The dwindling fortunes of Nigeria’s Code Division Multiple Access, CDMA sub-sector of the telecoms industry last month worsened when news filtered that MTN Nigeria, a GSM transnational had advanced acquisition plans for the last CDMA operator standing, Visafone. Although it was a matter of time for extinction to happen on the CDMA sector in Nigeria, considering the challenges which bogged down their operations, it was also surprising that Visafone could go so soon, particularly when it just obtained approval for additional spectrum two months earlier.
It wasn’t as though survival was anywhere
near for the operators, going by the statistics. While their GSM counterparts
have continued to smile to the banks on account of robust sales and large
subscriber base, the CDMA operators could only boast of less than two per cent
of the Nigerian telecoms market share.
Data released by the regulator, the
Nigerian Communications Commission, NCC, shows that the four telecoms
operators; MTN, Globacom, Airtel and Etisalat have dominated the market
controlling 98.07 per cent of the market.
As at February this year, they
currently have a combined active subscriber base of over 140.2 million out of
the total 142.5 million active mobile subscriptions in the country compared to
the CDMA and the fixed wired/ wireless segments which boast of a paltry 2.1
million and 183,270 active lines, representing less than two per cent market
share respectively.
According to the data, while MTN had
added on the over 58.3 million subscribers, Globacom, on the over 26 million;
Airtel’s subbscriber base hovered around 25 million and Etisalat had added on
on the over 19.8 million mobile subscriptions on their networks as at the third
quarter of last year, the CDMA operators were losing ground tremendously.
Industry concerns
While the statistics make Visafone
acquisition less surprising, the concern of industry observers seems not to be
what the future holds for CDMA operation in the country but what would become
of the telecom sector when more power is added to the operators who already
wield much power.
Deduction from opinions of industry
professionals who spoke to Hi-Tech on the issue are, for instance, that MTN’s
acquisitions of Visafone will give it access to 800 MHz spectrum band which
will enable it provide 4G LTE services and apparently places it in enviable
position of being the only GSM operator with access to this spectrum and
thereby increase their chances of becoming a monopoly in the industry.
The NCC in 2013 declared MTN dominant
in both the retail mobile voice and wholesale leased line markets following the
2013 Dominance Determination and imposed specific obligations meant to ensure
it balances competitive behaviour and also ensure the sustenance of long term
competition in the telecommunications industry.
But the regulator however did not
declare any operator dominant in the mobile data market where MTN’s operation
of Visafone network, should fall. Yet industry analysts feel that the
acquisition and possible access to valuable sub-1GHz spectrum to provide 4G
services would be to the exclusion of other leading operators and may clearly
give it an unfair advantage, which will be impossible to replicate in the short
term by any operator.
Perceivedimbalance
There are three major reasons that are
alleged could create that perceived imbalance. One is that the 800 MHz spectrum
band is characterized by the presence of sub-optimal licensees who have largely
been inactive over the last 8 years. For the few who have remained active,
their performance has been sub-optimal and most lack the financial capacity to
deploy services and thus can hardly compete effectively.
Secondly, that it may look unlikely
that the regulator may want to re –farm the 800MHz spectrum to make it
available for other operators to deploy services, considering that the current
licence holders in the spectrum band have been unable to meet their roll-out
obligations. Another reason is that the 700MHz band which is due for
re-farming, in line with Internation Trade Union’s digital dividend objectives,
is currently being held by the Broadcasting industry and may not be available
for release before 2017.
An industry practitioner and a Lagos
based value added provider, Engr Andrew Ndem, said while the deal may be
healthy to salvage a dying CDMA sector, there could be reason to apply every
caution in finally consummating it.
He said: “while I will always give
kudos to MTN for its giant strides in this economy in general, I am however
concerned that should this acquisition give it access to sub 1GHz spectrum to
the exclusion of other leading operators, it will therefore provide it with an
unfair competitive advantage in the data market where it can easily deploy its
size and profitability to further entrench dominance in the market.
“This may stifle other late entrants
and their ability to compete. Again, given that it has already been declared
dominant in the transmission market, its ability to control both spectrum and
access at prices they dictate to industry and consumers makes this an unhealthy
state of affairs, and poses a grave threat to the viability of the industry.
This scenario, if it eventually plays
out, will potentially leave the sector with one dominant player in both the
retail voice and data markets”. For him, “the Nigerian subscriber may
ultimately pay for this in the form of higher tariffs, poor quality of service
levels and little or no incentive for innovation due to the lack of competition
in this market segment”.
Regulatory scrutiny
Meanwhile, there are suggestions that
the situation requires close regulatory scrutiny in line with what obtains for
dominant operator in any market. The regulator is further challenged to review
the acquisition to ensure that it does not give any operator unfair advantage
in industry which may be detrimental to the growth of a viable and healthy
telecommunication industry in Nigeria.
There are also suggestions that
licensees in 800MHz spectrum band should form active collaboration and
partnerships between current and other leading operators in the industry who
have established the ability to deploy telecommunications services and meet
their licence obligations
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