Not too long ago – about 10 years to be precise – Nigeria only had 400,000 connected lines from the Nigerian Telecommunications Limited (NITEL).

NITEL was the principal telecommunications company owned by the Federal Government and responsible for all wired telecommunications in the country before the advent of the Global System for Mobile (GSM) communications services.

Today, Nigeria is in the midst of an era of globalisation and high-speed communication.

Trends and means of telecommunications are changing fast; having positive effect on the overall economy of the country.

The level-playing field provided by the Nigerian Communications Commission (NCC), has resulted in substantial increase in competition spanning a wide spectrum of telecoms services.

Over the years, the industry has been swept up in innovation, facing a plethora of challenges like poor quality of service, competition, churn and decline in voice calls; mobile Internet is gradually replacing voice as staple business.

Advances in network technology led to this development. Telecom is now less about voice and increasingly about text and images.

High-speed internet access, which delivers computer-based data applications such as broadband information services and interactive entertainment is rapidly making its way into homes and businesses across the world. The fastest growth comes from services delivered over mobile networks.

With so many players in the market, competitors rely heavily on price to slug it out for market share while success rests largely on brand name, strength and heavy investment in efficient billing systems.

Currently, there are over 114 million connected lines – up from 98,000 in April last year; with teledensity of 64 per cent as at January, up from 56 per cent in April last year. This is an increase of 16 million in total connected lines and eight per cent leap in teledensity in only nine months.

Analysis of mobile subscriber information for December last year, posted on the website of NCC shows that MTN clearly leads the market with a subscriber base of 38.6 million and 5.89 per cent growth in Q3-4, recording an increase from 33.3 million subscribers in March of the same year.

Globacom came second with 19.6 million lines as against Airtel’s 15.8 million and Etisalat’s 6.7 million.

Airtel showed a marginal subscriber increase of only 746,929 where the other three Telcos recorded subscriber increases in millions.

Etisalat, a relatively new entrant into the industry recorded a steep increase of almost four million additional subscribers. It recorded the most growth in the last quarter with 25.37 per cent followed only by Globacom with 11.48 per cent.

MTN recorded a growth rate of 5.89 per cent while Airtel’s growth appreciated by 1.81 per cent from 0.75 in the first quarter of 2010.

While some analysts say Airtel’s recorded loss may be due to stiff competition the Telco introduced into the sector when it slashed call rates to N12 per minute from the average N24 per minute, others say it had to do with the name change, which has made subscribers lose faith in the brand.

MTN’s outstanding performance in the period under review earned it accolades from the MTN Group.

In the Group’s annual results for the year ended 2010, MTN Nigeria performed well for the period under review despite increased competition in the fourth quarter, increasing its market share to 52 per cent through the capture of more than 60 per cent of the subscribers added by the market in 2010.

This, according to the Group, may be attributed to attractive segmented promotions to customers and effective churn management.

Improved customer service and product accessibility through enhanced distribution channels and customer call centres also contributed to the subscriber base - increasing by 25 per cent over the year to 38.6 million.

Revenue grew by 16 per cent mainly as a result of increased airtime and subscription revenue (up 19 per cent), which was partially offset by lower interconnect revenue.

Interconnect revenue decreased by 25 per cent following the introduction by the regulator of lower mobile termination rates at the end of the prior year.

Data and SMS revenue continued on a strong trajectory albeit off a very low base. Average Revenue Per User declined by 10 per cent in local currency and 11 per cent in dollar terms to $11, in line with penetration into lower-usage segments of the market while mobile penetration in Nigeria increased by seven percentage points to 49 per cent during the year.

MTN Nigeria’s EBITDA margin increased by 3.7 percentage points to 62.9 per cent at December 31, 2010.

According to the Group, this was mainly due to the operation achieving better economies of scale and various ongoing cost control initiatives.

Capital expenditure reduced to 14 per cent of revenue from 31 per cent the prior year. Despite the slower roll-out, the operation maintained network quality and capacity and this will remain a priority as competition intensifies. Multilinks Telkom, has since indicated its intention to exit the Nigeria CDMA market on account of losses.

