Last week, news filtered in that the Nigerian Communications Commission (NCC) licensed some companies to operate in the mobile virtual network sub-sector. The move is expected to bridge access gaps in Nigeria and offer over 200 million subscribers in the country more opportunities amid heightened competition, ADEYEMI ADEPETUN writes.
Hope of improved and expanded telephony services in the country appears to be brewing following the licensing of some 25 companies by the Nigerian Communications Commission (NCC) to operate as Mobile Virtual Network Operators (MVNO) in Nigeria.
With Nigeria’s telecoms industry’s worth put at over $75 billion since the revolution began over two decades ago, service providers, especially the mobile network operators (MNOs) through several regulatory policies, have connected over 320 million telephony lines, of which 223 million are active as of first quarter of 2023. There are 158 million Internet users on the narrowband, while 91 million explore the web via broadband.
Though, the country’s teledensity is well over 100 per cent, the NCC has said that there are still 114 access gaps in the country, where some 25 million to 30 million Nigerians reside. The implication of this is that these people are either underserved or unserved, leaving them out of the telecoms revolution.
To bridge the gaps that still exist in the sector, the NCC rolled out several initiatives targeted at giving Nigerians more access to telephony services. Indeed, the commission had on August 11th, 2022, notified the public that it would be issuing the MVNO license, which would improve the telecommunication output of the country, enable the expansion and availability of quality mobile coverage, and close the gap to the unserved/underserved Nigerian population.
The essence MVNO
A mobile virtual network operator (MVNO) is defined as a wireless communication service provider that resells mobile network services bought at wholesale prices from mobile network operators (MNO), such as MTN, Globacom, 9mobile, and Airtel for discounted amounts to end users and customers. MVNOs carry out sales and marketing services but lack the network and core infrastructure to deliver network services; therefore,
MVNOs depend on the host MNO to provide this.
Entrance of 25 firms for operation
Last week, the NCC licensed 25 new companies to provide mobile telecommunications services under the MVNO Framework. The entrance of the MNVO is expected to provide competitive offerings in the telecoms market and lower the costs of calls, data, among others for subscribers.
Aside from lowering the cost of access to telecommunications services, NCC said the MVNOs would help to drive the government’s efforts to extend telecoms services to more rural, under-served, and unserved communities across the country.
While NCC had created different categories of licences under the Framework, which range from tier 1 to tier 5, it was gathered that the 25 companies so far licensed are in categories two to five, while no company has acquired a tier 1 license, which is the lowest.
According to the commission’s database, seven companies were licensed in the tier 2 category and these include: Routelink Integrated Systems Ltd; Hazon Technologies Limited; Asel Telecom Nigeria Limited; Briclinks Africa Plc; Pisi Mobile Services Limited; Univasa Nigeria Limited; and Imose Technologies Limited.
Companies licensed in the tier 3 category are also seven and they include Amics Technologies Limited; Zegtel Limited; Telewyz Limited; Siu Telecommunications Network; Abrindex Nigeria Limited; Metropolitan Consortium Nigeria Ltd; and IPNX Nigeria Limited. Those licensed as tier 4 operators include Imbil Telecoms Solutions Nig. Ltd; Environmental Expressions Limited; and DMK Telecommunication Nig. Ltd.
In the tier 5 category, 8 companies were licensed. These include Systegra Technologies Limited; Choffan Communications Limited; Mab Consultant and Associates Ltd; H & Y Business Global Limited; Taima Technologies Ltd; Global Communication Extension Services Ltd; USKS Ventures International Ltd; and Paribas Communication Limited.
The Group Managing Director of Routelink Group, Femi Adeoti, was quoted to have said that the NCC granted this licence to the firm based on the perception of what it is set to do in the market.
“Routelink is excited about the opportunities that abound in the Nigerian telecoms marketplace and is determined to make a major difference as regards the quality of service and innovation,” Adeoti said.
Through the issuance of the MNVO licence to the 25 companies, the telecoms regulator raked in about N5.9 billion for the government in licensing fees. According to the framework released by the NCC, the 10-year tenured MNVO licences come at different prices.
The highest in the categories, the tier 5 licence costs N500 million, while tier 4 goes for N200 million. Both the tier three and tier four licences cost N130 million and N60 million respectively, while the tier 1 licence is to be issued at N35 million.
Path to successful operations
With the hope of improved telephony service, the MVNO licensees would need to do more in terms of service delivery. The Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo, said the hope is that the service would benefit the industry and expand accessibility to service.
