SANDTON, South Africa-Nigeria’s promising telecommunications environment has been clouded by the government’s failure to accelerate the licensing of GSM operators. Nigeria, with one of the lowest teledensities in the world, is one of a few countries without a digital cellular network.
Ross MacDonald, MTN’s group executive for international business development, told delegates at the Opportunity Nigeria Conference and Exhibition held in April in Sandton, South Africa, that licensing GSM operators would increase the teledensity in the country and be a catalyst for economic growth.
Nigeria, with a population of more than 110 million, has about 700,000 telephone lines, out of which only about 400,000 are functional. Private landline operators licensed four years ago have introduced about 50,000 lines, mainly in the capital Lagos, leaving the state company Nitel still largely a monopoly.
“In terms of teledensity, mobile is the way to go, and GSM could increase the teledensity to between 8 (percent) and 9 percent,” said Andre Szezesniak, senior analyst from ING Barings Southern Africa.
He predicts that with a population of more than 126 million and a current 0 percent total mobile market penetration, four potential mobile operators could grab 2 million subscribers by 2003.
Attempts by international companies to enter the Nigerian market have so far been plagued by uncertainties.
Slow process
When the new government took over in June 1999, it suspended all licenses and contracts. The applicants were invited to send submissions to a review panel, but as the months passed, the whole process appeared to be on ice, without a clear indication on its status.
Telecommunications Minister Mohammed Arzika unveiled a new policy in October 1999, which critics said would only help to strengthen the parastatal Nitel’s monopoly as it made null and void 33 licenses issued by the Nigerian Communications Commission (NCC) to companies between 1997 and 1999. It also limited the number of licenses to four, mandated GSM technology and imposed a license fee of US$100 million per license, one of the highest fees in Africa.
The policy for the GSM licenses was reviewed and finally accepted in January, attracting 17 bidders, seven of which prequalified for the bid. The process was canceled at the last moment on 29 February shortly before submissions were due.
Reasons given included a conflict of interest among top officials over which companies on the short list should be awarded the contracts. The government then changed the beauty-contest format to an auction process with “an internationally competent body to act as consultants to the commission.” In a recent move, the multilateral organization, the Commonwealth Organization (CTO), was appointed as consultant to NCC to facilitate the process.
Ernest Ndukwe, NCC chief executive, said that with the appointment of the consultants, the commission would proceed quickly to commence preparation for the bid document and would subsequently announce a timetable for the process.
Meanwhile, international investors are quietly waiting in the wings for decisions to be passed and the pall over the mobile sector in Nigeria to lift.
