Efem Nkanga
2 January 2008
Lagos — In this report, Efem Nkanga looks at the events that will shapen the nation's Information Communications Technology sector in 2008
The year 2007 was a mixed bag of the good and not so good for the nation's information communications technology sector. It was a year that hit Nigerians in the face with issues of quality service that almost made nonsense of the gains recorded in the preceding years and caused stakeholders in the sector to sit up and look for ways out of the sobering effect of dwindling service issues characterised by dropped calls, call interference, and undelivered SMS, among others. It was also a year that was characterized by mergers and acquisitions that strengthened the power base of Private Telecoms Operators (PTOs), with some of them already walking down the path of extinction. It was also a year that brought about technological advancements like the Celtel's One Network theme that put Nigerians at the receiving end of seamless communications across African borders at zero cost, thus enhancing social and economic relationships and bringing Nigerians known for travelling far from home together through mobile technology at least within the motherland, Africa .
With a new born year unfolding, 2008 promises to be a year where 'the gains made in 2007 will be consolidated and the impact of technology in lives and business relationships of Nigerians will be felt the more as more and more Nigerians embrace technology fully.
The nation's ICT sector has evolved and grown in leaps and bounds since the advent of GSM in 2001.The sector against all odds and expectations has witnessed such growth that from a dismal 400,000 lines in a population of more than 130 million, no thanks to NITEL, the nations telecoms sleeping giant that was held in the quagmire of inefficiency, to its current 44,000,000 subscribers at the end of 2007 credited to the operations of the GSM operators and their CDMA counterparts. At that time, teledensity ratio was less than 1% and of today has risen to about 27% and is projected to hit 50% in the next five years. In the preceding year many landmark achievements aided the growth of the sector and many experts are of the view that year 2008 is a year that will consolidate the gains that has been recorded in the sector since 2001. Nigeria despite the challenges of poor quality service cannot be ignored and has consistently surpassed all projections of 2007 by hitting the 44,000,000 subscriber base.
A four million subscriber base over the 10,000,000 million increase in subscriber base in 2006.
Informa Telecoms & Media's World Cellular Information Service (WCIS), a searchable on-line database providing a constantly updated and accurate source of research data on the wireless industry worldwide had predicted last year that Nigeria will take over from South Africa as the largest mobile phone market in Africa by the end of 2007, a scenario that has come true which has happened. Its other predictions that mobile subscriptions in Nigeria will exceed 44 million subscribers in Nigeria as against 40 million forecast for South Africa has also come to be. This year Nigeria will commence its march into becoming a digitalized and technology compliant nation that will impact positively on Africa and the world if given the right enablement and right infrastructure to conquer and take its place truly indeed as the giant of Africa in Africa and the world in the ICT Terrain.
As the New Year begins, there are events that occurred last year that will no doubt shape the industry in 2008. One area that will shape the sector is the commencement of 3G technology.
With the unveiling of 3G by MTN and Globacom in December last year with MTN unveiling of 3.5G technology and Globacom 3G plus, Nigerians are in for a multimedia experience that will ensure the convergence of voice, video, data and fax services on the go. Third Generation Technology, popularly known as 3G is an enabler of mobile communications, that will usher in many benefits like roaming capability, broad bandwidth and high speed communication upwards of 2Mbps. 3G represents the convergence of various 2G wireless telecommunications systems into a single uniform global system which includes terrestrial and satellite components in its functioning. The technology represents a shift from voice-centric services to multimedia oriented like video, voice, data, fax services. The most useful aspect of 3G wireless technology is primarily in its ability to unify existing cellular standards such as GSM, CDMA and TDMA. The commencement of 3G is expected to lead to increased telephone penetration especially in the rural even as pricing of access to the technology might not be within the reach of rural folks. This is due to the fact that those applying for 3G will have to acquire new compatible 3G handsets because the present handsets being used will not be usable with 3G.
2008 will also be characterized by more mergers and acquisitions as most of the PTOs struggling to survive will be up for grabs by discerning investors interested in a slice of the nations telecoms cake. Small PTOs will increasingly find it difficult to compete as increased competition in the sector will edge them out of the scheme of things as bigger players gobble up the market and render the smaller players redundant. This will no doubt lead to a lot of mergers and acquisitions as smaller operators align themselves to bigger operators for survival. With 2007 seeing to the acquisition of Cellcom by Visafone for 3Billion naira, Telkom acquiring 75 per cent of Multi-Links Nigeria , for $280m land Sudatel acquiring 70% of Intercellular for 3billion naira, the sky is the limit and more acquisitions will definitely occur this year.
These acquisitions have no doubt highlighted the fact that Nigeria is a top emerging market that investors are falling over themselves to be part of. Already the Foreign Direct Investments attracted to the country through the sector has reached 10 billion dollars and is expected to increase by over 50% in 2008.
