GSM & Nigeria's Teledensity: One Year After (Posted
28th October, 2002) Tell your friends about this page! Email it to them.
Telecommunication arrived in Nigeria over 100 years
ago. At independence in 1960, the country only had about 18,724 phone lines for
use by a population of roughly 40 million. From independence, various
governments made several attempts to increase the number of telephone lines to
Nigerians. However, these attempts failed woefully due to certain reasons,
chiefly amongst these are monopoly of this sector by the country's public
utility, Nigerian Telecommunications PLC, NITEL, and its inept and corrupt
management. By the beginning of 1999, there were roughly 500, 000 lines
available for a population of around 120 million Nigerians.
Whatever uncomplimentary things, justified or not that many may have to say
about the Olusegun Obasanjo administration since its inception in May 1999, one
thing has become incontrovertible; this government successfully brought us a
deregulated telecommunications sector, by auctioning 3 Global Systems for Mobile
(GSM) Licences in January 2001 for $285 million each and further reserved a
licence for NITEL. The administration succeeded where others before it had
failed. In the end, only 2 out of the 3 companies at the auction, MTN
Communications and ECONET Wireless and NITEL were awarded full GSM Licences. The
third successful company, at the auction, Communications Investment Limited, CIL
was refused a licence on the grounds that it did not meet payment deadline.
An underlining vision for the introduction of the GSM by the Nigerian Government
was to expand the Nigerian teledensity and directly make telephone communication
cheap and accessible to the common man.
First off the block to commence services was ECONET Wireless who commenced
operations on August 6, 2001 with its contract package which was followed by its
post-paid package, popularly referred to as pay-as-you-go. MTN communications
opened its doors to its customers two days later with similar packages. Trust
Nigerians. Eager subscribers promptly bombarded both network operators to grab
the available lines. The third network, NITEL was nowhere to be found mainly due
to its un-preparedness and internal disequilibrium. The rest, as the cliché
goes, is history. These, two companies, according to their image makers, have
within 12 months added more telephone lines - over 1 million as at the last
count - into the Nigerian environment, more than was ever the case in 40 years
One year after, GSM has come to stay in Nigeria. In fact, many have called the
introduction of the GSM telephony a revolution in a way, but one can also refer
to GeeSeeM as a quantum leap for Nigeria's infrastructure capacity building,
which is a major ingredient for the much-debated jump-starting of the
strangulated national economy.
According to a World Bank comparative study on Information and Communication
Network between 1994-1997 in some African countries, Nigeria was discovered to
have 4 phone lines per 1000 people as opposed to 5 in Cameroun, 9 in Kenya, 11
in Senegal and 15 in Zimbabwe. Another study contained in the World Development
Report, 1999/2000 situates Nigeria as having merely 4.00 telephone mainlines and
0.00 mobiles telephones respectively as at 1997. This illustrates the
dilapidated Nigerian telephony infrastructure 5 years ago. It also underlines
the great enthusiasm with which Nigerians embraced the GSM at its introduction.
Expectations had always been high for the introduction of a mass based telephony
which is both convenient and cheap to acquire.
NITEL, the state telecom company, a couple of months back, finally started its
own GSM services by releasing 118,574 to the market. It has also promised to
release another 400, 000 lines by this December. Meanwhile, the two
front-runners are also not relenting in giving up their first entry advantage
and are still pushing out more lines and also connecting and hoping to connect
more cities by December this year and beyond. According to the
MTN website, the
company currently covers 21 cities in the country and hope to add another 25 to
this before the end of the year. We were unable to get the figures for
However, the 3 current GSM operators cover at least 24 Nigerian cities and
In the process, the national treasury benefited through licence fee payments and
import duties, though discounted and will continue to benefit through payroll
and other taxes from these companies. Many direct and derived jobs have also
been created. These include workers absorbed by the individual operators, to the
franchise dealers, to direct and indirect dealers, to street re-charge/refill
card hawkers, to downright touts selling second-hand handsets and accessories
(often stolen or imported from Dubai, United Arab Emirates). Also lives have
been transformed and the socio-economic setting has been re-energised and
further empowered with easy-to-acquire and reasonably reliable telecom facility.
