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Nigeria: Mobile penetration, less than 50%

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Although Nigeria is known today as the largest mobile market on the African continent, it still has a mobile penetration level of less than 50%, suggesting that there is ample room for market expansion, this according to a recent study conducted by Canadian research firm Technology Strategies International, in partnership with BroadGroup TMT Ventures. The report, titled “Investment Opportunities in the ICT Sector in Nigeria: 2010”, also suggests that there is massive opportunity to improve fixed line and internet penetration in the country. “One of the things fuelling the growth in the Nigerian ICT sector is the imminent illumination of two undersea cables, which will increase international bandwidth dramatically. The improvement in international connectivity will have a major impact on business in Nigeria”, said Christie Christelis, President of Technology Strategies International. The study revealed that demand for mobile services is still on the increase, with Nigerian operators experiencing declining ARPUs levels, as the subscriber base broadens to include poorer segments. Companies such as MTN Nigeria have shown that, even at ARPU levels of $12 and declining, the business is still capable of making superior margins, added Christelis. He argued that the recent political crisis surrounding President Y’Ardua’s ill-health, and the instatement of Vice President Goodluck Jonathan as acting President, is a temporary setback for the country, but investors, although considerate at the moment, should continue investing in Nigerian ICT companies. Among other setbacks, the sensitivity of the economy to oil price fluctuations, which could result in volatile foreign exchange rates, is a major concern for investors- as well as regionalism and corruption. Furthermore, Christelis points out the government’s Vision 2020 initiative – including the promotion of indigenous electronics manufacturing – and the capitalization of the infrastructure sharing venture, Helios Towers, as creating an environment conductive to high growth. The 53 pages report expands on the reach of undersea cables, building out mobile infrastructure, turning investments into fixed wireless infrastructure into sustainable businesses, expanding the retail network for mobile, fixed wireless and internet services, and in electronics manufacturing.

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