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N354 bn investment, broadband internet for 36 states in 2008 - Ndukwe
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Ernest Ndukwe
The Nigerian telecomsector will attract investment to the tune of about $3 billion (about N354 billion ) this year (2008). Ernest Ndukwe, the executive vice chairman of the Nigerian Communications Commission (NCC) told newsmen that this is the projection for investment in the sector for 2008.
Ndukwe who was speaking with newsmen at the weekend in Lagos further said that investment into the sector last year summed up to $11.5 billion. The focus of the NCC for this year would be to take broadband and Internet services to all the state capitals in the federation as well as to many sub-urban centres. This, he said was because a nation could not be considered to be very developed if it did not have broadband highspeed Internet.
He added that the NCC would also press to ensure improved quality of service from the operators in the new year.
Ndukwe observed that subscription in the country's telecom sector had scaled up from 400,000 to 41.9 million in seven years and that this exponential growth could be attributed to a number of factors.
" First of all we had a government that provided the right environment. Before investors come into a place, they look at the regulatory environment. If there are no rules of engagement, they are very cautious about coming in. What has happened is that over these years many investment houses, finance houses have found it easy to give to give money to telecommunications companies doing business in Nigeria. That is one reason.
"The second reason is that there is a big informal market in this country and Nigerians love good things and Nigerians are very entrepreneurial in their approach and many people immediately found that mobile services were essential for their usage for business and for pleasure so they embraced it. The third reason is something that might not be obvious to many people. There's been some growth in the economy over the past four to five years. The economy has been growing at an average of six percent per annum and that means that there are new people that are suddenly able to afford lines and that many more people can talk more because there's more money in their hands.
"And of course, there is the confidence that the investment community has in the regulatory body that is overseeing the telecom space here. Every investor has a choice. It is either they invest in Nigeria or they invest elsewhere and if the local operating environment is suitable for investment, then the investments start pouring in. As at the end of last year, it is estimated that about $11.5 billion had been invested in telecom in the country, in licence fees, equipment and things like that. This year, 2008 alone, it is estimated that over $3 billion will be invested in the telecom environment. So, it's that kind of investment profile that we are talking about.
"2008 is a very important year for us. First of all Nigeria has experienced tremendous growth in voice-mobile services but we cannot boast of being a very modern state if we don't have broadband and Internet penetration that is much higher than what we have today. Some of you might have heard of the State Accelerated Broadband Initiative. Last year, we identified three companies that will be involved in this initiative. As soon as we finish the negotiation we will be announcing them - latest by later this month. These companies are supposed to ensure that we have broadband in all the state capitals and major commercial centres of the country. By December 2009 all this would have happened. We would have had broadband Internet and broadband services in all the state capitals and major commercial centres.
In 2008 also, there is a lot of focus on improving quality of service generally in the industry. So, there is a push that the NCC is making with the operating companies to make sure that they continue to expand services, because the main problem is capacity and there is need for all to grow capacity in the network and to augment that, we are also going to give subsidy to one of the long distance operators to provide optic-fibre infrastructure to some identified rural and semi-urban centres. This is to enable transmission to be readily available for what we want to do. That is part of the Wire Nigeria project. So, this year' s going to be what I will call a turning point for the country, in terms of improved quality, improved transmission infrastructure nationwide and also, a lot of improvement in respect to broadband and Internet. 2008 is a very important year for Nigeria.
Quite honestly, I don't even know whether EASY (East African Submarine Cable Venture) cable will work but they are still working on it. But for SAT3, this afternoon, I had a conversation with the MD of Nitel and he informed me that they have opened up a lot more STM I's in the SAT3 cable and that they are now very aggressively marketing the capacity that is in the SAT3 cable. As you know, many people are actually surprised and disappointed that Nitel has not taken full advantage of that very important infrastructure. But I think there is a major rethink in Nitel now and something is being done. I have a feeling that in the next one month, you will be hearing a lot more about some of the initiatives that have been taken and that many of the major operating companies will be reporting that they are making full use of the SAT3 infrastructure.The NCC is looking at it very closely and indeed Nitel needs to buck up because the are other cable initiatives that are happening in the West-African coast.
