Nigerian Telecom Sector Report (June 2012)

Data is king and numbers don’t lie. However, any researcher or data lover will tell you how hard it is to happen upon some much-needed data in Nigeria. I’ve often had to use multiple primary sources to get data, which should already exist, for reports and research work around the Nigerian technology space. This explains why, for example, the number of Internet users in Nigeria is still a subject of debate. According to Wikipedia (quoting the International Telecommunications Union), there are now 47,143,356 Internet users in Nigeria. Many industry experts disagree, and the fact that there’s no trusted local source where such data can be verified doesn’t help.

One would expect the National Information Technology Development Agency (NITDA), which now sits on more money than it needs to host press conferences, to keep such records but please don’t hold your breath. Now that the Minister of Communication Technology, Mrs Omobola Johnson, whose ministry supervises NITDA, has announced plans for Nigeria’s Internet penetration (e.g. growing broadband access from current 7% to 35% by 2017), it is hoped that NITDA will be put under pressure to measure this. Whatever we can’t measure can’t be improved, as it’d be difficult to even know when we have truly made progress – except we want to continue playing the inaccurate guesstimate game.

All hope isn’t lost for data in Nigeria’s ICT sector though. The Nigerian Communications Commission (NCC), another agency with the same Ministry of Communication Technology, keeps an impressive record of industry data – from investments to subscribers and more. Having worked with both NITDA and NCC in the past, I can give NITDA free advice about something NCC does and they don’t – focus on numbers. NCC has economists and researchers who focus on getting these numbers out and NITDA can do the same, if they want to. The former excuse used to be about money, but with NITDA Act’s provision (signed into law by the president as far back as April 24, 2007) for a National Information Technology Development Fund (NITDEF), let’s hope NITDA turns a new (good) leaf. NITDEF is a tax-deductible levy of 1% of profit before tax to be paid by telcos, ISPs, pension managers, banks and insurance companies with annual turnover of N100 million and above.

Back to NCC and data, the June 2012 data for telecom subscribers shows a continuation of growth for GSM companies but decline for CDMA service providers – and near-death decline for Fixed (Wired/Wireless) service providers. That’s why the announcement of a merger between Multi-Links, MTS and Starcomms didn’t come as a surprise to industry watchers. We wish CAPCOM all the best with the $200 million from core investors. With a teledensity of 73.12, there is the temptation to assume that Nigeria’s telecom sector will soon inch closer to saturation but that isn’t the case. With a popular multiple phone ownership culture in Nigeria (a step that was taken to make up for the poor quality of service from providers but has since gained status symbol), the real teledensity would be better calculated per user – and not per SIM card. Thankfully, the recently concluded SIM registration exercise will throw up the accurate number of users (telecom subscribers) in Nigeria, and we can have a more realistic teledensity. I won’t be surprised if it’s closer to 40 than the current 73.12.

From the June 2012 data released by NCC on their website, Nigeria had 136,041,999 connected and 102,369,999 active (used in the last 3 months) phone lines as at June 30, 2012. Of these, there are 133,715,146 connected mobile lines and 2,326,853 connected Fixed lines. 101,855,094 or 76.17% of the connected mobile lines are active while only 514,905 (or 22.13%) of the connected Fixed lines are active. When you break mobile down into GSM and CDMA, it’s easier to see that while 81.66% of GSM lines are active, only 26.57% of CDMA lines are active.

Compared to the previous month (May 2012), month-on-month growth for the various telecom services shows a trend that industry watchers have seen over the past few months. Connected GSM lines grew by 1.29%, connected CDMA lines grew by 0.91% and connected Fixed (Wired/Wireless) lines grew by 0.07%. The total number of telephone lines in Nigeria grew by 1.19% for the period. The numbers for active lines paint a better picture: GSM grew by 0.78% month-on-month, CDMA recorded -4.75% (~5% drop is a whole lot; no pressures, CAPCOM), Fixed (Wired/Wireless) takes a -5.17% hit but the total number of active phone lines in Nigeria increased by 0.55% in June 2012. GSM service providers increased capacity by 4.37% while CDMA and Fixed (Wired/Wireless) didn’t bother.

I took a good look at the industry players to see what market share looked like as at June 2012. For the Fixed (Wired/Wireless) segment of the market, does it surprise you that only 58,750 Nigerians use NITEL lines? Before you call NITEL the worst, note that some 80 people use WiTEL (pray, tell). Of the 16 Fixed (Wired/Wireless) service providers, Starcomms is the market segment leader with 191,816 lines (37.25% market share) even though they suffered a huge decline of -26.19% between Quarter 1 (Q1) and Quarter 2 (Q2) of 2012. Visaphone, which controls only 5.21% of the market segment, and is only 6th in terms of market share, recorded a much higher quarter-on-quarter growth with 4.72%. The industry segment bronze medalist, 21st Century Technologies, with a 13.75% market share grew by 0.96% within the same period. The new player, CAPCOM, now controls 55.17% of the Fixed market (based on June 2012 numbers) with 284,082 active lines managed by the merged Starcomms (industry segment #1), Multilinks Telkom (#2) and MTS Ist Communications (#7).

In the CDMA segment of Nigeria’s telecom market, Visaphone rules (well, as at June 2012) with an impressive 68.56% market share. However, they were not immune to industry decline as at end June 2012 as they lost 2.72% (quarter-on-quarter) of their active subscribers. Multilinks and Starcomms, now part of the new CAPCOM (which seeks to become Nigeria’s biggest retail broadband operator) controlled 14.87% and 13.44%, respectively, of the market. Starcomms lost 34.45% of subscribers between Q1 and Q2 2012 while Multilinks lost 22.7%. The 4th player, Reliance Telecoms (Zoom) controls only 3.14% of the market and lost none of their 111,077 subscribers between Q1 and Q2 2012.

In the GSM corner of the Nigerian telecom ring, MTN continues to lead with 43.93% market share (as at June 2012) and they improved subscriber base by 0.67% between Q1 and Q2 2012. Globacom grew their number of subscribers by 5.47% during the same period and has a market share of 22.36%. Airtel grew subscriber base by 6.56% and is number 3 with 20.16%. Though Etisalat holds only 13.29% of the market, their continued strong growth may worry earlier entrants. Between Q1 and Q2 2012, Etisalat recorded an impressive 9.52% growth. There are not many Nigerians that have active MTEL SIMs (258,520 did as at June 2012), so the only industry segment loss of -0.26% by MTEL doesn’t come as a surprise.


This piece has been featured in Technology Times, TechLoy and OTekBits.
Images and data courtesy of Nigerian Communications Commission

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