Nigeria is Africa’s largest mobile market with more than 110 million subscribers, and yet market penetration stands at only around 70% in early 2013. Subscriber growth accelerated again in 2012, driven by lower prices and a growing demand for mobile broadband services. The rapid growth has led to problems with network congestion and quality of service, prompting the regulatory authority NCC to impose fines and sanctions. Every year the network operators are investing billions of US$ into additional base stations and fibre optic transmission to support the ever increasing demand for bandwidth. According to some estimates, the number of cell sites in the country – currently around 20,000 – could more than triple in the coming years.
At the same time, efforts are being made to limit the environmental impact of further expansion and to encourage infrastructure sharing. Major tower outsourcing deals have been concluded. Much of the remaining addressable market is in the country’s rural areas where network rollouts and operations are expensive. This in combination with declining ARPU levels is forcing the networks to streamline their operations and to develop new revenue streams from services such as third generation (3G) mobile broadband, mobile payments/banking, and others.
Not every operator makes it in this highly competitive market. M-Tel, the mobile arm of the national telco Nitel is in liquidation together with its parent company, following a decade of failed privatisation attempts. Mergers and acquisitions (M&A) are going on amongst the country’s other smaller operators, many originating from the fixed-wireless sector using CDMA-2000 technology. Some of them hold suitable frequency spectrum for a technology migration to Long Term Evolution (LTE). Several other LTE networks are being rolled out, but commercial launches have been hindered by delays with frequency spectrum allocations.
Although the market is one of the most competitive in Africa, the industry regulator is tightening price caps and mandating further reductions of interconnect rates. Following years of delays, mobile number portability (MNP) was finally introduced in 2013, promising to make the market even more competitive.
- Billions of US$ in investments per year, tens of thousands of new base stations to be built;
- Major network infrastructure outsourcing deals;
- Mergers and acquisitions (M&A) among smaller operators;
- M-Tel/Nitel in liquidation;
- Several LTE networks preparing to launch;
- Regulator cracks down on poor quality of service;
- New price caps and lower interconnection rates;
- Number portability finally introduced.
Companies covered in this report:
MTN Nigeria; Glo Mobile (Globacom); Bharti Airtel (formerly Zain, Celtel); Etisalat Nigeria (EMTS, Mubadala); M-Tel (Nitel); Visafone; Starcomms (Capcom); Multi-Links; Reliance; Intercellular; Megatech Engineering (Zoda Fones); Telkom SA; Econet Wireless; Vodacom.