By Prince Osuagwu
Nigeriaâ€™s ascension to Africaâ€™s top and one of the world leaders in the telecom developments did not come by accident, after all.
A deliberate liberalisation of the telecom sector by Obasanjoâ€™s government in 1999 and the appointment of the then President of Association of Telecom Companies of Nigeria, ATCON, Engr. Ernest Ndukwe as the Executive Vice Chairman and Chief Executive officer, to head the industryâ€™s regulatory agency was a clear indication of that administrationâ€™s resolve to stand tall in telecom development world over.
Moreover, handpicking a renowned and credible civil servant Alhaji Ahmed Joda to chair the board of that commission, also gave NigeriansÂ a clear vision that Obasanjoâ€™s administration wanted to leave a legacy.
Today, it can be argued that the telecom sector is about the only credible legacy that administration could be remembered for.
Since 2001, when the first set of Global System for Mobile communication (GSM) licences were auctioned, the sector has been in the news for good; breaking barriers to become a prophet honoured both home and abroad..
Only last week, a US based research firm Pyramid research, after admitting watching the gradual but steady rise of Nigeriaâ€™s telecom development, decided to capture it in a book form. The book which was officially unveiled in Abuja Nigeria, gives step by step account of how the liberalisation of the industry in 1999 led to the boost that has seen Nigeria taken over lead of telecom developments in the whole of Africa.
It takes a dispassionate look at the sector, throwing up lots of figures to support its claims, revealing the complexities of doing business in Nigeria as well as other countries in Africa and in most developing countyâ€™s of the world.
Pyramid also supports it research with critical graphs and charts which it said was sourced from relevant and credible industry players as well as information pieced together from interviews and deep survey of the Nigerian telecom landscape.
The duo of Gabriela Baez, Managing Director and Badii Kechiche Analyst, EMEA who presented the book in the presence of Former Minister of state for Information and Communications, Alhaji Aliyu Ikra Bilbis and the EVC NCC, Engr Ernest Ndukwe, said the book entitled â€œThe Impact of Mobile Services in Nigeria: How Mobile Services Are Enabling Transformation Across Economic And Social Activitiesâ€, was one of the most integrated works on the countryâ€™s telecommunications industry.
The detailed documentation supports the claims that lots of progress have made in the industry, attracting several billions of dollars from local and international funding sources, but also points out very vividly that a lot still remains to be done thus presenting investment opportunities for operators, equipment vendors and manufacturers. It covers important landmark achievements in the sector including :
Employment and distribution networks of mobile operators
Mobile operators contribute to the economy by creating workplaces and jobs that rely on the distribution of mobile technology and services.
This contribution also takes the shape of employment beyond the telecom operator ranks, by enhancing entrepreneurship, productivity and other commercial skills. The use of mobile phones enables professional and economic agents to multitask and carry out various activities simultaneously.
In total, telecom operators employed around 8,000 people directly and around 3m indirectly in 2008. Although direct employment is easier to quantify, indirect employment has a wider and more profound impact. There are several groups, which can be divided into two subgroups, that earn their living thanks to mobile services:
The top category of indirect employment encompasses equipment sales, infrastructure deployment, advertising, marketing and public relations as well as security Ã¹ workers involved in the protection of base stations. Reportedly, in 2008 Zain employed as many as 8,000 security guards.
At the base of the pyramid, there are mobile service resellers, recharge card distributors, retailers, phone booth operators as well as street vendors. The so_called mini call centers consist of simply one or a few mobile phones and airtime bought in bulk from the operator. Call center operators allow other people to use the phone for a fee and quite often will take a message, also for a fee.
Investment in infrastructure by mobile operators
Pyramid said that in its research, it found out that with every network rollout and upgrade, GSM operators bring money and employment opportunities to the market.Â IT cited example of MTNâ€™s, investment in building three networks: a core telecommunication network, a transmission network and a power supply network and attributed the development to a result of Nigeriaâ€™s underdeveloped infrastructure.