Yesterday, I had a meeting with one company. One of them was talking about landing rights to be able to land their cables in Nigeria. So, there are about three initiatives that we know about, trying to also provide cable infrastructure under sea linking with the outside world. So we think that that will happen much sooner than later and that is why there is a bit of urgency for Nitel to make hay while the sun is still shinning, because we will not hesitate at all to give licences to these other initiatives in order to provide the right competition as well as to lower the price of transmission so that the Nigerian people will enjoy much better pricing.
The first thing the NCC does is to do consultations. That consultation is still ongoing. There has been an industry working group that has been set up with some of our commissioners involved and they have been busy trying to work out the modalities for number portability. I have a feeling that in the next month or two, those modalities would have been fully worked out.
Giving an account of the liberalisation of the telecom sector seven years ago, Ndukwe said:"My predecessors had tried to advertise for interest and eventually the process was fraught with all kinds of political influences and that ended the process. Then when we came in year 2000, it was necessary to organise a licensing process that would be as transparent as possible. That's how the auctions came about and eventually after all the preparations in January 2001. Since then, of course at the time of auction there was very limited information about the demand structure for telecommunications in Nigeria because of the fact that at that time we only had about 400,000 lines and those analogue mobile, which was just twenty- something thousand lines and fixed lines which was just about 400,000 lines. People could not rightly estimate the demand structure in the industry. I remember in those days predictions were there that if the operators were able to do 1.5 million lines each in five years - those were the kind of projections that were being touted at that time.
"But of course, Nigeria with its population no doubt had so many people who were anxious to get telephone services.
Out of the 400,000 lines not up to 150,000 people had their own individual lines. Most of the lines were in government offices or private offices. Once the lines started rolling out, subscriptions started growing and by the end of December 2007, we have about 41.9 million active subscribers on the networks. This is a very large subscriber base by any means. I know there are a few countries that are larger than us but Nigeria is among the top ten GSM countries that have registered high growth over the last two years. And so we continue to see this happening and of course with that growth comes also challenges.
" We have had to intervene in interconnection. Some of you might remember that early in 2001, even Nitel was resisting interconnecting the new operators. The Nigerian Communications Commission had to intervene to make sure that the interconnection happened and subsequently even when MTN and Econet in those days were connected, when Glo came subsequently in 2002 there was also that resistance to interconnect and the NCC had to make sure that that happened.. We followed that up with interconnect regulations and interconnect determinations in 2003 to set rates for the industry and even as recent as last year we came out with another interconnect regulation that the country is using now.
" So its been a very eventful period and what we've done is democratize telecom services and today services are for the big and small and for the rich and not so rich and for the ordinary people in villages, in cities, people are proudly clutching their mobile phones. Nigeria today is one of those countries where mobile is the main source of communications and the level of mobile services today is about 97 percent of the subscriber base. And as you know,we don't only have GSM mobile today, we also have CDMA mobile with some of the operators who have Unified Licences also providing fixed wireless and mobile wireless services".
He added that the NCC would also press to ensure improved quality of service from the operators in the new year.
Ndukwe observed that subscription in the country's telecom sector had scaled up from 400,000 to 41.9 million in seven years and that this exponential growth could be attributed to a number of factors.
" First of all we had a government that provided the right environment. Before investors come into a place, they look at the regulatory environment. If there are no rules of engagement, they are very cautious about coming in. What has happened is that over these years many investment houses, finance houses have found it easy to give to give money to telecommunications companies doing business in Nigeria. That is one reason.
"The second reason is that there is a big informal market in this country and Nigerians love good things and Nigerians are very entrepreneurial in their approach and many people immediately found that mobile services were essential for their usage for business and for pleasure so they embraced it. The third reason is something that might not be obvious to many people. There's been some growth in the economy over the past four to five years. The economy has been growing at an average of six percent per annum and that means that there are new people that are suddenly able to afford lines and that many more people can talk more because there's more money in their hands.
