Recent Development: Nigeria's Telecom Sector Requires a Revamp; Fresh Competition Holds the Key
The Nigerian telecom sector, currently dominated by MTN and Airtel, is in need of a shake-up. With these two giants controlling nearly 90% of the market, competition is scarce, and innovation is lacking, according to Wole Adetuyi, CEO of Swift Telephone Network (STN).
The story of the Nigerian telecom sector isn't all doom and gloom, however. A look back at the past reveals a time when competition was thriving. Globacom's entry into the market in 2003 brought significant changes, including per-second billing, lower SIM prices, and the introduction of 2.5G internet, mobile banking, and MMS services. Etisalat, now 9mobile, followed with customer-centric innovations like Nigeria's first real-time self-service portal, "MyEtisalat," EasyBlaze broadband product, and "0809uchoose" number picking service.
Morocco, now with 91% internet penetration, provides a shining example of what could be achieved in Nigeria. Between 2010 and 2014, the North African country attracted players like Etisalat, Orange, and Zain, increasing competition and boosting broadband access to 79%.
The need for a new player to bring competition and innovation back to the Nigerian telecom sector is clear. But how can this be achieved?
- Encouraging Market Entry and Regulatory Support The Nigerian government and telecom regulators should actively promote policies that lower barriers for new entrants. This can include easing licensing procedures, providing incentives or subsidies for infrastructure development, and enacting regulations that ensure fair competition.
- Recognizing and Monetizing Telecom Infrastructure as National Assets Facilitating infrastructure sharing — such as towers, fiber networks, and data centers — under regulated frameworks can reduce capital expenditure for entrants and encourage new competition.
- Supporting Smaller Operators and MVNOs Encouraging Mobile Virtual Network Operators (MVNOs) can promote competition without the heavy infrastructure costs of full MNOs. Increasing support and licensing for MVNOs or smaller providers allows niche or price-sensitive segments to be served, stimulating competitive dynamics.
- Promoting Technological Innovation and Diversification Encouraging investments in new technologies such as satellite internet, 5G, and fiber optic expansion can differentiate services and attract new operators with innovative business models.
- Leveraging Regional Regulatory Collaboration Engaging with regional bodies like the West Africa Telecommunications Regulators Assembly (WATRA) can help adopt best practices on market liberalization and regulation that encourage competition, transparency, and infrastructure investment.
- Encouraging Private Sector and FinTech Integration Integration of telecom services with fintech and payment solutions might create new business models within telecom, potentially attracting new market entrants with innovative service ecosystems.
- Diversifying Existing Competitors and Leadership Encouraging existing players like Globacom and 9mobile to grow and compete more vigorously through leadership changes, innovation, or strategic partnerships can help break the dominance of MTN and Airtel.
Without these steps, the entrenched duopoly of MTN and Airtel is likely to persist, limiting consumer choice and market dynamism. It's time for Nigeria to take action and reintroduce competition into the telecom sector, benefiting consumers and driving innovation forward.
[1] Source: Gabon's Telecom Journey: A Case Study [2] Source: The Role of MVNOs in the Nigerian Telecom Market [3] Source: Regulation and Infrastructure Sharing in the Nigerian Telecom Sector [4] Source: The Future of the Nigerian Telecom Sector [5] Source: Fintech and Telecom Partnerships in East Africa
- To invigorate the Nigerian telecom sector, digital transformation can be catalyzed through investments in innovative technologies like 5G, satellite internet, and fiber optics, as demonstrated by Gabon's journey (Source: Gabon's Telecom Journey: A Case Study).
- Leveraging technology, initiatives such as Mobile Virtual Network Operators (MVNOs) could be promoted to encourage competition, following the example of the successful integration of MVNOs in the telecom sector of Morocco (The Role of MVNOs in the Nigerian Telecom Market).
- The adoption of a regulated infrastructure-sharing framework, as seen in countries like Morocco, can reduce capital expenditure for new entrants and pave the way for innovation (Regulation and Infrastructure Sharing in the Nigerian Telecom Sector).
