Nigeria Telecommunications Report Q1 2011

PRLog (Press Release) – Feb 07, 2011 – The latest figures from the Nigerian Communications Commission (NCC) suggest Nigeria's mobile customer base grew 12% in the first nine months of 2010 to reach almost 82mn at the end of September. This resulted in a mobile penetration rate of 52%, up from more than 47% at the start of 2010. BMI estimates that at the end of 2010 Nigeria had more than 84.5mn mobile customers, equivalent to a penetration rate of 53.4%. Despite having a mobile penetration rate which is more than 50%, we believe the sector has a high incidence of multiple SIM ownership and a large number of inactive prepaid users. We believe one of the biggest challenges for the sector will be expanding network coverage to underserved areas. Meanwhile, although Nigeria's mobile market still offers considerable scope for growth, we predict the introduction of SIM registration, as well as the introduction of number portability in 2011, will result in slower growth.

Our newly revised and extended forecast for Nigeria's mobile sector envisages a market with almost 93mn subscribers at the end of 2011, reflecting full-year growth of about 9%. By the end of 2015 we expect more than 128mn mobile customers; equivalent to a penetration rate of almost 72%.

Noteworthy developments in Nigeria's telecoms market include the news in December that Etisalat Nigeria became the most recent Nigerian operator to acquire a licence to provide 3G services. Etisalat acquired its licence through the purchase of start-up Alheri Mobile Services, a wholly owned subsidiary of local conglomerate Dangote Group. Alheri was awarded a 3G concession from the NCC in April 2007, alongside established operators Airtel Nigeria (then Celtel), Globacom and MTN Nigeria. Etisalat plans to spend US$50mn on 3G equipment out of a total investment of US$400mn for 2011. The operator will initially deploy its 3G network in Lagos, Port Harcourt and Abuja, with plans to expand coverage to other areas later in 2011.

It was also reported in December that New Generation Telecommunications, the consortium which emerged as the preferred buyer for state-owned incumbent operator Nitel in February 2010, had been given an extension to pay a US$750mn bid security for the ailing operator. Nigerian President Goodluck Jonathon approved the consortium's bid of US$2.5bn for a 75% stake in Nitel and its mobile arm M-Tel in October 2010. The New Generation consortium comprises Minerva Group of Dubai, Nigeria's GiCell Wireless and technical partner China Unicom.

Nigeria has risen to first position in BMI's latest set of Business Environment Ratings for Sub-Saharan Africa. The rise in our rankings to pole position is the result of higher scores in the Industry Rewards and Country Risk categories.

For more information or to purchase this report, go to:
- http://www.fastmr.com/prod/114381_nigeria_telecommunicat ...

Bharti Airtel Ltd., India’s biggest mobile-phone operator, plans to create tower companies in each of the 16 African countries where it operates following its $9.7 billion purchase of assets from Kuwait’s Zain.

Seven months after the transaction, Bharti is pushing programs to turn around the operations it bought, working on cutting costs -- through projects such as pooling tower assets into a separate entity -- and boosting subscriptions.

“Our 100 percent focus is to get these 16 properties into very good health,” Manoj Kohli, Airtel Africa chief executive officer said in an interview from Nairobi yesterday.

Profits and market shares at businesses Bharti bought from Zain were declining, Kohli said. In the past two quarters the slide has been arrested and the group had net additions of 2 million users for a total of 42 million at the end of December. The plan to cap costs by separating and sharing the mobile-phone towers mirrors a system Bharti has tested in India.

Increased competition in Africa from established operators and new entrants is making it “essential for all of them to cut costs,” said Thecla Mbongue, an analyst with Informa Telecoms & Media in Johannesburg. “Already we have had companies such as Millicom, MTN and Vodacom do tower-sharing deals.”

For Bharti, sales from African operations rose 8.6 percent to $911 million in the three months ended December, the New Delhi-based company said. Minutes of use per user in rose 7 percent to 120, it said. The margin on earnings before interest, tax, depreciation and amortization narrowed to 21 percent, from 24 percent previously, primarily on rebranding costs.
Infrastructure Costs

Bharti has two tower company programs in India, one a joint venture with Vodafone Group Plc. and Idea Cellular Ltd. The other is a subsidiary called Bharti Infratel Ltd., which has about 30,000 towers in its portfolio.

“The objective is to optimize the infrastructure costs of the entire industry and Bharti Airtel will lead it like it has led it in India,” Kohli said. “It will probably lead to a much lower cost structure, which is good for the industry and good for the consumers to.”

The management of the tower companies within the operating companies in Africa will be independent of Airtel’s consumer business, he said. He declined to give more details on what the plans were for the tower companies.

