People power

It's difficult not to notice the huge rise in telecoms activity in Nigeria, which is emerging as a leader in the region. It is the most populous state in the continent, with a population of 120 million people. This figure is set to soar to 356 million by 2050, and 602 million by 2100, when it is expected to overtake the US as the third most populous country in the world. Goldman Sachs has named Nigeria as one of the so-called Next Eleven - one of eleven countries forecasted to have significant investment and growth opportunities in the future.

According to Business Monitor International (BMI), Nigeria's telecoms sector has the best prospects in the continent. The country topped the UK-based analyst group's business environment rankings for Africa - taking into account the market potential, country structure, independence of the regulator and potential risks in the country.

There are four mobile operators in Nigeria: MTN, Celtel, Globacom and M-Tel, and another is expected soon. UAE incumbent Etisalat holds a 40% stake in investment company Mubadala, which picked up the fifth licence last year. It will be difficult for Etisalat to break into the market-dominating trio of MTN, Celtel and Globacom, but by promising to invest $1 billion in the market over the next three years, it's making a good go of it.

While the number of mobile users will continue to rise, BMI expects downward pressure on ARPU rates and growth rates are also forecasted to decline. Mobile penetration is expected to rise to about 65%, or 92 million, by 2011.

But serious question marks remain over quality of service; MTN and Celtel were fined recently by the Nigerian Communications Commission (NCC) for unacceptable levels of network congestion, as they scrambled to add to their customer bases. Both operators have vowed to throw more money towards infrastructure, with Celtel earmarking $1 billion towards upgrades, and proudly announcing the opening of a new switch this month - increasing its network's capacity to 20 million. 3G services are finally being rolled out across the board, hopefully meaning better services and further advances in technology are to follow.

In the world of fixed-line, Nigeria languishes at a sub-1% penetration level, and this remains problematic. Internet connectivity, however, has been given a boost with the launch of the country's first satellite solution, which will also provide fixed-line services to rural areas.

The good news is the increased competition expected with Etisalat's entry. Established players will have to up their game or suffer significant customer churn. BMI also noted the NCC's positive approach in helping to liberalise the market: "The NCC is emerging as something of a regional leader," a BMI report on the Nigeria telecoms sector said.

"The organisation has taken a proactive stance regarding market liberalisation, privatising incumbent operators, selling new licences to regional operators and setting high standards for service quality and consumer protection."

With competition levels heating up, there is bound to be reductions in prices to the benefit of all consumers. With this huge population on the verge of a new telecoms boom, Nigeria is quickly becoming the African destination of choice.

One way into the market is via Nigerian Public Telephone Operators (PTOs), which are attracting investment from foreign carriers and private equity firms as an easy way in. Since the government opened unified licensing in 2006, some PTOs - such as Starcomms - have launched CDMA networks to compete against the GSM operators, offering both fixed and wireless services.

But Western vendors are losing out to Chinese rivals, says BMI. Ericsson is showing growth from its African network operations, but the likes of Huawei Technologies and ZTE Corp are happy to undercut them and use Sino-African political ties to their advantage. Plenty of opportunities remain, but the playing field is getting crowded.

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