Adebayo said because they are smaller players, “we hope they will be able to attend to the nitty gritty of subscribers’ needs. You know they would have niche operations and coverage. It is hoped that in those niche areas, they would be able to give a better value of services and much improvement than what the big operators are doing.
“It is also hoped that they will be able to diversify in their areas of service within the scope of their license.” To the ALTON boss, it is a common practice across the world that you have MVNOs, which are relying on legacy operators to provide service and Nigeria should not be different. “If you go to the UK, U.S. and other parts of the world, you can pick up a SIM from the airport, get cheaper international calls and data, and it is easier to access their services than the big MNOs. They will also be bound by the same rule, but they should have a better turnaround time in terms of user experience than the bigger players.
“However, it is also our hope that the forces of competition of the big players would not come to force on them. This is because unless the big players keep a space for them to survive, they may face challenges. So, there have to be obligations on the part of the big players to make them succeed. I don’t know the terms and conditions of their license and obligations placed on the big players, but the fact remains that the bigger operators have a role to play in ensuring the success of the MVNOs.”
The President, the Association of Telecommunications Companies of Nigeria (ATCON), Tony Izuagbe Emoekpere, said the current situation in the sector is that people are not competing seriously. He said while the MVNO is more service driven than just providing connectivity, “So, whatever kind of service you can offer would be an attraction to your operation. The ultimate beneficiary would be the subscriber.”
Emoekpere however, said the MNOs might have some challenges in connecting them, “but it will now depend on the value add they can bring to operations of the existing MNOs. For example, I have my network already and earning some revenues, so, why should I allow you to be a virtual provider over my network that is on one side? Then, on the subscriber side, what innovations are you bringing that would attract subscribers to network within the network.”?
On his part, the Chairman, the National Association of Telecoms Subscribers of Nigeria (NATCOMS), Chief Deolu Ogunbanjo, said it is an opportunity to serve the underserved and unserved Nigerians.
While commending NCC for the initiatives, Ogunbanjo said MVNOs should focus more on the rural areas, saying that some travel far from their base to make and receive calls in nearby cities because of no network in their villages. He appealed to NCC to spell out the responsibilities of MNOs and MVNOs to ensure no conflict in service delivery, “above all, it is a win-win for subscribers because networks will be expanded across the country.”
According to him, both existing and potential consumers are in for the best, stressing that MVNOs should ensure users get value for their money, especially in this era of the digital economy and 5G. I think the initiative is very relevant now to expand services across the country.”
On his path, the Managing Director of Routelink Telecom, Ikechukwu Nguzo, believes that the introduction of MVNOs in Nigeria has the potential to stimulate growth in the Nigerian telecoms industry and benefit consumers in several ways, including coverage expansion, more innovative services, improved service offerings, and partnership opportunities.
Why NCC introduced MVNOs
Speaking at a forum, the Executive Vice Chairman of NCC, Prof. Umar Danbatta, said that pursuant to the Nigerian Communications Act (NCA 2003), Licensing Regulation 2019, and other subsidiary regulations, the commission through the MVNO, would create an enabling environment where various players provide diverse services based on licenses, issued by the commission.
“In its drive to create an enabling environment, the Commission has introduced an MVNOs licence that will generate employment and bridge the gap between the unserved and the underserved in society. It will also further engender competition and provide choices for telecommunication consumers,” Danbatta explained.
The NCC EVC posited that the Nigerian market is reported to have a demand for differentiated services with lots of gaps in several sectors, especially mobile to fixed market, M2M, B2B, and rural networks.
While calling for more industry collaboration, the NCC EVC averred that the growing concern of over-the-top (OTT) players eating into operator’s ARPU offers a prime opportunity for MVNOs to partner with these players, therefore, directing some revenue back to the MVNOs through wholesale agreements.
Intense competition seen in retail segment
The Senior Manager, External Relations, Funso Aina, said MVNO Framework allows new market players to ride on network infrastructure of existing players to provide their brand of communications services to end users.
Aina, who said it lowers the barriers to entry in a CAPEX-intensive sector and will further deepen competition, noted that customers are to benefit from this as more players, who will provide niche services, with key differentiation in the areas of innovative products and services as well as customer services will come into the market.
“In terms of the impact of operations of MNOs, the involvement of MVNOs will bring about intense competition in the retail market amongst players with a keen focus on delivering more value to consumers, while presenting an opportunity for MNOs with unutilized network capacity in the wholesale market,” he stated.
