Nigeria's 4G LTE has potential to rejuvinate sector performance

In 2015 and the first half of 2016 mobile data moved to the front and centre of Nigeria’s telecoms sector. In recent years the country’s four established mobile operators – namely the local firm Globacom, the UAE’s Etisalat, South Africa’s MTN and India’s Airtel – have ramped up investment in the development of high-bandwidth mobile data networks in response to steadily increasing smartphone uptake.

At the same time, a handful of new players have moved into the mobile data space. In early April 2016, for instance, ntel, a new local operator, launched high-speed mobile services on its 4G LTE network in Lagos, Abuja and Port Harcourt. This followed the launch of 4G LTE services in Nigeria beginning in 2014 by Smile Communications, a Ugandan company. Both ntel and Smile have focused their efforts on providing high-speed mobile data services at a relatively low price point, so as to appeal to the nation’s burgeoning middle class. “Mobile data is the headline product worldwide, and Nigeria is no different,” Segun Ogunsanya, CEO of Airtel Nigeria, told OBG in late 2015. “Consumption [of mobile data] is constantly increasing, while voice is decreasing.”

Driving Development 

The rise of mobile data in Nigeria has been a long time coming. Since the introduction of GSM mobile services in 2001, the Nigerian Communications Commission (NCC), the federal telecoms regulator, has worked with mobile operators to ensure that services of all kinds are affordable and accessible to most Nigerians. Regulatory pressures plus price competition have resulted in declining sector-wide average revenue per user (ARPU) in recent years, to around N1452 ($4.58) as of mid-2015, according to local media reports.

This trend is hardly unique to Nigeria, with many of Africa’s telecoms markets seeing a similar evolution, but the figures nonetheless represent a fall from average sector-wide ARPU of around N5850 ($18.14) in 2004. As a result, the rise of mobile data services represents a major opportunity to boost revenues. According to MTN, mobile subscribers that own smartphones generate ARPU that is around 3.5 times higher than non-smartphone users.

Investment 

The nation’s four major mobile operators have invested heavily in new, high-speed mobile data infrastructure in recent years. As of mid-2016 Nigeria’s mobile telecoms sector had attracted some $32bn in total investment, according to the NCC. This included spending by local operators and foreign players since the early 2000s. This figure is expected to expand rapidly over the coming years.

In late 2015 Adebayo Shittu, the minister of communications, forecast total investment in the mobile telecoms industry would reach $166bn by 2020. Much of this expenditure will be aimed at facilitating increased mobile data speeds. In recent years the bulk of mobile telecoms spending has gone towards 3G and, since 2014, 4G LTE network installation and expansion. MTN, the nation’s largest mobile operator, plans to launch 4G services before the end of 2016 through its subsidiary Visaphone, for instance.

Public Sector Focus 

Encouraging 4G LTE services is a key objective of the NCC’s eight-part strategic vision, the Eight-Point Agenda, which was announced in early 2016. Under the first pillar of the agenda, the government aims to facilitate increased broadband penetration in Nigeria by optimising access to both fixed and mobile high-speed data services. One way the state aims to implement this plan is by updating and streamlining Nigeria’s spectrum-allocation policies in an effort to better facilitate spectrum usage by mobile operators. Another means of boosting mobile data usage involves the state working to facilitate more effective infrastructure-sharing agreements among operators. While many of these firms already share towers and fibre-optic cable capacity, greater sharing is widely thought to be key in boosting high-speed mobile data availability.