“Duplication of infrastructure is not good for the consumer and not good for the company,” Kohli said. “It does not benefit anyone and is quite wasteful.”
‘Right Framework’

In India, tower companies “help infrastructure-sharing on a very non-discriminatory way,” he said. The “management is independent so that all customers of the tower company can come and get the service very fairly,” he said. “That is the right framework; these tower companies will be independent and have independent management.”

Bharti is also driving down costs through automation across the businesses. For example, consumers in Nigeria, Airtel’s largest market, can access a top-up service called Easy Recharge by going to a retailer and receiving airtime electronically.

Retailers have airtime stored in their stores’ phones and are able to send the minutes to the buyer through a short message service, or sms, transaction. This eliminates the need to print and distribute coupons and vouchers and cuts costs.

“We would like to have this across all African countries,” where Bharti operates, Kohli said.

Airtel aims to have 100 million customers by the end of March 2013, Kohli said. The group wants to have sales of $5 billion and Ebitda of $2 billion by that time, Kohli said.

For now, the company is “too busy” with what it has to pursue other expansion, he said.

Etisalat last night extended its partnership agreement with FC Barcelona into Africa and Asia as Etisalat Afghanistan and Etisalat Nigeria were both named 'Official International Partner' for Spain's leading football team in their respective markets. This is a development of the four-year agreement that Etisalat signed with FC Barcelona in 2009 and which was joined by Mobily in October 2010.

Through this unique partnership, Etisalat is bringing football action to its 135 million customers in 18 countries, while providing an extended worldwide fan base to the FC Barcelona in relatively newer territories. The partnership also further strengthens Etisalat's association with football.

Etisalat Afghanistan and Etisalat Nigeria were officially anointed at Camp Nou, the headquarters and stadium for FC Barcelona, during a special ceremony organized by Etisalat and attended by various leading figures from the telecom industry. The ceremony was hosted by H.E Mohammad Omran, Chairman of the Etisalat Group who was joined by H.E. Ahmad Abdulkarim Julfar Group Chief Operating Officer, Mr.Essa Al Haddad, Group Chief Marketing Officer and FC Barcelona President Mr.Sandro Rosell who jointly announced the partnership. Present at the ceremony as well was , Mr.Saeed Al Hamli, CEO of Etisalat Afghanistan, Mr.Steven Evans, CEO at Etisalat Nigeria and Mr. Khaled Al Kaf, Chief Executive Officer at Mobily , besides many other senior officials from Etisalat Group and its operating companies.

Essa Al Haddad, Group Chief Marketing Officer for Etisalat said: "When we initiated this strategic and unique agreement with FC Barcelona, our plan was to expand this partnership to our operating companies to share value with customers across our footprint. Today's ceremony is a major landmark in achieving that vision and we are excited to be able to allow our customers in Nigeria and Afghanistan the opportunity to extend their support to the world's most famous football team."

Sandro Rosell, President of FC Barcelona said: " if not Etisalat who will be, FC Barcelona is one of the world's most famous football teams and we are privileged to have such loyal and active supporters. This partnership with Etisalat helps our fans in countries in Africa and Asia keep in touch with our Club and allows them to share in the excitement of our various victories and achievements. We are grateful to the Etisalat Group for its continued support of our team and look forward to many years of partnership."

"As part of Etisalat Group, we are delighted to join hands with a global brand such as FC Barcelona, synonymous with quality and expertise. We are deeply committed to investing and promoting sports at both the grass root and the professional level in Afghanistan as we believe sport is very important for Afghans to prove to the world that they believe in peace and happiness like any other society in the world," said Saeed Al Hamli, Chief Executive Officer at Etisalat Afghanistan.

"This partnership with FC Barcelona shall allow us to bring the excitement of football action from the biggest football club in the world and we are excited and look forward to sharing this experience with our ever increasing customer base in the country."

Steven Evans, Chief Executive Officer at Etisalat Nigeria said: "Football is a major past-time in Nigeria and across Africa. Everyone, from all walks of life can enjoy this sport. By partnering with FC Barcelona we are giving our customers a new way to enjoy football and to participate in the excitement of the game. We look forward to developing our relationship with FC Barcelona and to extending the many benefits to our continuously growing subscriber base as we introduce more services on 3G technologies in 2011."

Under the umbrella agreement, Etisalat and its international subsidiaries can adopt the title of "Official International Telecom Partner of FC Barcelona" in their respective countries and Etisalat and Mobily have already successfully activated their partnership in the UAE and Saudi Arabia respectively.

In the UAE, Etisalat has undertaken a variety of high profile advertising and promotional campaigns. These included offering a specially designed SIM-package, branded USB modem, news updates, organizing football coaching sessions for young footballers in the Emirates and also running several competitions to watch FC Barcelona play in Spain.