New investor-interest set to lift telecoms sector
Jonah Iboma examines the possible impact of new investments in Nigeria’s telecoms sector
The last two months have seen some developments in Nigeria’s telecommunications sector. In December 2006, the Nigerian Communications Commission announced the award of the Unified Access Licence, including a fifth Digital Mobile Licence, to Mubadala Development Company of the United Arab Emirates, in a deal worth $400m.
And in what demonstrated its readiness to become a major player in the attractive Nigerian telecoms sector, the Middle Eastern firm subsequently paid the full sum for the licence within four weeks.
But as Nigerians were still digesting the news of the entry of yet another player with financial clout into the local telecoms sector, Kuwaiti’s mobile operator and owners of Celtel Nigeria Limited, MTC, also announced that it would invest heavily in Nigeria. MTC said it was investing N182bn in its Nigerian operations as part of its plans for global conquest.
With these developments, the Nigerian telecoms industry is suddenly becoming awash with investment. This is in sharp contrast to what obtained a few years ago when major firms were not willing to invest in Nigeria.
When in 2001, the Nigerian government organised the auction of four Digital Mobile Licences, it took the determined actions of the then Communications Investments Limited of Dr. Mike Adenuga, to push the bid price to $285m per licence. Even at that time, firms, including Celtel, pulled away during the bid process claiming that the market did not warrant such money to be spent on it. But with the success of MTN, Celtel (formerly Econet Wireless) and Globacom, and the fact that many smaller players are doing well, the world has come to realise the potential of the Nigerian telecoms market.
Speaking on its plans for Nigeria, MTC Group, the 65 per cent equity holders in Celtel, said it would use Nigeria and some other large markets as a launch- pad to reach its global target of 70million subscribers.
Speaking at a media briefing, MTC Group’s Chief Executive Officer and Vice-Chairman, Dr. Sa’ad Al-Barrak, said the company was committed to achieving a rapid subscriber growth in Nigeria, noting that the Group planned a very aggressive expansion in the country.
He explained that the Group’s vision could not be realised without dominating large markets like Nigeria. According to him, the MTC Celtel Group was thrilled at the potential of Nigeria, adding that the country was the cornerstone for the political and economic development of the continent.
“We are very committed to Nigeria. We are encouraged by what we have seen and are determined to play a long-term leading role in the Nigeria economy because of the good investment climate in the country. We will continue to work with our Nigerian partners to achieve our goal,” Al-Barrak said.
The move is part of a new ambitious growth strategy in the Group has set for itself with a target of increasing its subscribers from over 25million in 20 countries to 70million subscribers by 2011, and spreading its banner to several corners of the world. The Group said it hoped to provide the driving force to position it to take on the challenges of globalisation.
Before the new investment, MTC had taken over Vmobile Nigeria in a deal worth $1.5bn and immediately announced plans to invest $700m to transform the firm. However, it appears that the performance of the firm within the first seven months of its takeover, has encouraged MTC to increase the value of its investment.
With the acquisition of its bouquet of licences, Mubadala is also bracing up for service rollout in the next 12 months, meaning that more investment is coming to the sector over the coming months.
Commenting, however, the Managing Director of Juniper Solutions Limited, Mr. Gboyega Ojuri, noted that the decision by both MTC and Mubadala were just the beginning of new activities in the market in the coming years.
He added, however, that there was need to see more experienced hands in the sector so that people could have real value for their money.
Ojuri, however, noted that Mubadala could find the competition a bit too strong to cope with given the advantages that incumbents already had.
Also commenting, the Managing Director of Kemson Concepts Limited, Mr. Benjamin Aduli, said he believed that the entry of these big players and the amount of money they were bringing into the sector, would make it more competitive.
According to him, penetration would certainly grow deeper but the people must also brace up to use value-added services.
The last two months have seen some developments in Nigeria’s telecommunications sector. In December 2006, the Nigerian Communications Commission announced the award of the Unified Access Licence, including a fifth Digital Mobile Licence, to Mubadala Development Company of the United Arab Emirates, in a deal worth $400m.
And in what demonstrated its readiness to become a major player in the attractive Nigerian telecoms sector, the Middle Eastern firm subsequently paid the full sum for the licence within four weeks.
But as Nigerians were still digesting the news of the entry of yet another player with financial clout into the local telecoms sector, Kuwaiti’s mobile operator and owners of Celtel Nigeria Limited, MTC, also announced that it would invest heavily in Nigeria. MTC said it was investing N182bn in its Nigerian operations as part of its plans for global conquest.
With these developments, the Nigerian telecoms industry is suddenly becoming awash with investment. This is in sharp contrast to what obtained a few years ago when major firms were not willing to invest in Nigeria.
When in 2001, the Nigerian government organised the auction of four Digital Mobile Licences, it took the determined actions of the then Communications Investments Limited of Dr. Mike Adenuga, to push the bid price to $285m per licence. Even at that time, firms, including Celtel, pulled away during the bid process claiming that the market did not warrant such money to be spent on it. But with the success of MTN, Celtel (formerly Econet Wireless) and Globacom, and the fact that many smaller players are doing well, the world has come to realise the potential of the Nigerian telecoms market.
Speaking on its plans for Nigeria, MTC Group, the 65 per cent equity holders in Celtel, said it would use Nigeria and some other large markets as a launch- pad to reach its global target of 70million subscribers.
Speaking at a media briefing, MTC Group’s Chief Executive Officer and Vice-Chairman, Dr. Sa’ad Al-Barrak, said the company was committed to achieving a rapid subscriber growth in Nigeria, noting that the Group planned a very aggressive expansion in the country.
He explained that the Group’s vision could not be realised without dominating large markets like Nigeria. According to him, the MTC Celtel Group was thrilled at the potential of Nigeria, adding that the country was the cornerstone for the political and economic development of the continent.
“We are very committed to Nigeria. We are encouraged by what we have seen and are determined to play a long-term leading role in the Nigeria economy because of the good investment climate in the country. We will continue to work with our Nigerian partners to achieve our goal,” Al-Barrak said.
The move is part of a new ambitious growth strategy in the Group has set for itself with a target of increasing its subscribers from over 25million in 20 countries to 70million subscribers by 2011, and spreading its banner to several corners of the world. The Group said it hoped to provide the driving force to position it to take on the challenges of globalisation.
Before the new investment, MTC had taken over Vmobile Nigeria in a deal worth $1.5bn and immediately announced plans to invest $700m to transform the firm. However, it appears that the performance of the firm within the first seven months of its takeover, has encouraged MTC to increase the value of its investment.
With the acquisition of its bouquet of licences, Mubadala is also bracing up for service rollout in the next 12 months, meaning that more investment is coming to the sector over the coming months.
Commenting, however, the Managing Director of Juniper Solutions Limited, Mr. Gboyega Ojuri, noted that the decision by both MTC and Mubadala were just the beginning of new activities in the market in the coming years.
He added, however, that there was need to see more experienced hands in the sector so that people could have real value for their money.
Ojuri, however, noted that Mubadala could find the competition a bit too strong to cope with given the advantages that incumbents already had.
Also commenting, the Managing Director of Kemson Concepts Limited, Mr. Benjamin Aduli, said he believed that the entry of these big players and the amount of money they were bringing into the sector, would make it more competitive.
According to him, penetration would certainly grow deeper but the people must also brace up to use value-added services.
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