Nigeria on the verge

Nigeria is on the threshold of restructuring its decaying telecoms sector  says Dulue Mbachu in Lagos


The appointment of a second national operator (SNO) for Nigeria's telecommunications market appears to have put Africa's most populous country on the verge of a communications revolution. Globacom, owned by Nigerian businessman Mike Adenuga, proved its seriousness when it ended up as the

only one of the four bidders to pay the initial $20 million deposit for the licence last August (2002). The company subsequently emerged as the sole contender going on to complete the reserve bid price of $200 million.

For Adenuga is was a remarkable scoop. A year before his Communications Investment Ltd (CIL) had won one of the four GSM telephone licences the Nigerian government had put out to tender. But after narrowly missing the deadline for payment of the $285 million bid price, the licence was cancelled. Now, Globacom, having forked out $200 million not only has a GSM licence, but can also compete with state-owned NITEL as a national and international carrier of fixed line phones.

Globacom quickly announced plans to roll out 1.9 million mobile lines and 1.4 million fixed lines -  which the company pledges will be "of world class standards hitherto unavailable in Nigeria" within five years.

In October (2002) concrete steps towards realising these objectives became a reality when Globacom signed a multi-million dollar deal with telecoms giant, Alcatel. Under the deal Alcatel will provide 100,000 fixed wireless local loops, three international gateways, a fibre optics backbone ring and transmission equipment to cover 32 cities across the country of over 120 million people.

According to Globacom, GSM lines should be operational in early January 2003. High speed, broadband fixed lines capable of digital voice and data transmission are expected to follow soon afterwards, leading to a combined deployment of one million mobile and fixed lines within one year. Apart from ending one of the lowest global teledensities of one telephone line per 240 people, Globacom aimsthrough this infrastructure to make internet access cheaply available throughout Nigeria.

Coming barely one year after two mobile phone companies, Econet Wireless and MTN, signed up more than one million subscribers between them in less than12 months, the portents are indeed good for the Nigerian consumer. But for state-owned telecoms utility, NITEL, these are not good signs.

After more than 70 years of operating as a monopoly NITEL was able to deploy only 700,000 phone lines across Nigeria, of which, according to company records, only 400,000 were functional. NITEL has a poor service reputation, its equipment is poorly maintained and corruption is rife. These qualities make the company unsuited for the rigours of a competitive environment.

A GSM licence was reserved for NITEL by the Nigerian government at the time Econet Wireless and MTN acquired theirs. But NITEL failed to meet the three-month roll out deadline set by the Nigerian  Communications Commission. One year later the company has only made under 100,000 lines available whereas each of its rivals had surpassed the 500,000 mark.

"The emergence of Globacom will only compound NITEL's problems," said Wande Joseph, a Nigerian information and communications expert. "Once the new SNO rolls out its fixed lines and consumers have a choice, many who depended on NITEL for fax and data are bound to migrate. With several mobile operators already in market it will be squeezed from both sides and it can't survive doing things the same old way."

The licensing of small, regional private telecoms operators across Nigeria in recent years is not going to make things any easier for the increasingly obsolete behemoth. Many of these telecoms operators have captured regional markets, chipping away at NITEL's client base.

Another major development for the Nigerian telecoms industry has been the joint venture between state-owned National Electric Power Authority (NEPA) and its South African counterpart ESKOM. Named NEPSKOM, its key project is the construction of a national fibre optics backbone, following the routes of NEPA's power pylons. This highspeed, broadband infrasturcture is available for rent by other telecoms operators.

Perhaps it is quite telling that an attempt to sell 51 percent of NITEL to private investors early this year failed spectacularly. It signifies loss of investment confidence on the fortunes of the former monopoly. For millions of Nigerians starved of telecoms access, its demise might mean the end of a communications. 

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