Nigeria is the largest and the fastest growing telecommunications market in Africa. With over 1,863 licenses managed by the Nigerian Communications Commission (NCC), the market generated about USD10 billion in telecommunications services revenue in 2009 and recorded an average annual growth rate of about 30 percent. Mobile telephony using the Global Systems for Mobile Communications (GSM) accounted for about 75 percent of the market growth and revenue. According to the NCC, Nigeria’s active subscriber base increased from 57 million in December 2008 to approximately 70 million in December 2009. Reportedly, over USD20 billion dollars in foreign direct investment has been attracted to Nigeria in this subsector since January 2001 when Nigeria conducted a public auction to sell digital mobile cellular licenses valued at USD285 million dollars. Other license categories sold by NCC overtime include Local Exchange Operator license, internet service provisioning, equipment sales and installation, customer premises equipment services, interconnection management services, and private submarine cable systems.
Nigeria’s telecom market is dominated by service providers from South Africa (MTN), Kuwait (Zain Group), UAE (Etisalat) and equipment/peripheral providers from Europe (Ericson, Siemens and Nokia),Asia (ZTE, etc.) and the United States (Motorola and Harris Stratex, etc.). Nigeria is the chief driver of telecommunications import, trade and investment in West Africa accounting for about 85.2 percent of the regional GDP estimated at USD376 dollars. This is one of the reasons Nigeria through the NCC is advocating “Fiber Without Borders” – a concept to motivate African countries to realize their telecommunications potentials by encouraging free passage, interconnectivity and access to submarine cables and other broadband technologies. At the inception of cellular mobile telephony in Nigeria in 2001, the country could boast fewer than 500,000 functional wireless and fixed telecommunications lines. To underscore the continuing spectacular growth of the Nigerian telecom market, NCC’s CEO, Ernest Ndukwe disclosed that Etisalat has recorded over a million subscriber base less than a year after it began operation in 2008.
Nigeria is investing heavily in infrastructure development including telecommunications facilities such as submarine cable systems (Glo 1,Main One and West African Cable Systems), cell sites, towers and transmission stations. Glo 1 is a 9,800 kilometer submarine cable owned by Globacom, which landed Nigeria from Bude in United Kingdom on September 5, 2009. It was laid by Alcatel-Lucent of France. Main One is a private investment of Mainstreet Telecommunications Ltd – the first company to obtain a license for submarine cable network from NCC and Ghana’s National Communications Authority. The West African Cable System (WACS) is a consortium led by MTN group, which is expected to link Europe, West Africa and South America with over 3.8Tbps. Over the next 3-5 years, Nigeria will remain a growth market for US suppliers and manufacturers of telecommunications equipment, infrastructure and services.
The Government of Nigeria (GON) has substantially opened Nigeria's telecommunications sector. The Telecommunications Act of 2001 authorizes the Nigerian Communications Commission (NCC) to issue licenses to existing and prospective service providers. Five enterprises, including Etisalat which commenced operations in 2008 and NITEL, have licenses. Globacom won mobile, fixed, and international gateway licenses as Nigeria's second national operator in mid-2002.
In July 2007, three carriers in the 800MHz spectrum band were awarded to Visafone Communications in a competitive auction process that included GiCell Wireless Limited, Multilinks Telecommunication Limited, and TC Africa Telecoms Network Limited. Also in March 2007, four licenses for a 10MHz lot in the 2GHz spectrum were issued to Alheri Engineering Co. Limited, Celtel Nigeria Limited, Globacom Limited, and MTN Nigeria Communications Limited.
The NCC commenced the unified licensing regime in May 2006, awarding the first batch of unified licenses to four telecommunication service providers. The unified license permits telecommunications companies to offer services across the board in telecommunications, including fixed line, wireless, data services, etc. This marks the end of the five-year exclusivity incentive granted the mobile telephone licensees in 2001.
