2009 Nigeria - Telecoms, Mobile, Broadband and Forecasts

Nigeria has overtaken South Africa to become the continent’s largest mobile market with over 65 million subscribers, and yet market penetration stood at only around 45% in mid-2009. Far reaching regulatory reform has led to hundreds of companies providing virtually all kinds of telecom and value-added services in an independently regulated market. Billions of US$ are being invested into network infrastructure each year.

Competition has increased under a new unified licensing regime, and declining average revenue per user levels are forcing the operators to streamline their businesses, introduce new services and transform themselves into converged broadband service providers in order to maintain market share.

Significant consolidation has already occurred in Nigeria’s Internet and broadband sector, from over 400 ISPs two years ago to around 150. Powerful new players from the fixed-wireless and mobile network operator camps have entered the market with third generation mobile and advanced wireless broadband services such as WiMAX. Mergers and acquisitions, which have attracted record prices in recent years, are expected to continue.

The arrival of two new international submarine fibre optic cables in 2009 will break the current monopoly in this sub-sector and revolutionise the market by reducing the cost of bandwidth by up to 90%. Several national fibre backbone networks are being rolled out to transport this bandwidth to the end-users. However, due to the vast expanse of the country and decades of neglect of infrastructure prior to market liberalisation, satellite-based services will continue to play an important role in Nigeria’s telecoms sector.

After failing three times in the past, privatisation of the incumbent national telco Nitel is scheduled to be finally completed in 2009. The government is looking for a new strategic investor and new business models to turn the ailing company around.

Key highlights:

·         Forecasts for fixed-line, mobile and Internet markets to 2010 and 2015;

·         CDMA-based 3G networks are outpacing their GSM rivals with triple digit growth rates;

·         Profiles of major players, including financial results;

·         ARPU is expected to continue falling before turning around on the back of broadband services;

·         Competition in international fibre bandwidth set to arrive in 2009 will revolutionise the market;

·         IP-based next-generation networks are enabling converged voice, data and video services;

·         Sub-Saharan Africa’s first Fibre-to-the-Home (FttH) network rollout;

·         Privatisation of Nitel scheduled for 2009 after three unsuccessful attempts in the past.

Nigeria blended monthly mobile ARPU – 2006 - 2008

(Source: BuddeComm based on company data)

Data in this report is the latest available at the time of preparation and may not be for the current year.

The following notes provide some background to our scenario forecasting methodology:

·         This report includes what we term scenario forecasts. By describing long-range scenarios we identify a band within which we expect market growth to occur. The associated text describes what we see as the most likely growth trend within this band.

·         The projections shown in the tables in this report are based on our own historical information, as well as on telecommunication sector statistics from official and non-official, national and international sources. We assume a possible deviation of 15-20% around this data.

·         All statistics for GDP, revenue, etc, are shown in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.

For those needing high level strategic information and objective analysis on the telecommunications sector in Nigeria, this report is essential reading and gives further information on:

·         The largest mobile market and the most competitive fixed-line market in the region;

·         Government policies affecting the telecoms industry;

·         Market liberalisation and regulatory issues;

·         Telecoms operators – privatisation, acquisitions, financial results, new licences;

·         Internet and broadband development and growth;

·         3G mobile broadband rollouts and pricing;

·         Average Revenue per User (ARPU);

·         Mobile application and content developments.