There are more than 70 million mobile subscribers in Nigeria and it has the largest mobile subscriber base in Africa. With the mobile subscriber penetration potential being more than 100%, there is ample room for growth in the market. National backbone coverage is limited and, in keeping with the government's Vision 2020 initiative, there are plans underway to extend the backbone, which will provide additional opportunities for investors. The imminent lighting up of the MainOne and Glo-1 undersea cables is also likely to yield a wide range of growth opportunities in making international bandwidth more readily available.
The Nigerian government has established a number investment promotion initiatives whereby it will provide funding support to investors that address certain types of investments, most notably those aimed at providing broadband access to specific stakeholder groups or communities. The government is also actively promoting electronics manufacturing in Nigeria on the basis that Nigerian ICT markets are big enough to support local manufacture. Nigeria thus offers a wide range of investment opportunities in a rapidly growing market.
In this report we provide a comprehensive analysis of propsects for investment in ICTs in Nigeria. Forecasts are provided for mobile, fixed and internet usage. Investment opportunities are identified.
Objectives of the Study
A Note on Forecasts
Investment Opportunities in the ICT Sector in Nigeria
Rationale for selecting Nigeria
Overview of the Nigerian Economy
Prospects for the Nigerian Economy
ICT's in Nigeria
The Fixed Line Market
The Mobile Market
Challenges in Nigerian ICT Markets
Profiles of Key Players
Zain (formerly Celtel)
MainOne Cable Company (Nigeria) Ltd
Visafone Communications Ltd
Starcomms Nigeria PLC
G-Cell Wireless Ltd (GiCell or G-Cell)
Regulatory Context and Prognosis
Overview of ICT Legislation
Historical Investment in the ICT Sector
Market Growth Prospects and Forecast
The Fixed Line/Fixed Wireless Access Market
Mobile Market Forecast
Internet Market Forecast
Government Investment Promotion Initiatives
Investment Opportunities in the Fixed Line Network and Backbone
Investment Opportunities in Mobile Networks
Other Investment Opportunities
Investment in Nigeria in Perspective
Appendix 1: Key Contacts
List of Figures
Nigeria: Real Annual GDP Growth Rate
Teledensity in Africa (Nigeria)
Nigeria: Fixed Lines in Services (2000 – 2009)
Nigeria: Mobile Subscribers (2000 – 2009)
Nigeria: Internet Users (2000 – 2009)
Nigeria: Cumulative Private Sector Investment (2000 – 2008)
Nigeria: Fixed Line Forecast (2000 – 2014)
Nigeria: Mobile Subscriber Forecast (2000 – 2014)
Nigeria: Internet Usage Forecast (2000 – 2014)
Nigeria: Internet Subscriber Forecast (2000 – 2014)
List of Tables
Nigeria: Key Statistics
ICT Usage in Nigeria (2008 and 2009 estimates)
Nigeria: Mobile Market Share by Service Provider (September 2009)
Nigeria: Mobile Market Growth by Service Provider (Q1 to Q3 2009)
MTN Nigeria Financial Data
Zain Nigeria Financial Data
Starcomms Financial Data
Registered Financial Institutions in Nigeria
Investment Companies and Funds Active in Nigeria and Sub-Saharan Africa
The Nigerian ICT sector is poised for substantial growth, which will attract massive investment into the sector, according to a new study published by Technology Strategies International in partnership with BroadGroup TMT Ventures. The report, titled “Investment Opportunities in the ICT Sector in Nigeria: 2010”, says that even though Nigeria became the largest mobile market on the African continent in 2008, it still has a mobile penetration level of less than 50%, suggesting that there is ample room for expansion of the market. Penetration in the fixed line segment is dismal and there is a vast opportunity to improve internet penetration, the report points out.
“One of the things fuelling the growth in the Nigerian ICT sector is the imminent illumination of two undersea cables, which will increase international bandwidth dramatically”, says Christie Christelis, President of Technology Strategies International. “The improvement in international connectivity will have a major impact on business in Nigeria.”
At the other end of the spectrum, there is still huge latent demand for mobile phone services, says Christelis. Operators in Nigeria are experiencing similar challenges to operators in other emerging economies, with declining ARPUs as the subscriber base broadens to include poorer segments. But companies such as MTN have demonstrated that even at ARPU levels of $12 – and declining – astute operators are able to make above superior margins, he says.
Christelis points out that the recent political crisis surrounding President Y'Ardua's ill-health, and the instatement of Vice President Goodluck Jonathan as acting President, is a temporary setback for the country, and is bound to make investors jittery about the prospects of investing in Nigerian technology companies. But he says that, provided the political transition is well managed, it is unlikely to impede growth in the ICT sector in Nigeria. The Nigerian Government's Vision 2020 initiative is creating an environment conducive to high growth.
“There is huge momentum behind the growth, and even through the recent global financial crisis investors have managed to source funds for good investment opportunities in Nigeria”, he says. “One example is the capitalization of the infrastructure sharing venture, Helios Towers. The Helios business model could well be rolled out across other emerging economies.”
Key opportunity areas identified in the report include expanding the reach of the undersea cables, building out mobile infrastructure, turning investments into fixed wireless infrastructure into sustainable businesses, expanding the retail network for mobile, fixed wireless and internet services, and in electronics manufacturing. Christelis says that the Nigerian Government is particularly keen to promote an indigenous electronics manufacturing and is doing much to attract investor interest.
Christelis warns, however, that the Nigerian ICT sector is complex and investors must give due consideration to the characteristics of the Nigerian market when evaluating business plans. The sensitivity of the economy to oil price fluctuations can result in a volatile foreign exchange. Regionalism has a big impact on the extent to which services can be rolled out. And corruption weighs heavily on investors' minds, he says. The fact that the market is liberalized, and hence very competitive in certain segments, provides some safeguards to investors.
The 53 page report provides a comprehensive review, analysis and forecast of investment opportunities in the ICT sector in Nigeria. It analyses the investment environment in the country in the context of recent political and economic developments, and provides a balanced assessment of growth opportunities in the country. Detailed forecasts are presented for fixed line/fixed wireless communications, mobile communications and internet usage. Specific investment opportunities are identified and categorized in terms of scale of investment.
- G-Cell Wireless Ltd (GiCell or G-Cell)
- Globacom Nigeria
- Helios Towers
- MainOne Cable Company (Nigeria) Ltd
- MTN Nigeria
- Starcomms Nigeria PLC
- Visafone Communications Ltd
- Zain (formerly Celtel)