The year will also be characterized by increased competition in the sector as operators fight for market share. MTN, Globacom, Celtel, Starcomms, Visaphone and the expected commencement of operations by Mubadala heats up the sector and makes it too hot for unserious players to thrive in. Mudabala is expected to start operations by march following the acquisition of its operating license from NCC for 400 million dollars. Operators like MTN which acquired VGC communications for 65 million US dollars is expected to launch a fixed broadband network that will complement its mobile arm in 2008. While Globacom is expected to continue consolidating its hold by continuing its regional expansion drive across West Africa and beyond.
Celtel is also expected to continue its winning streak in 2008. Its One Network launch in 2007 has put it in the league of serious players ready to take Nigerians to the next level of technological advancements. Its One Network is the world's first borderless mobile phone network that enables customers on the Celtel network to enjoy pan African community and move freely between countries in which the group operates.
The Network, whose coverage capability is twice the size of the European Union will redefine how Nigerians communicate its people and with its African brothers.
One Network currently has 12 countries currently on the one network with 10 more projected to be added before the end of 2008. What this means is that Nigerians can communicate with relations and business partners in Brazzaville, Dar es Salaam, Kampala, Khartoum, Kinshasa, Lagos, Libreville, Lilongwe, Nairobi, Ndjamena, Niamey, Ouagadougou. The service is available to subscribers on both prepaid and postpaid platform to be able to call and receive calls, send and receive SMS free of charge as well as top up their phones with recharge cards at applicable local rates without paying any access fees or roaming charges. As you step into any of the countries where Celtel offers the service, you are automatically welcomed and informed via SMS of the service and given directives on its offerings with no prior registration, signing fee or roaming contract needed.
One other event that will shapen the industry is the proposed merger of the Nigerian Communications Commission NCC and the Nigerian Broadcasting Commission NBC . With the commencement of 3G by MTN and Globacom the need for the fine tuning of the merger is more than ever before necessary. For example with 3G employing voice , video and data transmission, it will not make sense for MTN or Globacom to approach the NBC for a separate TV license to enable video transmission.
The year will also be shaped by the adoption of technology especially in the stock market. As more and more Nigerians embrace the Stock Market and as more telecoms firms hit the stock market to satisfy the hunger for local ownership in the sector. Words like eBonus, eDividends, eNotification, will come to play and will be part of the vocabulary of Nigerians especially as more Nigerians have come to embrace the market as a wealth creation tool. Nigerians will have more incentives to trade their stocks online in 2008 through their mobile phones , internet etc with the expected upsurge of activities especially from telecoms firms in the market this year.
Broadband access is another factor that will dominate 2008 as more and more Nigerians seek access to the internet at home, at work and on the move. Mobile banking will also increase as a service challenge as more Nigerians deploy technology in enhancing the way they live, work and play. The number of ATMs in the country which is currently about 3800 nationwide is set to double this year as Interswitch deploys more ATMs across the country to meet the huge demand for ATMs by Nigerians seeking for convenience and ready access to their cash 24/7. There is also the possibility that off bank ATMs will increase as banks explore more ways of meeting the growing demands of their clients. ATMs will no longer be located just within banks alone but in more off bank locations like churches, supermarkets, gas stations etc.
This year will also be characterized by increased Personal Computers acquisition as more Nigerians take advantage of the several initiatives in place targeted at ensuring that Nigeria becomes a digitalized nation. Initiatives like the Computer for all Nigerians initiative CANi of the Federal Government, a government-assisted personal computer ownership scheme and essentially a social programme designed to assist individuals in the public and private sectors purchase quality PCs and laptops at discounted prices under affordable and convenient repayment plan. Another fact is that most banks in the country in partnership with major Nigerian computer firms are offering laptops to Nigerians at prizes as low as N5,000 in a convenient repayment plan.
Another event that shaped the sector in 2007 and is not likely to go away in 2008 is the issue of poor quality of service. Nigerians should brace themselves and be ready for continued depreciation in service offerings from operators. Until our infrastructure base improves we will continue to experience a drop in service delivery and that is the truth. The National Assembly that has waded into the issue of poor quality service should in 2008 focus on how to ensure that an enabling infrastructure that meets world class standard is put in place to ensure world class service delivery. While not absolving operators of some of the blame for poor service quality, the truth is that there is no point putting in place a third class kind of infrastructure and yet expect world class service. Garbage in garbage out. What you put in is what you get. All hands should be on deck especially government hands to ensure that the infrastructure base is remodelled to guarantee uninterrupted and adequate power supply first of all, good roads, and adequate security as a focal point in 2008 and every other thing will be added unto it. It is only in Nigeria that people acquire world class automobiles at astronomical costs to ride on third class roads that has seen better days and expect the best service from the cars. If we want the best, we have to put in the best input wise to get the best output. It can no longer be business as usual. This is a year when government hands, regulatory hands, operator hands aided by stakeholder hands must be on deck to squeeze the best out of the Nigerian telecoms sector.
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