We should not neglect the fact that GSM has actually created the habit of time
management in Nigerians. This can be noticed right from the curtailment of
expansive Nigerian salutations while contributing to the reduction of motor
accidents on major Nigerian highways due to the elimination of long journeys for
pleasure and business. It is now convenient to place a call to business
associates or relatives rather than waste valuable time embarking on sometimes,
needless journeys. Top among its benefit is the gait the Nigerian business
environment has assumed with improved cost and efficiency. It has also improved
Internet and information technology awareness through WAP services (Wireless
Application Protocol), E-Commerce through mobile payment systems called
M-Payments among others. Further, investors feel more secure investing in the
economy now as the GSM as offered a corner stone in Nigeria's race towards
attainment of adequate infrastructure.
One though has to ask, are there any downsides, either temporary or enduring,
bedevilling GSM operations in Nigeria? According to most users, the greatest
worry and drawback that GSM bears is cost of maintenance. Most have argued that
call charges are far too exorbitant at around 50 Naira per minute (38 US cents).
One has to bear in mind though, that the Nigerian currency, the Naira, currently
exchanges for 131 to the Greenback. It is also instructive to remember that
average per capita income per year in Nigeria is only US$300. The telecom
companies on the other hand have insisted that they are still making losses and
would probably not break even until 2005. They have both ruled out direct tariff
reductions for now. Hear the Managing director of MTN, Adrian Wood speak
sometime in August: "... the realities of the enormity of operating costs
required by the business at this stage, do not unfortunately make a downward
review feasible for now". Indeed, he stated, the company is seriously battling
to keep its current tariffs in the light of the slides the Naira has witnessed
in recent times. This notwithstanding, he stated that MTN's tariffs remain
comparable to tariffs charged in different parts of the world by GSM networks at
the stage of maturity of Nigeria's. "Even the UK and continental European
networks that are now at 6 to 7 years maturity, charge on average 15% to 20%
higher than we do". Factor purchasing price parity into the equation and you
will get the true picture.
ECONET and MTN have both claimed that their supposedly high tariffs result from
the enormous start up cost they had to endure due to virtually nil telephony
infrastructure when they arrived in Nigeria and also an inefficient and
disorganised power sector. To top it all up, these companies added that the US$
285 million they paid for the licences were too high. Indeed there is some truth
in these claims. However, it will be difficult for any discerning mind to accept
that the US $285 million ECONET and MTN paid is on the high side. One has to
consider the size of the Nigerian market, if well served and harnessed, would
generate enormous revenue for these telephone companies in the medium to long
To ask a simple question: In how many countries have they started operations
within a year and sold over a million lines? Nigeria's communications regulator,
Nigerian Communications Commission, NCC, has been called upon by very many
Nigerians to put a check on the pricing structure of these GSM companies.
With NITEL lately coming into the frame with a N22 per minute talk-time at peak
period, it is perceived that the competition will be more balanced if it is able
to push adequate lines with reliable service into the market. In the process,
the tariff of both ECONET and MTN would have become untenable.
Another GSM menace, probably in the short term, is the lackadaisical attitudes
of motorists in handling the sets while driving. This has necessitated the Lagos
State Government to carve out a law banning the use of GSM while driving. GSM
may also have increased the volume of armed robbery and assassinations in the
country. Even banks have disallowed the use of the device within the banking
hall. This though could be described as the failure of the Police than anything
else. If you are a stranger or visitor to Lagos, the first rule of the game is
not to flaunt your GSM set. If you do, you may well be the next victim of
professional GSM vandals, who serve as the conduit pipes to the striving GSM
The low/slow data-carrying capabilities of GSM telephones means that businesses,
government agencies, educational institutions, individuals, etc. are still not
fully reaping the benefits of telecommunications. The Internet and fax
capabilities of GSM mobile phones still leave a lot to be desired in these areas
and make the development of fast and efficient land and fixed wireless telephone
network in the country imperative.
What lies in the future? The operators have promised wider coverage, better
connectivity, more value added services etc. Indeed, kudos should be given to
the operators for a job well done. Within 12 months they have covered over 24
cities and still expanding the network.
The recent victory of Globacom at the auction of the Second National Operator
(SNO) license is a plus in this direction. The more the players, the fiercer the
competition and in the long run, the subscribers will have cause to smile with
quality service and cheap cost of owning and maintaining a GSM mobile phone
One cannot but say that the GSM has made tremendous impact on the multifaceted
Nigerian society. It can be firmly asserted that its benefits far out-weigh its
demerits. What do you say?
Why don't you
contact us today and tell us your comments about the GSM telephony in
Nigeria and how it has impacted on your personal and business life?
Tell your friends about this page! Email it to them.