Monday, 22 April 2013

Nigeria Phone Rule Toughens Turf Battle for MTN, Airtel

By Emele Onu

Mobile-phone users in Nigeria will be able to change service providers and retain their numbers under new regulations from today, increasing competition between companies including MTN Group Ltd. (MTN) and Bharti Airtel Ltd. (BHARTI)

The new rules are among a series of measures introduced by the regulator, the Nigerian Communications Commission, to help increase competition and deliver more benefits to consumers, Reuben Muoka, a spokesman for the NCC, said in a phone interview from Abuja, the capital, on April 19. Rates for calls between different phone companies were set 40 percent lower from April 1.

“Number portability will further foster competition on prices and quality of services,” Muoka said. “The reduction of termination rates followed a study on interconnect cost in the industry, and is with this in mind that operators will drop charges to subscribers.”
Nigeria, Africa’s most populous nation with more than 160 million people, had about 155 million telephone subscribers as of January, according to the NCC. The global system of mobile communication, or GSM, accounts for 138 million customers or 89 percent of the country’s phone users, followed by the Code Division Multiple Access, or CDMA, network with 14 million customers. Fixed lines amount to 2.4 million users.

Price War
“A price war should emerge soon and tighten revenue,” Akintola Salami, an analyst at Lagos-based Financial Derivatives Co., said in an e-mailed response to questions. Subscribers will probably benefit, he said.
MTN, based in Johannesburg, is the Nigerian market leader wih 47 million subscribers as of the end of last year, according to data on the NCC’s website. Nigeria’s Globacom Ltd. had 24 million users, Mumbai-based Bharti Airtel 23 million, and Abu Dhabi-based Emirates Telecommunications Corp. (ETISALAT), known as Etisalat, 14 million. In an industry with 25 operators, the top four have about two-thirds of the market.
The new pricing system seeks to protect new entrants and smaller operators than the top four, Muoka said.

While mobile-phone operators in Nigeria face “a reduction in voice revenue,” there is “an opportunity in data services to cushion the effect,” Gbenga Adebayo, president of the Association of Licensed Telecom Operators of Nigeria, said by phone from Lagos on April 19.
MTN invested $1.3 billion last year to expand its network in Nigeria, and Airtel and Etisalat have announced additional investments to improve their speed and capacity.
Other challenges facing the companies include frequent power cuts and the sabotage of phone facilities in the country’s mainly Muslim north, where Islamist militants target telecommunications companies for helping the authorities to track them.

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