â€œNigerian operators have to not only budget for building the transmission backbone and infrastructure but also for power generators, bringing in skilled ICT employees and transportation.
Since the introduction of GSM services in Nigeria, mobile operators together have invested several billion dollars in infrastructure deployments, network rollouts, upgrades and expansions. To support the mobile infrastructure, operators have also embarked on building backbone networks. These consist predominantly of fiber_optic cables, base stations and satellite connections, transmitting traffic between cities and to other countries. MTNâ€™s famous Yellow Bahn fiber_optic cable, for example, is more than 5,500km (3,400 miles) longâ€.
The Research firm also estimates that since the liberalisation of the telecom sector in 2001, capital investments in mobile networks and operations by the middle of 2008, have accounted for 80% of total telecommunications foreign capital investments. This translates to a total of more than $12bn. While as of March 2010, it quoted the NCC report as supporting an $18bn in telecom sector capex, $16bn of which is invested by mobile operators.
Facts of the investments according to the Firm, was that â€œIn 2008, MTN increased its number of base transceiver stations (BTS) by 1,560, to reach 4,776, and more were built in 2009, for a total of almost 5,000. In addition, MTN Nigeria has prioritized the rollout of 3G sites, and 551 3G sites were operational in 2008. MTN is also building metropolitan fiber rings around important commercial cities such as Lagos, Abuja, Ibadan, Port Harcourt, Kano, Aba and Warri. Additionally, MTN Nigeria estimates its total investment in network improvement in 2009 to be roughly $1.6bn.
Zain Nigeria is also investing a significant amount of resources in its network. The operator has more than 4,000 base stations and has contracted Nokia Siemens Networks to roll out its fiber_optic backbone, which will soon reach 4,000km.
â€œNew network rollouts require multimillion_dollar budgets. For example, in November 2008, Etisalat Nigeria awarded Alcatel_Lucent a multimillion_euro contract for the deployment of its new mobile cellular network in the country on a turnkey basis. Alcatel Lucentâ€™s radio access technology can accommodate a variety of standards, such as GSM/GPRS/EDGE/EDGE+ and W_CDMA/HSPA/HSPA _ and in due course LTE. Alcatel_Lucent will also provide Etisalat with network deployment and integration services as well as related infrastructure, such as towers, masts and power systems.
Etisalat Nigeria Chief Executive Steven Evans has confirmed that the junior operatorâ€™s capex plans are no less extensive than that of the other operators, and it will invest $2bn to build network infrastructure in Nigeria over the next three years.
â€œMobile operators have also begun sharing BTS sites, especially with the smaller CMDA operators. MTN,15 for instance, has reported that it shares about 350 sites with other providers.
Following its later entry in 2003, Glo Mobile started operating on a 2.5G network and brought to Nigeria the benefits of value-added services: Multimedia Messaging Services (MMS), Glo Mobile Internet, Glo Fleet Manager and Glo Mobile Office. Glo Fleet Manager is a vehicle_tracking application that gives the subscriber the ability to track and trace equipped vehicles. This is an early implementation of an M2M (machine_to_machine) service. Glo was also the first operator to launch mobile access to the Internet, with other 3G licensees replicating the move soon thereafter. MTN launched an HSDPA_enabled 3.5G network in June 2008, while Zain launched its 3G service in early 2009″.
Next Generation Services
The research threw up the fact that introduction of BlackBerry handsets is another step in the transition to next_generation services. The BlackBerry was launched in Nigeria by Globacom in 2006, and MTN followed suit in March 2007. The BlackBerry platform is a powerful tool for business people across Nigeria, given the patchy fixed_line and Internet penetration in the country. In May 2009, Zain contributed to further popularizing the device by introducing prepaid BlackBerry service.
â€œIn Nigeria, and at the overall African level, the most immediate wave of innovation will come in the form of connectivity for the growing pools of laptop and smartphone users. In addition, mobile broadband has positive effects on societies through the development of human capital. After analyzing developments in Rwanda and South Africa, for instance, equipment manufacturer Ericsson maintains that the rollout of Internet services has positive â€œeffects on three broad aspects of society: development, resource management and networking.
