The rate of growth in Nigeria’s telecommunications industry and her large population are parameters that will continue to make the country one of the most attractive markets to investors in Africa and the Middle East, a report by Pyramid Research has indicated.
Pyramid Research is a company that provides international market analysis and consulting services to the communications industry, and has its headquarters in Boston, Massachusetts.
The study took a five-year look at the country’s telecommunications sector returns, saying that demand profile in the country, both for voice and data services, is high and by far, the largest in Africa, even as it disclosed that the industry generated $9.3bn in revenue in 2012.
Pyramid Research also identified sound regulatory regime engendered by the Nigerian Communications Commission, the industry regulator, as a key factor bringing about and sustaining the growth potential.
According to the study, regulatory architecture is creating more level playing ground with the regulator placing emphasis on quality of service by fining operators that fail to meet Key Performance Indicators.
It noted that after consultations with operators and stakeholders, the regulator also implemented a progressive lowering of interconnect rates while highlighting the significance of the introduction of mobile number portability, an initiative the study said, would pave the way for a more competitive market and benefit consumers by lowering tariffs.
The competitive landscape in the industry, it observed, was putting pressure on operators to roll out new infrastructures to improve coverage and quality.
“Operators are investing billions of dollars to improve their services and to reach the underserved regions of the country. Industry is benefiting handsomely from these investments, with mobile revenues increasing at a rate of 4.5 per cent in local currency terms between 2012 and 2017,” the study said.
According to the report, main opportunities exist in network expansion, improved quality of service and infrastructure development.
It said, “For operators, with mobile penetration at only 66.3 per cent in 2012, opportunities exist for operators to increase subscriber base by investing in improving and expanding their networks.
“Mobile number portability is presenting further opportunity to attract competitors’ customers by offering better deals and quality service. Opportunities also exist in the broadband segment, which is expected to see massive growth during the forecast period.”
The industry remains attractive for telecoms vendors as operators continue to invest in their networks, the report said.
For instance, Globacom alone signed agreements with Huawei and ZTE worth $1.25bn. Etisalat secured $1.2bn loan to fund network expansion in Nigeria, among others.
The introduction of the Strategic Management Plan by the NCC, it noted, may likely mean there will be a number of areas, such as last-mile access, especially as it relates to the planned e-government push and further telecoms service rollout in the rural areas.
“For investors, with the NCC planning to release 30MHz of spectrum on the 2300MHz band to a new operator, opportunities exist for both local and foreign companies to invest in the new operator.
“Also, focus on expanding the fibre-optic network under the proposed Information and Communication Technology policy, opportunities exist for investors, as huge investment will be needed to carry out the tasks proposed,” it said.
When looking at telecoms opportunities in emerging markets, much of the focus has been on the growth of mobile devices and services due to less-developed fixed markets, the success of the low-cost prepaid mobile operator business model and growth strategies addressing lower-income segments, the research firm said.
It, however, maintained that as mobile growth rates slow and the market starts to mature, market segmentation becomes more important, and the consumer/enterprise split is the primary way in to distinguish customer types.
The firm said that the enterprise portion of the communications market in emerging markets was similar to that of developed markets; of which operators must have a clear picture of local business demographics and allocate resources accordingly.
The South African ICT market, the research firm said, was dynamic, strategic and growing fast.
It is one of the key markets in Africa and the Middle East region because of its size and wealth and because it is the home of several important regional telecom players.
Mobile apps, mobile advertising and cloud services are three of the fastest growing areas in the South African market, it said, adding that despite continued strong growth in the broadband markets, there are new, long-term growth opportunities emerging that are also of strategic importance for service providers.
Mobile app revenue is expected to show very strong growth, with a Compound Annual Growth rate of 48 per cent. The huge growth in the adoption of smart phones, the increasing availability of apps and the introduction of new payment methods are the key drivers.
Cloud services are enjoying strong growth, and revenue is expected to grow to $245m in 2017, up from just $72m in 2011.
