An Overview of the Nigerian

Telecommunications Environment

Chief Executive/Vice Chairman

Nigerian Communications Commission
ITU Telecom Africa 2004
An Overview of the Nigerian
Telecommunications……..

Introduction
 Introduction
• The need to attract investment to develop national
ICT infrastructure has led to policy and institutional
reforms leading to liberalization, of the telecom
sector
• Regulatory body, the Nigerian Communications
Commission (NCC) was established by law in
November 1992.
• Commenced operations in May 1993 with the
inauguration of the first Board of the Commission
making the beginning of partial liberalization of the
industry.

May 05, 2004 3

 Introduction
n Communication before full
liberalization ……. 1999
Alternatively………
•Unreliable phone
lines
•calls hardly
completed

•Few lines available (total of 450,000 lines)

• 0.4 lines to 100 inhabitants
•…. even available lines were mostly out of reach
•More than half of the connected 450,000 phone lines
were concentrated in government offices and
corporate organizations
May 05, 2004 4
Introduction
….Today………March 2004
n Teledensity now 3.9
lines per 100 inhabitants
from 0.4% only 3 years
ago.
n 3.8m mobile lines
connected in less than 3
years.
n Mobile network
coverage of estimated
45% of the population
over an area of about
156,200km2 achieved by
one of the mobile
operators in a period of
just over 2 years.
n Fastest growing mobile
market in Africa.

May 05, 2004 5

An Overview of the Nigerian
Telecommunications……..

Evolutionary Trend in Telecom

Development in Nigeria
Evolutionary Trend in Telecom Development
in Nigeria – Macroeconomic Data
Population (est) 130m

GDP USD52b

GDP growth 3.7%

Inflation 10.4%

May 05, 2004 7

An Overview of the Nigerian
Telecommunications……..

Telecommunications Industry
Structure
 Telecommunications Industry Structure
The
Federal Government
Overall directions for telecoms
development
•Overall directions for telecoms
development
•Enabling laws
•Policy Advice
Ministry of
Communications

•Formulates broad policy goals

•Monitors policy implementation Direct regulatory oversight

Service providers
•National Carriers
•Others

May 05, 2004 9

Telecommunications Industry Structure
• The Federal Government of Nigeria
• The Ministry of Communications
• The Nigerian Communications Commission
• Nigerian Telecommunication Limited (NITEL)
• The Second National Operator – Globacom
• Other Licensed private telecommunication
• operators and service providers

May 05, 2004 10

The Federal Government of Nigeria.
n The role of the government in telecommunications sector
includes;
n Giving overall directions for telecommunications development
n Ensuring policy consistency of telecommunications with other
national policies; and
n Enacting necessary laws and taking other measures promptly in
support of the National telecommunications policy.

May 05, 2004 11

An Overview of the Nigerian
Telecommunications……..

Trends in Nigeria Telecoms

Trends in Nigeria Telecoms

Two factors account for phenomenal

developments:
q Rapid Advances in technology

Wireless
Prepaid Billing
IP technology
o Market Liberalization/Competition

May 05, 2004 13

 Trends in Nigeria Telecoms:
Needs for Sector Reforms

Present Democratic government policy thrust:

n To improve services
n Eradicate misuse of monopoly power
n Increase sector efficiency through competition
n Encourage innovation & introduce advanced
services
n Attract local and foreign investment
n Enhance value to consumers through improved
range and pricing of services
n Extend services to underserved & unserved area

May 05, 2004 14

Full liberalization: 2000 to Date

•Opening Up of the Sector

q Enthronement of
•all market segments remaining under Democracy and responsive
monopoly (including mobile and long governance in 1999 with
distance segments) were opened to policy thrust to fully
competition
liberalize the industry.
q A New telecom policy
released in the year 2000,
the hallmark of which was
the blueprint for full
liberalization of the telecom
industry.
q The implementation of the
policy has resulted in some
measures highlighted
below.

May 05, 2004 15

 Full liberalization: 2000 to Date - contd
Incentives:
q Restriction in level of foreign Equity participation
removed.
q Reduction in level of import duties on telecom equipment
from 25% to 5% for first two years
q Simplification of procedures for importation of
telecommunications equipment and development of
related software.
q Granting of pioneer status to qualified investors.

q Fiscal incentives to encourage local manufacture.

