Telecoms experts say there is an increased likelihood of operators merging in Nigeria as a battle to gain more percentage of current market shares.
This they say has become more glaring, especially as Bharti Aitel Tuesday merged with Tigo in Ghana to become the country’s second largest mobile operator and to create a fairer competition with South Africa’s MTN, which currently dominates in the Ghana market with 47.5 percent of subscribers.
Lanre Ajayi, managing director, PiNET Informatics, told BusinessDay that the industry had been clamouring for a merger between smaller operators in the Nigerian market in order for there to be fair competition between all players.
“Merger and acquisition is not strange in Nigeria. You would recall that MTN last year acquired Visafone, the only Code Division Multiple Access (CDMA) operator in the country. The possibility of other mergers is always there in Nigeria,” Ajayi said.
Currently in Nigeria, both large and small mobile network operators are working to try and mitigate the challenges related to squeezed margins, and in other cases generating losses, and lack of direct access to foreign currencies, with the smaller firms struggling the most to compete.
Although analysts say that reduced competition will be a lose-lose situation for all operators, and the public as a whole, experts suggest that for there to be healthy competition in the market, smaller operators may have to be consolidated.
Olusola Teniola, president, Association of Telecommunications Companies of Nigeria (ATCON), says a consolidation is very likely in Nigeria but that the Nigerian Communications Commission (NCC) will need to approve which operator’s spectrum takes precedence, in the case of spectrum already allocated.
“The market will still have an opportunity for a fourth voice-data play of scale and with 4G networks. It is easier to deploy OTT voice apps that can provide the necessary consumer choice and the possible entry of early deployment of narrowband Internet of Things by other players to create opportunity for further consolidated growth going forward. Sufficient spectrum availability is clearly the key in all this,” Teniola told BusinessDay in an emailed response to questions on the possibility of a consolidation between operators in Nigeria.
According to Subomi Sodipo, CEO, CF Mobile, the telecoms market conditions in Ghana are quite similar to that of Nigeria, with MTN dominating both markets and so the possibilities of same happening are quite high.
“Airtel might have decided to first try out a merger in Ghana which is a smaller market than Nigeria to see how it works and if it will be beneficial. If it gives the company more leverage and gives it an opportunity to compete fairly with MTN in Ghana, then it probably might do same in Nigeria. Right now, let’s say they are testing the waters,” Sodipo told BusinessDay.
The National Communications Authority regulator in Ghana granted conditional approval for the merger in September 2017, following an agreement in March 2017 by the two companies to combine their operations.
The combined AirtelTigo will now serve around 10 million subscribers out of Ghana’s 37.4 million mobile subscribers, with revenues close to $300 million, the company said in a statement.
