Tuesday, Sep 21st 2021 7:57 AM
Lagos
+29°C

Market Digest Nigeria

Economy

Nigeria’s telecoms revolution

telecoms

Journey of Nigeria’s telecoms revolution

The telecoms revolution that transformed Nigeria in different ways coincided with the dawn of the new millennium. A breakthrough in telephone infrastructure emerged in January 2001 when the sector was totally liberalised, paving the way for the licensing of private telecoms operators to offer telephone services previously the exclusive territory of the government-owned Nigerian Telecommunications Limited (NITEL) and its subsidiary, M-Tel, which had attempted to offer mobile, albeit analogue services.

The licensing of private operators was the result of a week-long spectrum auction, code-named Digital Mobile Licensing (DML) Auction, which took place in January 2001, in Abuja, and conducted, by the Nigerian Communications Commission (NCC), under the leadership of Dr. Ernest Ndukwe, during the era of President Olusegun Obasanjo.

The auction exercise climaxed on January 19, 2001 with Econet Wireless, MTN and Communication Investment Ltd (CIL), announced as winners.

However, each company, having paid a non-refundable deposit of $20 million to enter the auction, was required to pay a balance of $265 million within 14 days, for the total license price of $285 million, to be formally issued the licence – or forfeit the earlier deposit.

While Econet and MTN met the payment deadline, CIL failed to fulfill the obligation; and its license became encumbered – or forfeited. M-Tel, however, had its license awarded to it on a platter – being a government company at the time.

Thus, Econet and MTN paid $285 million each into the Federal Government coffers as Digital Mobile License (DML) fees. The licences were valid for 15 years, and government raked in over $800 million at the time.A very competitive beginning
The DML auction and licensing introduced serious competition, among local and foreign giants for the soul of Nigeria’s telecommunications sector.

History showed that the journey actually started with several interested parties including MSI-Celtel, MTN, Econet, CIL, M-Tel, among others.

MSI-Celtel was represented by Hakeem Bello Osagie, who later withdrew from the auction processes for undisclosed reasons. Left in the contest were MTN, Econet, M-Tel, and CIL. MTN was led by Irene Charnley (Chairperson of McSell of South Africa, the holding company for MTN South Africa. Others in the MTN team were Tunde Folawiyo, U.K Bello, and Feleng Molusi. Econet was led by Strive Masiyiwa, a Zimbabwean and Bolaji Balogun (Nigerian); while CIL was championed by Chief Mike Adenuga.

These players paid a $20 million non-refundable deposit to show their readiness for the Nigerian market.

Two years after, however, 2003 to be precise, Globacom was created as a Special Purpose Vehicle and was one of the five companies that received the nod for the Second National Operator (SNO) license; but the others withdrew from the bid at the financial stage and left Globacom in a solo race. The Globacom license, though, reads September 2002.

The NCC awarded Globacom the SNO license for $200 million. To show its readiness, Globacom was in France and Germany to sign equipment contracts with Alcatel and Siemens. That was the beginning of another level of revolution because, while the earlier operators claimed per second billing was not possible, Glo, the mobile arm of Globacom, pioneered that innovation, and people were able to pay for tariffs at per second billing level.

In 2007, Emerging Markets Telecommunications Service (EMTS), operating as Etisalat, from the United Arab Emirates, entered Nigeria, after paying $400 million for a mobile license. Its entry into the market began another level of innovation.From 400,000 lines to 297m connected telephone users
The efforts of players paved the way for the transformation the sector witnessed, which later saw investment to the tune of over $75 billion within the last two decades. These investments are traceable to mobile towers, VSAT turnkey networks, fibre optic infrastructure backbones, data centres, call centres and service centres spread out across the country. Also, landing stations for international subsea cables went up from one to about five, changing the communications landscape and making voice, data, and video and Internet services available at the fingertips of Nigerians.

It is interesting to mention that while there are 297 million connected lines, 187.3 million are active. This has pushed Nigeria’s teledensity to 98.28 per cent. The country can also boast of 140 million Internet users.

Statistics from the NCC showed that there are now 36,998 base stations, spread across all states of the federation. Fibre optics deployment stood at 94,547.82km (terrestrial fibre & submarine cable) as at 2020.

Further checks showed that the top five states with highest number of towers are Lagos, Ogun, Oyo, Rivers and FCT, while the states with the least number of base stations are: Jigawa, Ebonyi, Gombe, Yobe and Zamfara. Specifically, as at 2020, Lagos had 5,686 towers, Ogun 1,834; Oyo 1,761; Rivers 1,720, FCT 1,495 and Edo 1,270; Jigawa 329; Ebonyi 311; Gombe 295; Yobe 248 and Zamfara 248.