May 05, 2004 16

 Positive Developments
Dividends of Full Liberalization - contd
n Policy and Regulatory Intervention
q Development of Spectrum Plan for the Nigeria
q Commercial Spectrum Management transferred to the
NCC
q Interconnection Regulations and Guidelines published
q Landmark resolution of interconnect disputes
q Settlement of Interconnection Rates
q Development of various regulations
n Establishment of Consumer Affair Bureau.
n Establishment of the Consumer Parliament

May 05, 2004 17

 Positive Developments:
Dividends of Full Liberalization - contd
The Highlight of Telecom Development in Nigeria, (2000 – 2004)
n Digital Mobile Line Licence Auction 2001.
n Four (4) digital Mobile Lines Licences issued.
n Roll out in August 2001.
n NITEL national carrier licensed by NCC.
n Second National Operator Licensed.
n Fixed Wireless Access Operators Licensed.
n A new Communications Law enacted in 2003.
n National Long Distance Operators Licensed.
n Consumer Affairs Bureau established.
n Consumer outreach programmes and Consumer Parliament established.
n Enforcement team constituted and is enforcing Compliance.
n Teledensity increased by over 1000% in 2 years.

May 05, 2004 18

Positive Developments:
Dividends of Full Liberalization - contd
Dec-00 Dec-02 Jun-03 Dec-03 Mar-04

Number of 450,000 702,000 724,790 850,000 888,854

Connected Fixed
Lines
Number of None 1.6m 2.05m 3.1m 3.8m
Connected Digital
Mobile Lines
Number of National 1 2 2 2 2
Carriers
Number of 18 30 30 35 35
Operating ISPs
Number of Active 9 16 19 30 30
Licensed Fixed
Line Operators
Number of 1 4 4 4 4
Licensed Mobile
Operators

May 05, 2004 19

Positive Developments:
Dividends of Full Liberalization - contd
Telephone Subscriber Growth

5,000,000
Digital Mobile 4,700,093
4,500,000
Fixed
4,000,000 4,002,529
Total Subscribers
3,500,000 Increase
3,132,790
3,000,000
2,774,790
attributable to
2,500,000
2,296,179 roll out plans of
2,000,000
Fixed, Mobile
1,500,000
and FWAs
1,000,000
830,321
500,000 450,000 536,202

0
Dec 99 Dec-00 Dec-01 Dec-02 Jun-03 Sep-03 Dec-03 Mar-04

Growth in Connected Subscriber Lines

May 05, 2004 20

Positive Developments
Dividends of Full Liberalization - contd
• Connected telephone lines grew at an n Nigeria –
average of 10,000 lines per annum (in fastest
the 4 decades between independence
in 1960 and end of 2000)
growing
• In last three years (Aug 2001 to March
mobile market
2004), an average growth rate of over in Africa and
1m lines per annum was attained. one of the
• And by March 2004 total connected fastest in the
fixed lines stood at 888,854 and world
mobile lines 3,811,239 with total
telephone lines of 4,700,093.
• Teledensity as at March 2004 is 3.92

May 05, 2004 21

 Positive Developments
Dividends of Full Liberalization - contd

Private Investment (USD million) - 1999 - 2003

4,000.00( estim
Dec-03 ate)
2,550.00( estim
Sep-03 ate )
Jun-03 2,550.00

Dec-02 2,100.00

Dec-01 1,200.00

Dec-00 150.00
Dec 9950.00

0.00 1,000.00 2,000.00 3,000.00 4,000.00

Growth in Investments

May 05, 2004 22

Positive Developments
Dividends of Full Liberalization - contd
4,500,000 4

4,000,000 3.5 • Total teledensity

Mobile was 0.4 lines per
3,500,000 100 inhabitants
Fixed 3
3,000,000 Teledensity in 1999; reached
2.5 1.96 in Dec 2002
Subscribers

Teledensity
2,500,000
2
• It increased to
2,000,000 3.33 in
1.5 December 2003.
1,500,000
By March 2004,
1,000,000
1 the total
0.5
teledensity was
500,000 estimated at 3.92
0 0 lines per 100
inhabitants.
Jun-02