Additional benefits of mobile broadband can be seen in the case of the Gramjyoti project in India, which shows how 3G Internet access can have a beneficial impact on the development of a rural population
Since the introduction of GSM services in 2002, the popularity of mobile services has been the result of a combination of affordable rates, quality of service and wider reach when compared with fixed alternatives. In 2001, before the advent of mobile technology in Nigeria, incumbent Nitel had 711,250 lines, of which 408,558 were active and the remaining 302,692 were inactive.
This resulted in an average of one telephone line for around 300 people. Almost 10m people were waiting to be connected, with the waiting period ranging from several months to several years. In addition, fixed communication was expensive. Before 2001, the official set_up cost of a telephone line from Nitel was about N60,000 ($600).
Fixed calling rates were also high; reduced charges to Europe, the Americas and the Caribbean were N165 ($ 1.48) per minute, while calls to other African countries were N112.50 ($1.00) per minute. On top of that, there was an installation fee; in August 1999, the government ordered a reduction of the installation fee to $217 (N20,000) and, in early 2000, further lowered it to $162 (N15,000).
Mobile services faced challenges in 2001 but have since grown at a rapid pace. In early 2001, the Nigerian market had roughly 30,000 mobile cellular telephones that were not working properly. SIM card prices have also come a long way from the beginning of the mobile era in Nigeria: from around $300 (N33,000) in 2001 to less than $2 today.
A look at mobile operatorsâ€™ advertised rates at their launch time in 2001 reveals just how much the cost of mobile communications has fallen. At the time of its launch, August 7, 2001, Econet Wireless (now Zain) was reportedly charging N32 ($0.29) per minute for airtime during the peak period (7am to 7pm) and N19 ($0.17) per minute for the off_peak period (7pm to 7am). International call rates ranged from N125 ($1.12) to N145 ($1.30) per minute depending on the zone.
Business partners (corporate clients) paid a connection fee of Nll,000 ($99.00)and N4,000 ($35.96) for a SIM card. Subscribers also paid a monthly rental fee of N4,000 ($35.96). Similarly, MTN, which launched within 24 hours of Econet Wireless, on August 8, 2001, offered rates of N30 ($0.27) per minute during the peak period and N20 ($0.18) per minute for the off_peak period. Considering that nominal GDP per capita was $381 at that time, a mobile phone was clearly a stretch for the average Nigerian.
Changes in packages and plans also significantly spurred adoption of mobile services. In September 2001, Econet Wireless launched its prepaid service, known as Buddie, and on the day of its introduction it sold more than 30,000. The Buddie starter pack cost N30,000 ($269.70) and consisted of a SIM card, a phone and free airtime worth N6,000 ($53.94).
Econet also initiated airtime recharge cards in three different denominations Ã¹ Nl,000 ($9.00), N2000 ($17.98) and N5,000 ($44.95) Ã¹ with airtime windows (the period when the card is active) of 10,20 and 60 days, respectively.
MTN followed suit and lunched MTN Pay_As_You_Go in November 2001 with four denomination cards _ N750 ($6.74), Nl,500 ($13.48) N3,000 ($26.97), and N6,000 ($53.94) cards Ã¹ giving access for five, 15, 30 and 60 days, respectively. Since late 2004, the competition between V-Mobile (now Zain), MTN, Globacom and Mtel has been the driving force behind tariff reductions and expanded access to mobile services.
Pyramid among other things noted that the cost of acquiring a mobile handset is another area where market players have made a lot of progress. Back in the early 2000s, only a few Nigerians could afford to own a personal mobile phone. In rural areas, the government and private players established calling centers to allow the public to rent airtime, but today almost everybody clutches a mobile phone.
If one judges by the facts of the Nigerian telecom market thrown open by the book, itÂ could pass for one of the most profound investment guides in the countryâ€™s telecommunications industry which from documented evidence still has virgin opportunities.