Twenty years ago, telephone lines in Nigeria were for the privileged few; the average Nigerian could not afford the N50,000 or more needed to acquire a NITEL (Nigeria Telecommunications Limited, the sole provider of telecommunications services) line. Expectedly, the teledensity was less than 1%. Then, for the average person, to make or receive calls was akin to playing dart in a darkroom.
Enter the mobile networks
This changeddramatically in 2001 when the mobile telephony services or GSM was introduced in the country. MTN and Airtel (then Econet) set the pace, with Glo and Etisalat coming on board later. Twelve years after the introduction, the growth has been phenomenal. Many call it a ‘revolution’, and indeed the numbers are mindboggling. From less than a million active telephone lines in 2001, latest figures from the industry regulator, the Nigerian Communications Commission (NCC), show that there are 119 million active telephone lines in Q4 2013, with a teledensity of over87%. The rapid pace of change has had a significant impact on the social economic life of Nigerians and the nation.
To date, the mobile telephony sector has contributed private sector investments in excess of $20 billion in the country’s telecommunications industry, particularly on infrastructural development. From sales of frequency spectrum, the country has made close to half a trillion naira. Hundreds of thousands of direct and ancillary jobs have been created by these investments. Official figures showed that mobile telephony or GSM accounts for an average of 4% of the country’s GDP annually, over the past decade. Thecontribution to the GDP has grown steadily since 2009 and stood at 8.53% in March 2013. With enough headroom for further growth, the industry is projected to grow at 10% annually over the next decadeas more foreign direct investments and fresh investments from industry players pour in. The industry leader, MTN, with a market share of 55.4%, recently secured a landmark $3 billion medium term financing syndicated facility to be used for expansion, modernising and improving its network infrastructure.
The effect of this growth on individual and group communication has equally been astonishing; the GSM revolution has transformed interpersonal and business relationships, affecting the way Nigerians live, the way they work or play. No longer does an individual necessarily need to rely on a privileged uncle, a family member or a neighbour to make or receive international calls. And the long queues at NITEL phone kiosks are long forgotten.The rapid advancement in and deployment of cutting-edge technology in the industry has helped in the transformation.
A new way to live
In 2001, the GSM industry started out with only voice calls and SMS but today it accounts for 97% of telephony services with the deployment of 2G and 3G platforms that support mobile broadband and multimedia services. Thus, a journalist, for instance, no longer has to travel long distances to his office to file in his story on off-cuts.A simple Blackberry or smartphone takes care of that. Nor does an expectant father who is away on a business trip abroad have to wait weeks to learn that the wife delivered safely. No longer is it essential to visit the market to choose the colour or pattern of an Aso Ebi; the seller can Ping or WhatsApp designs and colours to the buyer to choose from. And the Arsenal, Barcelona, or Bayern fan is assured he won’t miss a minute of the football action if his DStv subscription ran out on a Friday night; he can simply recharge that same day using internet banking on his mobile phone to pay for fresh subscription. Communications now is at the speed of light, instantaneous.
A costly growth
The telephony bar was raised by the GSM sector in terms of quality of service. Where once you paid several thousands of naira to get a NITEL line, you pay nothing now for a GSM line. Where once you needed to curry the favour of a NITEL official to keep and maintain your line, your GSM line is yours for as long as you want it. Where once you got into arguments with NITEL staff over bloated telephone bills, now you can pay as you go and be certain that you are billed for what you consumed. Where once you didn’t know who to direct complaints/enquiries to now you have dedicated 24/7 customer care centres to address your complaints and enquiries. In essence, by raising the bar, expectations have shot sky high and consumers are impatient when they perceive a drop in quality.
An important challenge in the GSM industry today is managing consumers’ expectations. In spite of the huge investments in facility upgrade and capacity building in terms of personnel, issues around voice clarity, drop calls, pricing, call charges, and interconnectivityare major talking points. Consumers are largely unsympathetic to the tough regulatory, socio-economic and political environment under which the industry operates. For instance, the GSM operators sometimes have to lay optical fibre cables through some of the most hostile terrains under harsh conditions, spend billions of naira on generators yearly to power their base transceiver stations,contend with vandals, particularly the Boko Haram, who take delight in damaging base stations or hub sites and disrupting services, or contend with a volatile naira, which impacts their import bills negatively,and sometimes disruptive regulations and multiple tax obligations.
A peep into the future
Demand for telephony services will continue to grow. The key driver of growth will bethe population growth, which is projected to grow at 3% annually. Other drivers arethe cashless policy in the banking sector, which will boost demand for high- and low-end smartphones for use in financial transactionsin the coming years (only 25% of Nigeria’s 119 million mobile subscribers currently use smartphones, according to global market research company TNS); convergence of voice, data and multimedia services is going to enhance the smartphone growth. Already, the GSM networks areaggressively promoting their data services,enticing consumers with freebies.
In the near term, the operating environment will remain tough. Regulation is not likely to ease much with the regulator’s predilection to err on the side of the consumer. And the GSM sector, which has the lion share, 97%, of the telephony industry, will continue to attract the flak for what consumers see as poor quality service.That is the price that must be paid for the industry’s visibility. American Bette Midler, who is familiar with success, once said: “The worst part of success is trying to find someone who is happy for you.”
Indeed, not many are happy with the GSM industry now, but the networks must continue to strive for better quality service even as they expand.They know this. Michael Ikpoki of MTN uses words like “enhancing” and “quality” to describe the organization’s thinking regarding its network. Liberalisation of the power sector is likely to ease some of the pressure on the networks when power supply becomes more regular and fuelling and other logistic and base station maintenance cost gradually reduce. This should free much needed funds for the GSM networks to be deployed into the core business of connecting people and businesses. The industry trend now is to outsource non-core business and free up funds to improve on core business. In January this year, Etisalat announced it appointed Standard Bank to help sell its over 2,000 towers in Nigeria. MTN sold 1,200 towers in Rwanda and Zambia to IHS last year and Airtel is expected to sell its Nigerian towers in April. If the industry must win the populace to its side, then it must listen to Albert Einstein and “strive to be perceived not only as successful but also of immense value to society.” This is a task for the entire industry, including operators, original equipment manufacturers as well as the regulatory body, the Nigerian Communications Commission.
Adebola, Adebayo is a consultant with XLR8