However in the fixed/fixed wireless market, Starcomms leads with 575,417 lines followed by Multilinks Telkom with 121,834 lines and Reltel with 104,367.

The sector, which accounts for 16 operators accounting for 1,050,237 active lines recorded a year end growth rate of 9.17 per cent.

In the fixed wireless market with 16 operators, Intercellular led the growth rate with 30.1 per cent in the last quarter, followed by VGC/MTN with 26.3 per cent growth rate and Multilinks with 17 per cent.

In the Code Division Multiple Access (CDMA) segment, data analysis shows that none of the CDMA operators were able to increase their market share, with Multilinks-Telkom leading the losses - decreasing from 2,164,023 subscribers in March 2010 to 1,454,704 in December of the same year, followed by Starcomms. Multilinks-Telkom, however, recorded the most bullish growth of 15.36 per cent followed by Starcomms with 9.82 per cent and Visafone with 1.52 per cent.

Multilinks-Telkom’s loss may not be unconnected with moves by the company’s core investor, Telkom SA to exit the CDMA market owing to financial and capacity constraints.

According to the company’s Acting Chief Executive Officer, Vincent Raseroka, the decision to exit the market is purely a business imperative.

He said: "It is strategically, financially and commercially challenging for us to continue to do business in this segment.

"With a current market share of 2.6 per cent in a market dominated by the GSM technology, it has become imperative that we explore other options and chart a new path to growth and profitability for ourselves as a business by utilising our fixed infrastructure here in Nigeria.

"Additionally, a number of contracts have rendered Multi-Link Telkom’s CDMA business unprofitable and unsustainable."

He said despite the comprehensive turnaround programme of the company in March this year, CDMA business in the country is still facing a lot of challenges in a highly competitive environment, requiring scale to successfully compete.

According to him, despite the intervention, Multi-Links operating revenue decreased by 1.7 per cent to N15, 065 million. Subscriptions and connections revenue decreased 18.2 per cent due to termination of access fees as a result of increased competition.

Traffic revenue decreased 24.6 per cent mainly due to decrease in traffic volumes and higher churn rates.

He explained that CDMA’s only 10 per cent market share limits the necessary scale opportunities for the players.

He concluded by saying: "The Telkom Group Board has mandated management to review options for the exit of the CDMA business.

"We have received a number of expressions of interest, which will be evaluated and quantified over the next quarter.

"For the time being, our CDMA operations will continue to run as usual. Multi-Links will work with the NCC to find a solution. Once the decision is finalised, Multi-Links will notify customers accordingly with sufficient lead time."

Multi-Links voice subscribers increased 19 per cent to 2.21 million during the year, while average revenue per user for voice fell to $6 from $12 excluding non-revenue-generating subscribers.

Analysts say the CDMA market is not lucrative because of their unattractive product and service offerings, stressing that they were originally meant for rural telephony services.

Industry stakeholders in Nigeria attribute the woes of the CDMA segment to the restructuring carried out by the former Executive Vice-Chairman of the Nigerian Communications Commission (NCC), Mr Ernest Ndukwe, an engineer, in 2006 when he doubled the interconnect rate of CDMA operators.

They contend that everywhere in the world, CDMA interconnect rates are not at par with GSM interconnect rates, adding that the new leadership of the NCC under Dr. Eugene Juwah should re-visit and restructure the interconnect rates of CDMA operators, as a foundation for building on attractive products and services.

But the Chief Technical Officer, MTN Nigeria, Karl Toriola, is of the opinion that the inferiority of the CDMA technology makes it unappealing for operators.

He said: "CDMA is a technology, which is dying away across the globe. If you look at Sprint in the US and Reliance in India, they are all migrating from CDMA standard to 3G UMTS standards.

"Technologically, it is not superior. The right choice is to go with UMTS; it’s the choice, which the whole world is making. Even people who were initially for CDMA in the US are all migrating, with AT&T migrated to the 3G UMTS standard."