Nigeria is pitching broadband market opportunities to investors hoping to exploit stakes in the next phase of telecoms market growth, ahead of 2.6GHz spectrum sales slated for May this year in Abuja.
The Federal Government of Nigeria, through the Nigerian Communications Commission (NCC) has flagged off the race to sell 14 licences in the 2.6GHz band, the frequency spectrum expected to power the delivery of broadband services across the country.
However, some key questions in the minds of many could be, is there a market for the winner? And what is the market stakes ahead of the auction exercise?
Understanding the need for the auctioning can help to see the market stakes ahead of the plan. Let us consider the demographic and economic developments nationwide and in particular, the subsequent potential scale and growth of Internet penetration in Nigeria. The expansion in the telecommunications sector also provides a number of major opportunities for telecommunications operators, subscribers and the economy in general.
Nigeria is the most populous nation in Africa with a population of about 173.6 million people, as at 2013, according to the World Bank. The population has grown at a rate of 2.3% for each year from 2000 to 2013.
Since the year 2000, the Nigerian telecommunications market has witnessed major increase in competition driven by government’s liberalisation policies. The development of competition has, in turn led to increased growth in the number of connections and improved services for subscribers as anticipated.
To continually provide the required frequency resources to support this growth, the NCC says it plans transparent auctions in the process of the 2.6GHz spectrum sales.
In Nigeria today, there are currently five major mobile licensees: Airtel Networks Nigeria Limited (Airtel), Emerging Markets Telecommunications Services Limited (Etisalat), Glo Mobile Limited (Glo), NATCOMS Development Investment Limited (trading as Ntel), and MTN Nigeria Limited (MTN), the telecoms regulator and auction umpire says.[quote font=”georgia” font_size=”22″ font_style=”italic” align=”right” bgcolor=”#” color=”#” bcolor=”#” arrow=”yes”]Access to PC in Nigeria was estimated at 8.1 %2of the population in 2013. As at December, 2015 the total active Internet subscriptions for all market segments was 97,193,247. There was a steady growth in the number of active Internet subscriptions from December, 2012 to December, 2015 and this growth was primarily driven by the growth in the mobile GSM market segment.[/quote]
In addition to two licensed National Carriers, there are several service providers offering Wireless Broadband Services based on LTE and UMTS Wimax and CDMA technologies. Furthermore, there are a couple of other operators offering fixed telephony services, including Fixed Wireless Access (FWA) services, according to NCC.
According to the NCC market information, there has also been a tremendous growth in the number of active Mobile (GSM & CDMA) and Fixed wired/wireless operators in Nigeria that have delivered a total of 151,357,769 phone connections by January 2016.
Also we cannot deny the growth in Nigerian’s use of the Internet today. Nigeria currently has growing levels of Internet take-up, PC penetration and broadband adoption. The trend of Internet use in Nigeria shows an increase with the overall number of users rising from 1.4% of population in 2004 to about 47.8% by 20141 with broadband penetration at about 10% in 2015.
Access to PC in Nigeria was estimated at 8.1 %2of the population in 2013. As at December, 2015 the total active Internet subscriptions for all market segments was 97,193,247. There was a steady growth in the number of active Internet subscriptions from December, 2012 to December, 2015 and this growth was primarily driven by the growth in the mobile GSM market segment.
There are a wide range of economic sectors which need higher speed Internet access. But the fixed Internet access in Nigeria is limited while mobile Internet services are more readily available. The Nigerian Broadband Plan 2013-18 lists a wide range of e-government services which need to be introduced as soon as possible. These include issuing National Identity Cards, driving licenses and registration of companies among many others. In order to introduce these services, individual departments of government require high-speed Internet access. As a result, there is a large latent demand for broadband access service from providers.
We have many companies providing Internet access of some form or the other in Nigeria. Most Internet connections are through smartphones, meaning that there is only a limited range of functionality. The smartphone connections are provided by mobile operators. There is a need for higher speed connections for the more data–intensive services required by PCs and laptops, and also to serve the growing tablet market as well as other services and solutions.
The availability of broadband Internet access therefore has the potential to contribute positively to the growth of the economy and enable investors take advantage of the inherent growth in Internet usage in Nigeria.