Nigeria: Telkom’s Multi-Links throws in the towel

Jeffrey Hedberg is currently acting Group CEO of Telkom
AS part of its strategic repositioning efforts in the Nigerian market, the country’s premier Code Division Multiple Access (CDMA) operator, Multi-Links Nigeria has indicated its intention to exit the CDMA market.

Multi-Links Telkom Nigeria’s Acting Chief Executive Officer, Vincent Raseroka, said the decision to exit the market was purely based on business realities.

“It is strategically, financially and commercially challenging for us to continue to do business in this segment. With a current market share of 2.6 per cent in a market dominated by the GSM technology, it has become imperative that we explore other options and chart a new path to growth and profitability for ourselves as a business by utilising our fixed infrastructure here in Nigeria,” Raseroka.

He said a number of contracts have rendered Multi-Link Telkom’s CDMA business unprofitable and unsustainable.

Raseroka said his company was committed to reducing costs in a manner that ensures sustainable long-term benefits.

Raseroka said despite the comprehensive turnaround programme of the company in March this year, the CDMA business in Nigeria is still facing stiff challenges in a highly competitive environment, requiring scale to successfully compete. According to him, despite recent intervention, Multi-Links operating revenue decreased by 1.7 per cent.

Subscriptions and connections revenue decreased 18.2 per cent due to termination of access fees as a result of increased competition.

Traffic revenue decreased 24.6 per cent mainly due to decrease in traffic volumes and higher churn rates.

“For the time being, our CDMA operations will continue to run as usual. Multi-Links will work with the NCC to find a solution. Once the decision is finalised, Multi-Links will notify customers accordingly with sufficient lead time.”

Analysts say the CDMA market in Nigeria is not lucrative because of their unattractive product and service offerings, saying they were originally meant for rural telephony services. Industry stakeholders in Nigeria attribute the woes of the CDMA segment to the restructuring carried out by the former Executive Vice-Chairman of the Nigerian Communications Commission (NCC), Mr Ernest Ndukwe, in 2006 when he doubled the interconnect rate of CDMA operators.

They contend that everywhere in the world, CDMA interconnect rates are not at par with GSM interconnect rates.