The local telecoms and IT sector has seen spectacular growth of late, with subscriber numbers growing by leaps and bounds.

As across much of the African continent, Nigeria has benefited greatly from the growth of wireless telecoms networks, which have allowed the country to jump the communications divide thanks to the digital revolution. After the rebasing of national statistics in its final form in July 2014, the National Statistics Bureau (NBS) estimated the contribution of telecoms and IT to the national GDP at 8.3% in 2013, well above the 0.8% accorded to the sector under the old 1990 base calculation. Nigeria has also leapt to the top of Africa in terms of active voice users in numerical terms, while it can easily boast of a mobile penetration rate above 75% for this nation of over some 174 million. However, if one removes from the calculation Nigerians aged under 15 years of age, the penetration rate is well in the 90% range. Although multiple line subscription numbers may eat into this figure, the introduction of mobile number portability (MNP) in April 2013 appears to have had little effect on subscriber number growth.

The market regulator, the Nigerian Communications Commission (NCC), estimated there were 132.78 million subscribers for all line types at the end of 1H2014


The market regulator, the Nigerian Communications Commission (NCC), estimated there were 132.78 million subscribers for all line types at the end of 1H2014, up 4.4% on the YE2013 figure of 127.17 million. While growth over the first half of 2014 has slowed, this should be considered against the context of the past five years worth of growth, which saw subscriber numbers jump from 74.52 million in 2009 to where they are currently. Compare that number to pre-liberalization figures from 2000, with only 400,000 lines available nationwide, and you can understand just how far Nigeria has come. And as in many African countries, the fixed-line network has been completely supplanted. Of the 132.78 million phone subscribers nationwide, just 182,395 of them were linked to a fixed or fixed-wireless line—nigh on being a statistical rounding error. In fact, of the 18 operators licensed to work in the fixed and fixed-wireless market, only six were still considered active by the NCC in 3Q2014.The GSM network plays host to the bulk of subscribers, with the main four network operators having 130.64 million subscribers, or some 98.31% of the market. Two CDMA providers, Visafone Limited and Multilinks Telecom, soak up the rest of the 2.06 million subscribers, with the former company accounting for 2.03 million of them.

In April 2013, the NCC allowed users to access MNP, so as to more easily move between network providers and increase the level of competition in the mobile market. However, as of December 2013, just 157,432 subscribers had made the move to a new operator. In the GSM market, the market leader remains MTN Nigeria Communications, with 58.52 million subscribers at 1H2014. In second place comes Globacom, on 27.33 million, while Airtel Nigeria comes in close behind on 25.30 million. More recent market entrant EMTS, owned by Etisalat of the UAE, has 19.39 million subscribers. Overall, while MTN can be considered the largest player in the market, the careful balancing act the NCC has achieved to ensure market competition seems to be working—all to the benefit of Nigerian telecoms users. However, this explosive growth in user numbers may also come at a cost, with some reports the average revenue per user (ARPU) levels are as low as $6 per month, meaning operators need to rely on volume rather than high-spending customers to keep investments in the sector high.

Despite the strong growth the telecoms sector has seen of late, market players report a number of challenges that need to be overcome to improve the operational environment. Many complain of high taxes, infrastructure vandalism, and unreliable power supplies as holding back the potential of the sector. As Michael Ikpoki, CEO of MTN Nigeria, told TBY, "We have many challenges regarding managing states and local governments, and some issues in terms of multiple taxation." Segun Ogunsanya, the Managing Director and CEO of Bhartel Airtel Nigeria, underlined the energy challenge the operators were facing: "The major pressure on the industry comes from infrastructure, mainly power," he said. "Between the four telcos, there is insufficient power generation from the grid." As a result, most telecoms operators are forced to install diesel generators to help power their base stations, thus increasing operating costs. The CEO of the NCC, Dr. Eugene Juwah, is well aware of these concerns, especially in terms of the problem of inconsistent taxation at the state level. However, he underlined in his interview with TBY that congestion, or insufficient capacity, was also a major issue the network providers needed to resolve. In terms of infrastructure vandalism, he informed TBY that, "In conjunction with the government, we are championing a bill to criminalize such vandalism." While such challenges remain, most operators agreed that Nigeria's fast growing population was a key source of optimism and market potential going forward. As well, Nigeria is looking to join the ranks of Africa's mobile payment success stories, such as Kenya and Tanzania, though Central Bank of Nigeria regulations will require tinkering to break the traditional role of banks as the primary means of money transfers.


If the numbers for telecoms seemed strong, the growth of internet subscribers is even more amazing. Over 2013 alone, Nigeria recorded 99.91% growth in active internet subscriptions, from 32.22 million at the start of 2013 to 64.42 million by the end of the year. Of those internet subscribers, it was once again the GSM operators who took the commanding heights, boasting 99.71% of those with internet access. Wireless broadband, or 3G, subscribers came in at 17.53 million, leaving the bulk of those with internet access relying on limited bandwidth solutions, putting into question the strong rate of growth the sector recorded. As of 3Q2014, initial NCC data estimates that the number of internet users had reached 67.46 million. The number of licensed internet service providers at the end of 2014 was 108, though the size and influence of these individual licensees is often difficult to measure.

In terms of fiber-optic cables used to keep both the mobile and internet networks running, the market operators had deployed some 68,124 kilometers by end-2013 as compared to the 56,505 kilometers made available at the end of 2012. In terms of cable breakdown, 48,901 kilometers of this was on land, mostly split between the three largest GSM operators: Globacom, MTN, and Airtel, in that order of size. Globacom nearly dominated the submarine cable category, having 19,200 kilometers of the 19,223 kilometers of cable available, and making it a key player in Nigeria's link to the world for the telecommunications sector as a whole. However, for internet speeds to increase, both the government and the private sector will need to work out how to improve the capacity of Nigeria's undersea communication links with the rest of the world. Lagos remains the main receiver of undersea cables, with only the WASACE cable linking West Africa to South America and beyond also having a stop-off point in Ataba, near Port Harcourt.

In 2012, the government released the National Broadband Plan 2013-2018 to address issues of low internet speeds and ready Nigeria for a more active role in the global ICT revolution. The plan seeks to expand internet use through wireless connections, especially through 3G and 4G/LTE networks, as these are seen as the most likely to experience a quick roll out and suffer from lower rates of infrastructure degradation or vandalism. Present government policy is hoping to improve broadband penetration from 6.1% of users to 30% by 2018, as the CEO of the NCC told TBY. Importance has been given to improve local content levels to allow Nigeria to assume a larger role in the internet community, especially at a national and regional level. The influence of the Nollywood cluster should not be forgotten, and the potential for internet platforms to better convey its content is something considered of importance under the plan. As well, the National Information Technology Development Agency (NITDA) is looking at how to establish a Nigerian version of "Silicon Valley" in the new Lekki Free Zone. So far, there are plans to create a 48-hectare "smart city" concept that would help to act as a focus for Nigerian local content producers and software engineers.