Nigerian Mobile Telco has been referred to as the fastest growing market in Africa. Nigerian telecoms came into mainstream in 2001 when the deregulation of the subsector of the economy gave way to the private involvement. The telecommunication system was opened up with the issuance of Global System for mobile communication (GSM) unified license in 2001. GSM license in Nigeria cost about US$285million. Nigerian Telecommunication (NITEL) was the only operator in the market before 2001 with subscribers of about 500,000 from a population of 140 million.
The deregulation usher in telecom players like MTN, Glo Mobile, Zain formerly Celtel, Etisalat, Visafone, Multilinks, Starcomm and Zoom formerly Reltel. The telecom regulator in Nigeria is Nigerian Telecommunication Commission (NCC), with reference to NCC Act 2003; 3-(1) “There is established of a commission to be known as Nigerian Telecommunications Commission with responsibility for the regulation of the telecommunication sector in Nigeria”.
Product/ market Segmentation
The market is divided into urban and semi-urban, and rural market. Tele density in the urban is about 65% while semi urban is about 45% and rural is less than 15%. Product Segmentation is GSM and CDMA.
MTN, Zain, Glo and Etisalat control the GSM market. While Visafone, Multilinks, Starcomm and Zoom formerly Reltel are CDMA product segment. The market share of these major mobile telecoms are MTN-40.54%, Zain- 30.20%, Glo Mobile-28.11 and Etisalat- 0.7%, M-Tel Mobile phone business of NITEL-0.45%. While Visafone leads the CDMA market, follow by Multilinks, Starcomms, and Zoom.
Fig.1. Market shares (percentage of total subscriptions)
Factors affecting the industry
o High demand
o Frequency problem
o Regulatory institution (NCC)
o Inadequate base station
o Large market
o Economic sabotage
o Interconnectivity problem
o Quality of Service-Due to the problem of capacity constraint
The telecom operators offer similar products with slight difference such as
– CDMA and GSM- Voice Service
– VAS; SMS, mobile news, online banking, music, data card, etc
– With diverse product differentiation, voice is the main source of income for Telco in Nigeria.
Growth in the Industry
Nigeria has maintained its lead as African’s largest telecom market with active subscribers of about 65million relegating South Africa to second place with about 45million subscribers. From a bit above 500,000 NITEL fixed wire line and mobile subscribers in 2001. The industry grew to over 7million subscribers in 2004; in December 2008 the subscribers in the market grew to 62.99million. An addition of 22.59 million subscribers in 2008 alone represented 56% annual growth rate. Recent figure as at January 2009 put the subscribers’ base at 64.16. While GSM subscribers are in the range of 57million, CDMA subscription in Nigeria grew from just 380,000 in 2007 to more than 6million at the end of 2008. The country intelligent report on Nigeria by Pyramid research stated that the market grew by 23% with total industry revenue of US$8.42billion. With mobile penetration of 42% revenue will increase to US$11.14billion by 2013 with forecasted annual increase of 5.7%. The telecom market has been named the largest mobile market in Africa. Tele density of 0.73% in 2001 has steadily increase over the year to 33.72% as at December 2006 and about 45% aggregate in December 2008. The current market installed capacity is 117.892 million as at December 2008. The mobile industry ARPU in 2003 was around US$54 per month but as at 2008 December was US$13.
Demand in the Industry
There is increase in demand due to;
o Population explosion in urban cities and metropolis
o Business purpose- Growth in SMEs
o Improved Banking operations
o Competition-The opening up of the market to competition in all segments of the industry has resulted in major drop in price for telecommunications services.
o Business expansion by the operator- CAPEX and OPEX investment in the industry
o Infrastructure sharing
o Fall in cost of subscription- Pre 2001, NITEL mobile cost above #60,000 per line, after the issuance of GSM license from mid 2001, it cost #20,000 per line, and today, this figure has fallen to almost zero. Tariff for calls on GSM network was #50 per minutes, today as low as #25 per minute (mobile to mobile). CDMA and fixed wireless tariff is even much lower.
Supply level in the Industry
o The supply as regards the product availability is encouraging compared to about 4 years ago but in terms of service and customer satisfaction is the opposite
o The market is still dominated by the market leader MTN
o Infrastructure in short supply
Benefit of Mobile telecommunication Operation in Nigeria
o Create competition in the telecommunications industry
o Privatization of Government owned telecom entities
o Telecommunication becoming affordable to the ordinary Nigerians
o Increased accessibility to telecom services
o Rural telecommunication project is encouraged
o Increase revenue generation for the government
o Creation of employment opportunity in Nigeria
Conclusion and Recommendation
The telecom industry in Nigeria is a goldmine; the development of telecom in Nigeria is so rapid and gives the investors quick ROI more than what they could imagine. The regulatory body (NCC) has to do a lot in Nigeria telecom development such as the issue of frequency or spectrum allocation, also the SIM registration is taken effect from July 2009 as well as the number portability which is scheduled to take effect from May 29 2009. If these are done well and successfully, the subscribers will have another story to tell compare to what is happening presently in the industry which is characterized by high drop calls and economic sabotage among the major players vis-à-vis the Nigerian Telecommunications Commission. Federal government should also look into the problem of social infrastructure such as electricity because this has increased CAPEX and OPEX of the telecoms operators in Nigeria.
Telecommunication service providers should expand their coverage beyond urban areas unto rural areas as most rural areas of the country are still without telecommunications network coverage.
Rapid roll out of network resources such as base station and switches, which should result in improved quality of service; by improving on their transmission infrastructure across the country, optical fiber and microwave transmission lines should be constructed.