IT/Telecoms in 2007: A year of mixed fortunes

Oluwaseun Ayantokun, Lagos

AS the year 2007 folds up, one sector of Nigeria’s economy that wont’ forget it in a hurry for the rapid growth and development it has witnessed is IT/Telecoms. Immediately the year opened, the Nigerian Communication Commission (NCC) licensed Mubadala Development Company as the fourth GSM Operator in the country after the company from the United Arab Emirates had paid $400 million. And so other investors and operators swung into action.

The licence issued the company from the kingdom of Abu Dhabi was not the only one given out by the NCC. In March, the major GSM and giant telecoms operators got the NCC’s nod to operate 3G technology network. This is a technology that enables faster and longer data downloading.

Thus, the process that facilitates for more and better telecoms experience for Nigerian subscribers was set in motion. However, while Globacom, MTN and Celtel are putting preparations on the top gear to do commercial roll out early in 2008, there has not been any information to the public from Altten, the fourth 3G licence.

It could be conjectured that the company is not doing much now as the necessary initial daunting task of launching forth into the telecoms market is still confronting Altten.

The government in the land is currently concerned with rural telephony. Among other things, the NCC also saw Visafone fit to be awarded a licence to operate in some states of the federation, excluding Lagos, FCT, Abuja and some other states.

Another thing that the year 2007 was remarkable for in the telecoms sector was the influx of both Nigerian and foreign investors. The result of this was manifested in, among other things, big sharks swallowing up small ones. MTN that had earlier acquired VGC Communication Ltd for over $66 million property took over the business affairs of the CDMA-operating company.

Following suit was Multi-Links. Just as the year moved to the second quarter, Telkom, the South African Telecoms giant found its ambition to enter Nigeria’s telecoms market fulfilled on it sealed an agreement with Multi-Links, acquiring 75 per cent of its total shares. Having paid the cost which was about $280 million, Telkom then announced that it was set to invest up to $1 billion into the network.

The investment would take care of Multi-Links’ network’s coverage expansion and provision of second-to-none data and voice services, it said. In this regard, Tele-Info gathered that the new management team of Multi-Links is putting in every effort that will result in a sort of explosion in 2008.

Also, in the course of the year 2007, the ailing Cellcom got acquired by Mr. Ovia who has also continued to demonstrate his ability to deliver good services in the telecoms industry just as witnessed in banking. So far, restructuring is going on there and the former head office of Cellcom is wearing a new look. Tele-Info also observed that a lot of lines and services are now back on track and it may not be long when the formal announcement would be made that Cellcom has given way to Visafone. The troubled Intercellular also did not wait for nothing if the news that it has sealed an acquisition agreement with Sudatel is anything to go by.

It must be stated that acquisition would always bring a lot of benefits the way of operators and their subscribers. There would be more financial muscle for operators to do business, enlarging network coverage and delivering better and Nevertheless, this wouldn’t have been that possible if the government through the NCC had not make the CDMA operators attractive by offering them Unified Licence in May, 2006. The Unified Licence gives the licenses the opportunity to offer a bouquet of telecoms services in every part and across the country. It means that they can service in fixed and mobile telecoms and can also offer internet services. Therefore, Reltel that was not included in the list of those granted Unified Licence also got on board in 2007.

But much as competition among telecoms operators brought some relatively cheaper services the way of subscribers, the harrowing experience of poor quality of service (QOS) they have been passing through in the last six months may not be quickly forgotten. Among other things, unexpected surge in number of subscribers who want to enjoy free call offered by some of the networks led to serious congestion most times. Some of the GSM operators, that were particularly culpable in this regard, complained that the problem arose as a result of vandalisation of base stations by militants and area boys, theft of generators used to power base stations, etc. Having being criticised seriously for being slow to act, the NCC moved in and stopped further promotions by MTN, Glo and Celtel until there was an acceptable level of improvement on their networks. They were also sanctioned for failure to comply accordingly with the directives issued them.

Glo has got its ban lifted, having improved significantly and is currently running “mother of all promos” tagged “Rule and Win”. The promo is offering 500 cars between December 6, 2007 and May 6, 2008 to all classes of its subscribers.

Another major worry in the telecoms terrain in 2007 has been the face-off between Lagos State and Telecom operators over multiple taxation. Permit for tar cut, cost of reinforcement, right of way, among other taxes paid to Lagos state run to several millions of naira, but the state through its agency, Lagos State Infrastructural Maintenance and Regulatory Agency (LASIMRA), has not hidden the fact that it wants more. Actually, LASIMRA wants operators to pay an average of N500,000 per annum on each of about 400 base stations in the state, knowing that refusal to part with the tax could cost the operators some discomfort for other 60 per cent of their businesses that are resident in Lagos.

Both parties had earlier gone to court and the Federal High Court, Lagos in February, 2007 delivered judgment in favour of the operators, declaring that Lagos had no right to regulate telecommunications which is the prerogative of the Federal Government, courtesy of the fact that it is under the Exclusive Legislative List of the 1999 Constitution. However, LASIMRA has remained unrelenting, and the result is that telecom operators have not been able to increase their coverage capacity in the state. The implication could be poor quality of service for subscribers making calls to destinations in Lagos and those making calls from Lagos in 2008. It is note-worthy that shutting down the state on their networks is currently one of the steps being considered by the operators to force LASIMRA to reason and abide by the rule of law as far as the Federal High Court judgment is concerned.

The internet section of the market also recorded a major push towards international recognition as Nigeria launched its Internet Exchange Point (IXP). The implication of this is that there will be a reduction in the cost of internet service with regard to data traffic within Nigeria.

2007 was also a year of war in the mobile handsets industry. Indeed, Motorola, Samsung, LG and others made major moves into the market and also recorded good profit margins, but the major gladiators during the year were Nokia and Sony Ericsson. Both kept on bombarding the market with fantastic mobile devices.

Of course, Nokia maintained its leadership in the market, but Sony Ericsson remarkably gave it a good fight, winning lots and lots of customers with fashionable and trendy products. It is note-worthy that Sony Ericsson, a marriage of business between Sony and Ericsson is less than 10 years old in the market globally but has kept on winning in every market it comes to.

It was a year of increased IT penetration in Nigeria with both local and foreign original equipment manufacturers (OEMs) making great in-roads. Leading the local brands were Zinox and Omateks Really, they have not disappointed.

In all, it can be said the year has been a great preparatory one for the boom to come in 2008.