2006: An impressive year for Nigeria’s ICT sector

The Information Technology and telecommunications sectors have been recording impressive growth in recent years. Jonah Iboma examines the performance of the sector in 2006.


SINCE the issuance of Digital Mobile Licences by the Nigerian Communications Commission to three firms in 2001 and the addition of a fourth licensee in 2003, the country’s telecommunications sector has not remained the same. It has continued to grow in leaps and bounds. Also, the information technology industry has been recording has been recording some modest achievement given the reality on ground a few years ago. One of the factors that facilitated the growth of the telecoms sector was the grant of exclusive rights to the Digital Mobile Licensees to operate national mobile service by the industry’s regulatory body. As a result, the number of phone lines connected have increased to almost 30m so far. But in February this year, the five-year exclusivity period came to an end with the regime replaced with what the NCC called Unified Licensing. A unified licence gives an operator the freedom to offer mobile, fixed and any other telecommunications service to its subscribers provided it has the requisite frequency to do such. Expectedly, the growth of the mobile sector from less than 60,000 lines in 2001 to over about 20m in 2005, gave a reason for many firms to want to invest in the sector to reap some of its benefits.And so in April, Starcomms, Intercellular, Multi-Links and Prestel blazed the trail to secure the Unified licences from NCC when it was introduced in April.Among the conditions required to qualify for a unified licence were: having an existing and operating network infrastructure, a customer base of at least, 10,000 connected subscribers or justifiable evidence of financial capability for substantial network rollout and being up-to-date on submission of annual audited accounts.In addition, the applicant must be up-to-date on the payment of company tax, must be up-to-date with equipment type approval and in settlement of interconnection obligations. However, the introduction of the Unified Access licence by the NCC in March saw Fixed Wireless Access operators taking the lead primarily due to their desire to offer roaming services to their fixed subscribersThe first batch of licensees were, however, soon followed by MTN, VGC Communications Limited, Dan Jay Telecoms Limited and Boudex Telecoms after their applications were endorsed by the NCC. With this development, MTN thus became the first GSM operator to secure a unified licence. Given the criteria issued by the NCC, GSM operators were favoured to pick the licences ahead of other.The sector also witnessed some acquisitions with the successful acquisition of controlling shares in Vmobile Nigeria by Celtel International being the most notable. The 65 per cent share acquisition for S$1.005bn put an end to crises that had trailed earlier attempts by the Nigerian firm to attract a core investor. The transaction marked Celtel’s largest ever acquisition in Africa and put the firm in a position to challenge for the leadership in Africa’s mobile phone business. Commenting on the transaction, the CEO, Celtel International, Mr. Marten Pieters, said, “This agreement marks Celtel’s most important expansion in Africa to date. Nigeria is one of Africa’s biggest and fastest growing markets and we are delighted that we can bring our extensive expertise and resources to offer Nigerians the best possible quality of services.”An important development was the successful privatisation of the Nigeria Telecommunications Limited with the sale of 75 per cent of the firm’s shares to Transnational Corporation.The award of unified license seemed to be the tonic needed by many of the fixed wireless operators who have largely restricted their operations to Lagos began reaching out aggressively to other states. Starcomms, for Instance has moved into Ogun and Oyo states. Multi-Links, and MTSFirst have also removed outside Lagos with the former also building a nationwide optic fibre network, which it said would be used to increase service to many other part of the country. The problem of limited national long distance transmission also received a lot of attention with two private firms- Connectivity backbone Network and Phase 3 Communications commenced the investment of millions of dollars into network roll out. Another incident of note for the year was the continuation of controversies in the operations MTSFirst which saw the forced stepping aside of its Chief Executive Officer, Mr. Demola Eleso, over a dispute concerning his earlier contract with MTN Nigeria, where he left as Chief Technical Officer under controversial circumstances. The NCC also allowed firms to begin tests for the commencement of third generation mobile services though it is clear that it would not be able to complete the process of licensing operators within the year. In the IT sector, there was also some modest achievement, but the commencement of the Computer for Nigerians Initiative remained the most notable. Although not much has been achieved so far, the scheme seems to raise hope of Nigeria witnessing an increased IT penetration within a short period of time, especially given that government has ordered 14,500 computers to kick off the scheme.