Currently, land fibre deployment is around 43,898.8km. The on-land fibre deployment as per operators are MTN – 14,612km; Glo 13,306km; Airtel– 11,151km; EMTS 4,650km and Ntel – 180km.

By the end of last year, the total submarine fibre deployment in kilometers was 25,128.3km.The fibre deployment by four mobile operators include MTN-15,244km; Glo 9,800km; Airtel 14km and Ntel 70km.

In terms of fibre optics deployment, as at last December, MTN had deployed 14,612km on land and 15,244km submarine fibre optics; Globacom deployed 13,306km on land and 9,800km submarine fibre optics; 21st Century deployed 8,050km on land and 33km fibre optics, while ipNX deployed 1956km on land fibre optics. This makes an aggregate of 37,924km of on-land Fibre Optics deployed as at 2020.

While broadband penetration is 39.9 per cent with some 76.3 million having access, an aggregate of 25,077km Submarine Fibre Optics has been deployed by MTN, Globacom, 21st Century and IPNX.Telecoms revolution deepen sector’s contribution to GDP  
While operators have leveraged the different infrastructure to provide services, the sector has equally not failed to contribute significantly to the country’s Gross Domestic Product (GDP). In fact, it has lifted the economy out of recession on several occasions.

Statistics from NCC showed that telecoms contribution to GDP in 2012 was 7.7 per cent, but the figure doubled to 14.3 per cent as at the second quarter in 2020. This represented a N2.3 trillion growth, whereas the total contribution of Information and Communications Technology (ICT) to GDP was put at 17. 5 per cent.

It showed that in 2012, telecoms contribution to GDP was 7.7 per cent and in 2013, the contribution dropped slightly to 7.4 per cent, but it picked up again in 2014, contributing 7.6 per cent to GDP. In 2015, telecoms contribution to GDP further increased to 8.5 per cent and it had another increase in 2016, contributing 9.13 per cent. In 2017, it contributed 8.7 per cent to GDP and in 2018, telecoms contribution to GDP grew to 9.9 per cent.

In 2019, the contribution to GDP grew again to 10.6 per cent and in 2020, as at second quarter, it climbed to 14.3 per cent, representing N2.3 trillion, whereas the entire contribution of ICT to GDP within the same period was 17.5 per cent.There are still challenges
Despite these contributions to the economy, gaps and challenges remain. Nigerians are still grappling with poor quality of service (QoS). The NCC Executive Vice Chairman, Prof. Umar Danbatta said there are still 115 access gaps, where some 25 million Nigerian are still without basic telephony services.

Danbatta however, assured that the commission was working to ensure the gap is bridged adequately. He noted that licensed Infrastructure Companies (InfraCos), when they start operations, are expected to add 38,296km to optic fibre cables.

While Right of Way (RoW) charges remain, and still high in some states, the NCC EVC said the engagement of the Minister of Communications and Digital Economy with the Nigerian Governors Forum (NGF) has led to the adoption of a maximum of N145/m RoW fees in Kaduna, Katsina, Imo, Ekiti, Kwara and Plateau states, with the hope that others would follow suit. The high RoW charges across different states of the federation have negatively impacted the required expansion and rollout of more infrastructure, especially fibre optic across the country.

Stakeholders believe that harmonisation of RoW charges will increase investment and expansion of critical transmission infrastructure.

Also, the expected passage of the Critical National Infrastructure (CNI) Bill will classify telecommunications infrastructure across the country as critical national assets. This will improve the security of the infrastructure. Construction of roads with fibre optic ducts pre-laid will also reduce incidence of vandalisation and theft.Stakeholders optimistic of the future
The Chief Executive Officer, VDT Communications, Biodun Omoniyi, said despite the challenge, the sector has done well.
Omoniyi is confident that the sector will do more to satisfy Nigerians and add more to the economy, if the perennial challenges are removed.

From his perspective, the Nigerian Coordinator, Alliance for Affordable Internet (A4AI), Olusola Teniola, believes the Nigerian telecommunication sector has grown exponentially and has reached its peak after 20 years in the voice segment of the market and now about to transition both digitally, operationally and impactfully. This, he said would show the way Nigeria will be engaging and contributing its quota to the digital global world that is now upon us.

Teniola said this year signifies a new dawn of 5G and the emergence of Digital Solutions built by Nigerians for Nigerians based on Artificial Intelligence, Augmented Reality/Mixed Reality and Machine Learning.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

To Top
SUBSCRIBE NOW!
Get the best of Market Digest Nigeria financial news
delivered to your inbox daily!
By clicking Give it a try, I hereby: Agree and Consent to the Terms of Use and the Privacy Policy
& I may receive free newsletters & promotions from this site and can choose to unsubscribe anytime.