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Teniola cautions against calls for ‘consolidation’ in telecoms sector

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One of the front burner issues since the sale of 9Mobile started late last year has to do with ‘consolidation’ among operators in the telecommunication sector in Nigeria.

Experts cite India as example where the number of operators reduced from over 20 to just three.

Also, last year, Tigo and Airtel Ghana had to merge after the market got to saturation point.

So, the views among analysts have been that a player in the market ought to have been allowed to buy-over the troubled 9Mobile.

Even the industry regulator, at a point, favoured “consolidation” in the telecom industry.

The Executive Commissioner for stakeholders’ management at the Commission, Sunday Dare, said in a chat with TheCable stated that “consolidation is in the best interest of the industry” and hinted that this will play a key role in determining who finally gets to buy the nation’s fourth largest operator.

According to him, “Nigeria can learn a lot from the Indian telecom experience of consolidation and market competition in the development of the telecom market. The consumer in India now enjoys lots of benefits and cheap data,” he said.

Well, as it stands now, Nigeria may remain a multi-competitors’ market with five major operators, should Teleology complete payment of the $500million sum as it steps up acquisition of 9Mobile.

Even, the President of the Association of Telecommunication Companies of Nigeria (ATCON), Mr. Olusola Teniola, welcomes the idea of having more players in the market.

To him, consolidation as presently called for would be to the detriment of the subscribers and the market at large.

He spoke to TechEconomy.ng:

Consolidation in the telecoms sector

“Let me share one thing with you- there is consolidation in Nigeria. Zoom is not around anymore; likewise Visaphone, Multi-Link, Starcomms. Within few seconds we have been able to name four. I am sure if we continue in next two minutes the number can increase to ten or fifteen. Then, you have to also consider that quite a number of Internet Service Providers (ISPs) have closed shop long time ago. Remember, Visaphone was an acquisition of four CMDA operators. So, consolidation has been happening.  

“The issue on the front-burner is the consolidation of the big ones, especially with 9Mobile up for sale. That’s why people are raising that question. In an environment where infrastructure is not an issue, natural consolidation occurs by the way of acquisitions; that is the preferred method consolidation. In Ghana there was a merger of Tigo and Airtel- two big operators chasing few customers. So, it is natural they come together.

“In Nigeria, I disagree we should have fewer mobile operators. If that is not the case why are we having 275 market gaps- unserved and underserved? We have five ‘big’ operators but there are over 20 to 30 million Nigerians who may not have access to voice or internet access. It is when you go outside Lagos you see the reality- the difference between the city and some hinterlands is huge. What we should call for is true competition.

“Without competition, you are not forced to do anything. Through competition you get the build up infrastructure. Our story in Nigeria is that we are still in infrastructure play- we need more base stations, adequate fibre optic cables, sharing, co-location, and data centres because our population is huge and the landmass is massive. Don’t make mistake to believe one operator can do the whole thing.

“MTN as the biggest network has been able to cover 60 to 65% of our landmass. They have spent billions of dollars. It is not chicken feed! This is a development that should have been done by NITEL (now defunct). Now, do we think private companies will operate like the government? Is that what you people are saying- oh, let leave it to two or three operators? Please, let’s be careful what we wish for, because we are not England or America where infrastructures are readily available. They have luxury of that debate because their services are very sophisticated. They have laws that are obeyed. We are still developing.

“So, I disagree with those calling for consolidation among the big telecoms player. Better competition is preferable to consolidating for fewer players. Yes, we have to debate this because everybody is entitled to their opinion, but I think that the market inclusion and adoption of technology is still matured in Nigeria. There is a lot more technologies we can bring into the market to compete against the ‘leader’ to the benefit of the consumers.

“The market requires continuous growth to meet the demands. So, this question around consolidation is a weak one at the moment. I believe that in Nigeria, we have not even scratched the surface of our potentials. One of the dangers of premature consolidation is loss of price control.

9Mobile

“On 9Mobile, I want us to put this to bed- Teleology has made a partial commitment to buyout the operator. That is good news. Okay, it didn’t happen on January 1st. For the fact that it happened by the end of March is still good news; still far better than when no one looks at the way of acquiring the network.

“The debate now is whether they could raise the $450m balance. It is not cheap and not easy to raise such money in this environment at the moment. But we wish them well and we at ATCON are welcoming them”.

Teniola concluded by saying that Nigeria needs operators to move the industry to heights it ought to have attained.