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Follow on Google News | Industry Analysis: Nigerian Mobile TelcoNigeria 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.
By: Isaac Fadeyibi 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. Major Players 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 • Infrastructure • High demand • Frequency problem • Regulatory institution (NCC) • Inadequate base station • Large market • Economic sabotage • Interconnectivity problem • Quality of Service-Due to the problem of capacity constraint Product Differentiation 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’ Demand in the Industry There is increase in demand due to; • Population explosion in urban cities and metropolis • Business purpose- Growth in SMEs • Improved Banking operations • Competition- • VAS • Business expansion by the operator- CAPEX and OPEX investment in the industry • Infrastructure sharing • Interconnectivity • Fall in cost of subscription- Supply level in the Industry • 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 • The market is still dominated by the market leader MTN • Infrastructure in short supply Benefit of Mobile telecommunication Operation in Nigeria • Create competition in the telecommunications industry • Privatization of Government owned telecom entities • Telecommunication becoming affordable to the ordinary Nigerians • Increased accessibility to telecom services • Rural telecommunication project is encouraged • Increase revenue generation for the government • 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. # # # Integrated Marketing/ Management Consulting, Information management and Telco Consultant......http://isaacfadeyibi.blogspot.com/ End
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