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Nigeria | Here’s what telecoms landscape was like in 2011

Nigeria | Here’s what telecoms landscape was like in 2011

If we go back in time, the Nigeria telecoms sector has no doubt witnessed a whole lot of development in the last couple of years, as the industry emerged one of the most vibrant telecoms market in Africa in terms of telecoms investments, according to the Universal Service Provision Fund (USPF).

USPF, the fund set up to promote growth and diffusion of telecoms and allied services across Nigeria, with particular focus on areas considered uneconomically viable for commercial operators.

In the overview of the industry by authors of the USPF report, as at February 2012, Nigeria had about 96 million active lines and its teledensity grew from 1.89 percent in 2002 to the current 69.1 percent, according to Technology Times report at the time.

Nigeria | Here’s what telecoms landscape was like in 2011 1

Also in terms of data services, Internet usage in the country has witnessed strong growth of the past ten years.

“Internet users as a percentage of population have grown from 0.3 percent in 2002 to 28 percent in 2011 have grown from 0.3 percent in 2002 to 28 percent in 2011. However, internet penetration at 28 percent is still relatively low and the growth of the sector is still dependent on investment infrastructure,” USPF said.

The mobile segment being the most active and fastest growing segment of the Nigerian telecoms industry with a subscriber base of about 129 million as at February, 2012, has its growth  attributed to the strong performance of the operators in the GSM segment of the mobile market.

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AG Mobile, a typical example of a smartphone

According to the USPF overview,” the mobile segment makes up 88.3 percent of the entire market. The CDMA and fixed line segments account for about 9.9 percent and 1.8 percent of the market respectively as at February 2012.

“While the GSM segment continues to exhibit strong growth, though at a slower rate, the CDMA segment has experienced a consistent decline in the number of subscribers from the second half of 2010, and CDMA subscriptions showed an average negative growth rate of about -9 percent through 2011”

USPF notes that despite the rapid growth of telecommunications, the country is still lagging behind as the sector witnessed a decline in year-on-year growth in the past two (2) years, declining ARPUs and a decrease in Minutes of Usage (MoU) indicating  that the telephony market in Nigeria is fast approaching maturity.

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Also the Internet penetration in the country can be said to be relatively low at the rate of 28 percent in the midst of fellow developing countries like Malaysia (at 62 per cent), Chile (at 59 per cent) and Tunisia (at 36 percent), the report adds.

According to the USPF overview, the Internet market in Nigeria was at the time dominated by wireless and satellite operators due to the limited and inadequate fixed line backbone infrastructure.

In the medium-term, the mobile segment is expected to continue to experience growth; however growth is expected to be primarily driven by expansion into rural areas as the urban market becomes saturated within the next few years.

USPF projects that this segment will also continue to face increased competition as revenues will be largely dependent on the deployment of value added services, adding that programs like the Mobile Number Portability initiated by the Nigerian Communications Commission (NCC) are also likely to increase competition and further enhance service differentiation.

USPF states in contrast that the CDMA sub-segment may possibly witness mergers and acquisitions in the next few years to increase economies of scale, market share, capital base and ultimately ensure competitive advantage.

However, USPF notes that the increase in Internet demand by youth to access social networking sites, growth of e-commerce, cashlite process introduced by CBN and the increasing accessibility and affordability of smartphones are expected boost the Information and Communication Technology (ICT) sector in the nearest future.

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