Telecom Sector Investment opportunities In Nigeria

 

Nigeria is located in the region regarded to have the highest level of international telephone traffic per subscriber. This is estimated at over 200 minutes per year, but the overall level of traffic per inhabitant is less than 1 minute. This suggests that there is a pent-up demand that is not being met by the existing supply of telecommunications services. The business and investment opportunities in the sector are as follows:

Huge, Untapped Market

With a population of  140 million people with improving affordability, the market potential for telecommunications subscriptions and usage over the next few years is indeed very great.

Profitability of the Nigerian Telecoms Market

The Nigerian telecommunications market, as is, is one of the most profitable in Africa, and perhaps, the World. For instance, one of the Nigerian GSM companies declared full profitability less than 18 months after service launch on investments of over US$700m.

Provision of Services

The need to meet up with the ITU standard led to the deregulation of the industry by the Telecommunications law of 1992, which ushered in a new era. Private sector participation and operation in one or more of the deregulated telecommunications undertakings is now allowed. These are:

·        Sales and installation of Terminal Equipment;

·        Provision and operation of Public Pay-phones;

·        Provision and operation of Private Network Links employing cables, radio communications, or satellite, within Nigeria;

·        Provision and operation of Public Mobile Communications

         (Cellular Mobile telephony, Paging, and Trunked Radio);

·        Provision and operation of Community Telecommunication (Rural and Urban);

·        Provision and operation of Value Added Network/Data Services (Internet, Voice Mail, Electronic Mail services);

·        Repair and maintenance of telecommunications facilities, and

·        Cabling (e.g. Telephone-external and internal wiring for residence, office etc.).

Local Manufacture of Equipment

The local manufacture of switching and transmission equipment is necessary to meet the desired expansion. Presently, the country can only boast of local manufacture of low pair capacity cables. Thus, there is the need for the establishment of a plant to manufacture high pair cables as well as fiber optic cables and other telecommunications accessories.

Other investment opportunities in the industry include investing in any sub-sector of the industry such as manufacture, and supply of equipment and accessories as well as service provision. The industry’s size and growth prospects are very high, thus making it a self-sustaining sector.

With the deregulation of the industry, private sector participation and operation is fully allowed in the telecommunications undertakings.

However, only corporate bodies registered in Nigeria and/or Nigerian citizens can participate in telecommunications service delivery. Foreign investment is encouraged through Joint Ventures between the foreign investors and their Nigerian affiliates.

In addition to this, NCC license should be obtained. The license may cover:

·     The right to set-up and operate networks, and

·         The right to set-up operate and provide services for third parties on commercial basis.

Other Fixed National Operators

i).     National Operators

Fixed Service National Operators shall be licensed to establish and operate telecommunications service facilities in all the six (6) geographical zones.

The functions include the following:

·        To carry out the provision of quality service to its subscribers and compliance with tariff regulations, and

·        To carry out the responsibility of a National Carrier as a principal agent, trustee, contractor or otherwise and, either alone or in conjunction with others.

·        To do all such things considered incidental or conducive to the performance of that responsibility.

·        This category of operators includes the Private Network Links (PNL) licenses and is limited to ownership and operation of facilities for domestic services only.

ii).      Zonal Operators

A fixed zonal operator shall be licensed to establish and operate telecommunications services in one (1) of the Six (6) geographical zones.

·        Its functions include the following, among others:

·        Provision of quality services to its subscribers and to comply with tariff regulations;

·        To carry out the responsibility of a National Zonal Operators as principal agent, trustee, contractor or otherwise and, either alone or in conjunction with others.  To do all such things considered incidental or conducive to the performance of that responsibility.

iii).  Mobile Cellular Operators

In attaining the objectives of liberalization, globalization, economy of scale, effective national coverage as well as efficient delivery and pricing, there shall not be more than four (4) National Cellular operators for the initial five (5) years.

The functions include the following, among others:

·         To plan, develop, operate and administer the National Network;

·        To provide service to all parts of the Federation and beyond;

·        Provision of quality services to its subscribers and compliance with tariff regulations;

·        To carry out the responsibility of a National Cellular Operator as principal agent, trustee, contractor or otherwise and either alone or in conjunction with others, to do all such things considered incidental or conducive to the performance of that responsibility;

·        Establishment and operation of international telecommunications gateway for cellular traffic only, if found necessary.

It is worthy to note that another mobile cellular operator, Mubadala Development Company, a United Arab Emirate base firm was recently licensed to provide nationwide service. This is due to the fact that the initial five (5) years freeze which commenced in 2001 has expired. There is therefore room for additional mobile cellular operators

NOTE: The modalities for appointing the carriers shall be competitive and transparent.

Technology Developments and Local Manufacture

Government ensures that the Telecommunications development follows the worldwide standard – the establishment of digital or any other technology while gradually phasing out the existing analogue system. Efforts shall be made to promote indigenous design and production capability and manufacture of a substantial amount of the components and sub-systems used in the telecommunications services.