reach its power generation targets, operators explained that as the cost of purchasing diesel for generators increases, the rate of network expansion may decline, paving the way for infrastructure sharing among operators.

by Ikechukwu Odoso

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