Jun-03
Mar-02

Mar-03

Mar-04
Dec-99

Dec-00

Dec-01

Dec-02

Dec-03
Sep-02

Period Sep-03

May 05, 2004 23

 Positive Developments
Dividends of Full Liberalization - contd
NITEL GSM
GLOBACOM
11% NITEL GSM
4% 5%
ECONET
ECONET
44%
32%

MTN
45% MTN
59%

a) August 2002 b) September 2003

GLOBACOM NITEL GSM GLOBACOM NITEL GSM

13% 4% 18% 12%

ECONET ECONET
MTN MTN
31% 25%
52% 45%

d) March 2004
c) December 2003

Figures (a), (b), (c) and (d): Mobile Market Share – August 2002, September 2003,
December 2003 and March 2004.

May 05, 2004 24

 Positive Developments
Dividends of Full Liberalization - contd

Access Provision
• The ‘umbrella people’ are doing a great job
providing access to many who cannot own
telephones or mobile phones
• A major contribution to access provided by
mobile and fixed operators

May 05, 2004 25

 Positive Developments
Dividends of Full Liberalization - contd

n The ownership of mobile phones has been ‘democratised’ :

q Artisans, students, taxi drivers, market women etc now own
phones
n Access to telecom greatly enhanced
q Explosion of telecentres / cybercafe in all nooks and
crannies of the country where signals are receivable
n Cheap set-up costs
n Low overhead – a table, an umbrella
and a street corner

May 05, 2004 26

Positive Developments
Dividends of Full Liberalization - contd

•Colour dots indicate mobile coverage

•As earlier mentioned one of the
mobile operators has covered
May 05, 2004 27
estimated 45% of inhabitants
 Positive Developments
Dividends of Full Liberalization - contd

Tariff and Charges

n Reduction in Acquisition costs of New Lines
q fixed telephone lines

n Lines sold for an average of N100,000 at the end of

1999. But, today, low-end fixed lines go for as low
as N20,000 or less.
q analogue mobile lines
n Reduced by 650% over the same period from
N60,000 in 1999 to N7,999 in 2003.

May 05, 2004 28

 Positive Developments
Dividends of Full Liberalization - contd

n Reduction in costs

q Internet Usage
n Charges for internet usage in cybercafe now range
between N100 and N150 per hour as against N600 to
N750 per hour in 1997
n This represents about 500% reduction in usage charges
over the period.

May 05, 2004 29

 Positive Developments
Dividends of Full Liberalization - contd

Employment Generation
n GSM
n Over 3500 people directly employed by the GSM
operators alone
n Estimated 400,000 indirect employment
opportunities created through the operation of GSM
q Recharge card hawkers, Resellers etc including the umbrella
people

May 05, 2004 30

An Overview of the Nigerian
Telecommunications……..

The Consumer
 What does the Consumer want
Consumer Expectation

q Access
q Reliability

q Simplicity

q Value for money

q Ease of use of technology

May 05, 2004 32

 Positive Developments
Dividends of Full Liberalization - contd

Universal Access Provision Fund

• To boost the provision of communications services
to the rural, unserved and underserved areas of the
country
• The Universal Service Provision (USP) programme
is now at an advanced stage of implementation
• Pilot Projects identified for underserved, non
commercially viable areas
• USP Fund soon to be established
• Ministry of Communications UA programme will
provide additional access for rural community

May 05, 2004 33

Conclusion

n TWO YEARS OF TELECOM SECTOR REFORM HAS

BROUGHT ABOUT
? Improvement in Investment Climate
? Increase in number of market players
? Unprecedented Growth in the Network
? Substantial improvement in access to telecom facilities
? Empowerment of the Nigerian
? Respect from International Community
? Employment Creation
? Economic Stimulus

May 05, 2004 34

An Overview of the Nigerian
Telecommunications……..

Conclusion
Conclusion - contd

Nigeria remains Africa’s

largest democracy and
the most liberalised
telecommunications
market in the continent.

May 05, 2004 36

Conclusion - contd

We welcome all genuine

investors to Nigeria

……Africa’s preferred ICT

Investment Destination.

May 05, 2004 37

 THANK YOU
Ernest C.A. Ndukwe, OFR,FNSE,FNIM