The NCC is working toward setting up of a national emergency communications system and the introduction of a 3-digit emergency communications code for Nigeria. The project estimated to cost USD24.72 million dollars will see the emergence of community-based call-handling centers which will act as intermediaries between those needing emergency assistance and telecommunications
The Association of Telecommunications Companies of Nigeria (ATCON) said that the total investment in the telecommunications industry is about USD8.5 billion. Annual investment is projected at USD6 billion over the next 5 years. Nigeria liberalized its telecommunications market in 1998, and sold its cellular mobile license in 2001.
In 2001, Nigeria joined the global system for mobile communications (GSM) through an auction process whereby competing operators were selected to bid the available licenses. Four firms successfully concluded the auction but only three met the mandatory deadline for payment of the license fee of $280 million each. The successful firms were Econet Wireless (now known as Vmobile Nigeria Limited), MTN Nigeria, and NITEL, the Nigerian government-owned telecommunications parastatal. Econet Wireless (now known as Zain) and MTN both launched their services in August 2001. NITEL began skeletal services using its associate, M-Tel in Abuja, the capital city. The Nigerian mobile networks operate in the GSM900 MHz and GSM 1800 MHz frequencies.
Nigeria licensed and launched a Second National Operator (SNO), Globacom Mobile Limited, in 2002. The SNO has a bundle of licenses to provide services related to wireless telecommunications, including digital mobile (GSM), fixed-line services, data, Internet and IP services, business and carrier solutions. The second national operator or carrier is expected to provide national and international gateway services in competition with the former Public Switched Telecommunications Network. Pursuant to deregulation programs, Nigeria reviewed its telecommunications policy, first published in October 1999, and issued operating licenses to several private operators in the 350 MHz frequency range for zonal, regional and/or community telephony. Currently, there are over 30 private telecommunications operators in Nigeria using variants of GSM and CDMA technologies and equipment from the U.S., Europe and Asia.
NCC insists that the Nigerian telecommunications market is big and dynamic; that the market boasts of a stable regulatory and operating environment. As Nigeria deepens and expands its telecommunications infrastructure over the next 2-3 years, the biggest growth is expected from opportunities offered by broadband.
Infrastructure is a critical factor in this market and offers US manufacturers and suppliers a huge opportunity for partnership in technology and professional service. For instance, there are 774 local government councils (counties) in Nigeria with each council having between 20 – 25 villages. At a ratio of one base station per village, it comes to about 19, 350 base stations to cover provide effective telecommunications service across the country per operator. NCC disclosed that the total number of base stations by all the operators combined is less than 15,000 at the moment. Yet, Nigeria is doing well in voice services, but lags behind in data generation and management .
The Nigerian Communications Commission (NCC) is the industry’s regulator. NCC has approved more than 1,863 operating licenses and permits for various telecommunications services across the country, including over 50 Internet service providers. This has generated demand for telecommunications equipment, accessories, consulting and technical partnerships. The replacement of Nigeria’s outdated telecommunications infrastructure through both multilateral and Nigerian funding is a priority program of the Nigerian government.
The market reforms that started in 1993 have unleashed private sector-led innovations that are generating demand for telecommunications equipment, accessories and services. Topping the list of equipment are digital and mobile phone sets; VSAT notes, cellular, transmission and switching equipment; 220V PABX and voicemail facilities. Services such as Internet cafés, voicemail, and prepaid calling cards are exploding in Nigeria.
The best prospects in mobile telecommunications services include banking and financial service support technology and systems, value-added services such as equipment rentals, consulting services and training programs. Interested U.S. service providers should target wireless applications, rural and community telephony, local and wide area network design and management, spectrum management, transaction management using wireless applications, data network design and performance optimization, Internet and Intranet security services, electric and alternate power-supply services, and deployment and strategic marketing of wireless solutions. There are also opportunities in consulting services and training in project management and corporate leadership in this sector.
Nigeria is a strategic gateway to the West African markets and offers U.S. firms a tremendous growth opportunity that may be difficult to equal or exceed elsewhere. ECOWAS, the 16-member body of West African countries, recently adopted a common currency known as Eco and share a common tariff. Interested U.S. firms should take advantage of CS Nigeria’s Networking With the USA (NUSA) program and BuyUSA to enter this market – the largest and most robust in Sub-Saharan Africa.