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MVNO: Buhari declares Nigeria open for new mobile operators

MVNO: Buhari declares Nigeria open for new mobile operators
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MVNOs otherwise called Mobile Virtual Network Operators are to launch mobile services in Nigeria as President Muhammadu Buhari’s administration opens the telecoms market to more competition.

Technology Times can confirm that the Nigerian Communications Commission planned licencing rounds will introduced MVNOs offering mobile services on the back of existing mobile network operators (MNOs), MTN Nigeria, Airtel Nigeria, Glo Mobile and 9mobile and others, in what is seen as imminent shakeup of the telecoms market.

Typically, virtual network operators (VNOs) are entities that do not own telecoms network infrastructure but provide telecom services by entering into partnerships of purchasing capacity from existing MNOs or telecoms carriers.

MVNO: Buhari declares Nigeria open for new mobile operators
President Muhammadu Buhari, seen in file photo above, has thrown open the telecoms industry to promote competition.

The telecoms regulator has unfolded plans for the upcoming licensing rounds for MVNOs by issuing a draft framework outlining the roadmap for the new entrant mobile services providers expected to compete for stakes in the Nigerians telecoms market.

The business model for the MVNOs will see them riding on the back of existing MNOs as they will not need to invest in core networks already built by the existing players in the telecoms space.

“The defining difference between an MVNO and an MNO is the simple fact that an MVNO has no ownership whatsoever of spectrum elements, irrespective of its operational model.”

Nigerian Communications Commission (NCC)

“A Mobile Virtual Network Operator (MVNO) is a telecommunications product and service operator that rides on top of the capacity of a fully Licenced Mobile Telecommunications Service provider or Mobile Network Operator (MNO)”, NCC says.

According to the telecoms regulator, “the MVNO reaches a “Wholesale Agreement” or “Revenue Sharing Agreement” with the Telecommunications Company (Telco) through negotiations, and delivers its services after bulk purchasing resources from the Telco. The defining difference between an MVNO and an MNO is the simple fact that an MVNO has no ownership whatsoever of spectrum elements, irrespective of its operational model.”

mvno-nigeria-open-for-new-mobile-operators
Professor Umar Danbatta, Executive Vice Chairman/Chief Executive of Nigerian Communications Commission (NCC), seen in photo holding microphone, has unfolded plans to grant licences to MVNOs in Nigeria.

NCC says it decision to grant MVNO licences after a number of pre-licensing steps taken to test the market readiness that include the report of a 2017 request for proposal, research into regulatory approaches used in other markets where MVNOs operate; feedback from an internal workshop with industry stakeholders, among others.

NCC hopes to give MVNOs an open field “to participate in the telecommunications provisioning market of Nigeria, with an emphasis on improving the telecommunication output of the country.”

The telecoms regulator also wants to “ensure that all core stakeholders are adequately catered for and protected within a Virtual Network Operator enabled environment.”

If everything goes according to plan, the MVNO licensing will “allow for the Virtual Network Service to contribute to the availability and expansion of quality mobile coverage through redundant capacity utilization, active infrastructure sharing and national roaming, and other telecommunication elements that enable it.”

NCC says it is presenting “guidelines to which MVNO operations can flourish within the Nigerian Telecommunications space.”

The incoming MVNOs will be allowed to enter into agreement with existing telecoms industry players granted any of the following licences: Spectrum, Universal Access Services, Digital Mobile, Internet Services and Fixed Wireless Access, according to the 23-page MVNO licensing framework released by NCC.

“Depending on the operational model, an MVNO can choose to have all its dealing with any of the licensees within this section of the market players dependent on available capacity and negotiation terms”, the telecoms regulator says spelling out the under listed MVNO business models being considered in Nigeria:

MVNO: Category of Business Models to Operate in Nigeria

Category A: The Service Based MVNO leverages purely on the services it is offering to customers. This sort of MVNO has no real control of facilities and as such relies on its customer base or a niche market to make a solid case for its agreement with the Host operator to provide capacity for its operations. The MVNO must be lean, mean and highly adaptive to an ever-changing market demand for telecommunications services to stay ahead of the game and not be bullied by Incumbents and more robust MVNOs.

Category B: The Basic Facilities MVNO leverages on its technical abilities and desire to own the customer segment to a higher degree. Operators have the capacity and the resources to operate their own network elements that allows them to provide their unique offerings to their customers. These kinds of MVNOs can also own an internet gateway which may allow themselves to differentiate specifically, their offerings with respect to the Host operator. An MVNO looking to take this route should endeavour to focus on highly differentiated products and services to avoid any sort of cannibalization of Host Operators’ products and services.

Category C: The Full Facilities based MVNO Is capable of launching a full-scale Core Network to offer its services to customers. This MVNO is analogous to a Host Operator except for the lack of control of Radio Access Network elements. This is the key factor that differentiates an MVNO from an MNO as stated in the definition above. The full facilities based MVNO will flourish within the regions of Underserved and Unserved areas. These MVNOs are perceived as the biggest competitors by the MNOs and other licensed service providers. to avoid general anti-competitive behaviours, entities looking to pursue this MVNO model are advised to focus on the underserved and unserved regions of the market.

Category D: The MVNE/MVNA Model helps to properly structure the market as the MVNO space grows. This allows a single entity to negotiate directly with Host Operators, subsequently aggregates potential MVNOs under a single platform, and provide a quasi “Plug and Play” functionality to the MVNOs in a seamless manner.

VMNO Licence Fees

CategoriesLowerUpper
Category A₦ 500 000₦ 1 000 000
Category B₦ 1 500 000₦ 2 000 000
Category C₦ 2 500 000₦ 5 000 000
Category D₦ 3 000 000₦ 8 000 000

The imminent VMNO will be coming just as Nigeria this month marked two decades after the issuance of the first batch of digital mobile spectrum auctions that led to the launch of commercial mobile network operators twenty years ago in the country.

The incoming virtual mobile network operators will enter to compete with four big MNOs, MTN Nigeria, Airtel Nigeria, Glo Mobile, and 9mobile.

The existing MNOs control the lion share of the Nigerian telecoms market counting over 207 million active phones and over 154 million active internet connections split among MTN Nigeria (82,022,621; 65,767,750); Airtel Nigeria (57,231,523; 41,524,039); Glo mobile (55,089,386; 39,906,199) and 9mobile (13,188,059; 7,239,635), as at November 2020.

Unlike the conventional MNOs, the VMNOs will have an easier market entry as they will ride on the back of incumbent market players, since they will not be required to invest in expensive core network infrastructure. MNOs have laid out telecoms infrastructure encompassing physical elements and operations that have the function of interconnecting primary nodes that access the radio network of operators.

Experts reckon that MVNOs will complement existing market players by letting the latter expand into new geographic areas and offer unique features and products, increasing connectivity and responding to niche consumer demands.

Is Nigeria ready for VMNOs?

To determine if the Nigerian telecoms market was ready for MVNOs, NCC says the national framework was developed out to the outcomes of a 2017 request for proposal on “Development of a Licensing Framework for Mobile Virtual Network Operators (MVNOs) in Nigeria”; analysis and reporting of findings obtained from desktop research into other jurisdictions and the regulatory approach adopted in licensing MVNOs within their respective regions and reviews of past and present surveys of the Nigerian market and current regulatory documents.

An internal workshop and industry stakeholder focused group discussion was conducted, while all comments have been taken into consideration in the development of this draft framework document. It was also complemented by conclusions from both global and local research along with adapting International Best Practices.

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