Averting looming monopoly in Nigeria’s telecom industry

Telecommunication is a global phenomenon and its significance cannot be over-emphasized as an essential aspect of any nation’s social and cultural life.

This is even more pronounced in Nigeria which has become a key strategic growth market in the West-African sub-continent, the second largest African economy and fastest growing economy in sub-Saharan Africa with an estimated population of 160 million and projected average real Gross Domestic Product (GDP) growth forecast over the next three years of approximately seven per cent per annum.

Generally, most investors assess countries especially those of the African descent on various indices, including the socio-economic environment, consumer-driven factors, Gross Domestic Product (GDP), GDP per capital and population. Nigeria without doubt, has in quantum some of these indices, especially population and consumer-driven factors.

Moreover, with its seeming stability since its transition to civil rule over 15 years ago, Nigeria has become a preferred country for investors.

Prior to the 2015 elections, some doomsayers predicted the break-up of the country but the successful conduct of the 2015 elections and the famous phone-call of President Goodluck Ebele Jonathan to the President-elect, Gen. (rtd.) Muhammadu Buhari has conferred on Nigeria the toga of a more beautiful bride.

Undoubtedly, the telecommunications industry witnessed a boom within these years of civilian rule and especially during the administration of Obasanjo when the deregulation of mobile phone market led to the introduction of Global System for Mobile Communication (GSM) network providers operating on the 900/1800 MHz spectrum, including MTN Nigeria, Airtel, Globacom and Etisalat.

In fact, an October 2011 estimate placed the number of mobile phones at about 88 million, with most people having more than one cell phone.

South African-owned MTN’s entrance into the market kicked-off the GSM era and for months, it bestrode the telecommunications industry in Nigeria like a colossus. In fact, it was almost unthinkable that, per second billing was possible, because MTN made us believe that it was impossible.

However, Globacom demystified the ‘per second billing’ myth, Airtel made us to talk more and the last entrant in the industry and perhaps, the most innovative, Etisalat flourished in the data market.

In fact, the average consumer who was held hostage with the ‘per minute billing’ and lackluster data service was glad that things he considered impossible had suddenly become possible. Suddenly, life was getting sweeter for the Nigerian consumer and he continues to relish in it till date.

It was however a shock few days ago to learn that the industry that has enjoyed some seemingly oligopoly might be descending into the altruistic cum monopolistic world with the acquisition of Visafone by MTN.

According to experts in the telecommunications industry, the acquisition will not only give MTN access to valuable 800 MHz spectrum band and thereby providing it 4G LTE services but more importantly make it the only GSM operator with access to this spectrum.

This unfortunately will increase the monopoly of MTN in the industry and Nigeria might be dragged many years backwards to the unfortunate days of NITEL when consumers groaned over ineptitude in service delivery, amongst other malaise.

This is even more alarming with the dominant subscriber share of the market which MTN currently enjoys at 45 per cent subscriber share and over 70 per cent EBITDA share, which is the profitability of the industry as a whole, in the midst of 10 other active industry players.

The acquisition of Visafone by MTN completely negates the submission of the Nigerian Communications Commission (NCC) in its 2013 Dominance Determination which recognized that no operator was dominant in the mobile data market.

Already, MTN was declared dominant in both the retail mobile voice and wholesale leased line markets by NCC in the same year. MTN has thus made an incursion into the 800 MHz spectrum which is characterised by sub-optimal licensees, a majority of which have been inactive for close to a decade.

This will undoubtedly confer the status of a monopolist on MTN and the level playing field which the Obasanjo administration provided for players in the industry would be eroded. There is no doubting the fact that MTN’s sole access to sub-1GHz to the detriment of other players in the GSM market will allow the South African company to further entrench its dominance in the market and stifle other licensees who are desirous of entering the industry.

The telecommunications industry which has enjoyed relative flourishing will no longer be attractive because only one player will start dictating to the industry and consumers. The consumer will begin to pay through his nose for access to quality retail voice and data markets and the dark days of higher tariffs, poor quality of service level and little or no incentive for innovation due to lack of competition in this market segment will return.

Beyond the fact that, the consumers will suffer and be at the whims and caprices of MTN, the other operators may end up closing shop and the already bloated market of the unemployed will snowball which the incoming administration of Muhammadu Buhari might not be able to manage.

Globacom, Airtel and Etisalat have huge population directly and indirectly living off them and if MTN is accorded this status at the expense of others, millions of Nigerians will be affected while no single South African will be affected.

It has become imperative at this juncture to call on the NCC to revisit this rape of the GSM market.

NCC should ensure that the acquisition does not confer an unfair status on MTN at the detriment of the growth of a viable and healthy telecommunications industry.

In addition, the NCC should beam its searchlight on the approval of additional spectrum by Visafone in 2015 and sale of its assets two months after. Industry watchers believe that, there is more to this than meets the eye.

Furthermore, the NCC should encourage and support active collaborations and partnerships among current licensees in the 800MHZ spectrum band and other operators who have met their license obligations.

Nigeria is our country and we must continue to say no to monopolists in any industry, because monopolistic tendencies are usually unimaginable. The days of NITEL hullabaloo are over and we should never think of going back to those days in any guise.

Adekusibe is a Lagos-based communication expert.

Similar stories
ATCON laments death of small telecoms firms
Telecoms operators seek better regulatory policy from new regime
Telecoms, China stimulus boost European equities