"And of course, there is the confidence that the investment community has in the regulatory body that is overseeing the telecom space here. Every investor has a choice. It is either they invest in Nigeria or they invest elsewhere and if the local operating environment is suitable for investment, then the investments start pouring in. As at the end of last year, it is estimated that about $11.5 billion had been invested in telecom in the country, in licence fees, equipment and things like that. This year, 2008 alone, it is estimated that over $3 billion will be invested in the telecom environment. So, it's that kind of investment profile that we are talking about.
"2008 is a very important year for us. First of all Nigeria has experienced tremendous growth in voice-mobile services but we cannot boast of being a very modern state if we don't have broadband and Internet penetration that is much higher than what we have today. Some of you might have heard of the State Accelerated Broadband Initiative. Last year, we identified three companies that will be involved in this initiative. As soon as we finish the negotiation we will be announcing them - latest by later this month. These companies are supposed to ensure that we have broadband in all the state capitals and major commercial centres of the country. By December 2009 all this would have happened. We would have had broadband Internet and broadband services in all the state capitals and major commercial centres.
In 2008 also, there is a lot of focus on improving quality of service generally in the industry. So, there is a push that the NCC is making with the operating companies to make sure that they continue to expand services, because the main problem is capacity and there is need for all to grow capacity in the network and to augment that, we are also going to give subsidy to one of the long distance operators to provide optic-fibre infrastructure to some identified rural and semi-urban centres. This is to enable transmission to be readily available for what we want to do. That is part of the Wire Nigeria project. So, this year' s going to be what I will call a turning point for the country, in terms of improved quality, improved transmission infrastructure nationwide and also, a lot of improvement in respect to broadband and Internet. 2008 is a very important year for Nigeria.
Quite honestly, I don't even know whether EASY (East African Submarine Cable Venture) cable will work but they are still working on it. But for SAT3, this afternoon, I had a conversation with the MD of Nitel and he informed me that they have opened up a lot more STM I's in the SAT3 cable and that they are now very aggressively marketing the capacity that is in the SAT3 cable. As you know, many people are actually surprised and disappointed that Nitel has not taken full advantage of that very important infrastructure. But I think there is a major rethink in Nitel now and something is being done. I have a feeling that in the next one month, you will be hearing a lot more about some of the initiatives that have been taken and that many of the major operating companies will be reporting that they are making full use of the SAT3 infrastructure.The NCC is looking at it very closely and indeed Nitel needs to buck up because the are other cable initiatives that are happening in the West-African coast.
Yesterday, I had a meeting with one company. One of them was talking about landing rights to be able to land their cables in Nigeria. So, there are about three initiatives that we know about, trying to also provide cable infrastructure under sea linking with the outside world. So we think that that will happen much sooner than later and that is why there is a bit of urgency for Nitel to make hay while the sun is still shinning, because we will not hesitate at all to give licences to these other initiatives in order to provide the right competition as well as to lower the price of transmission so that the Nigerian people will enjoy much better pricing.
The first thing the NCC does is to do consultations. That consultation is still ongoing. There has been an industry working group that has been set up with some of our commissioners involved and they have been busy trying to work out the modalities for number portability. I have a feeling that in the next month or two, those modalities would have been fully worked out.
Giving an account of the liberalisation of the telecom sector seven years ago, Ndukwe said:"My predecessors had tried to advertise for interest and eventually the process was fraught with all kinds of political influences and that ended the process. Then when we came in year 2000, it was necessary to organise a licensing process that would be as transparent as possible. That's how the auctions came about and eventually after all the preparations in January 2001. Since then, of course at the time of auction there was very limited information about the demand structure for telecommunications in Nigeria because of the fact that at that time we only had about 400,000 lines and those analogue mobile, which was just twenty- something thousand lines and fixed lines which was just about 400,000 lines. People could not rightly estimate the demand structure in the industry. I remember in those days predictions were there that if the operators were able to do 1.5 million lines each in five years - those were the kind of projections that were being touted at that time.
"But of course, Nigeria with its population no doubt had so many people who were anxious to get telephone services.
Out of the 400,000 lines not up to 150,000 people had their own individual lines. Most of the lines were in government offices or private offices. Once the lines started rolling out, subscriptions started growing and by the end of December 2007, we have about 41.9 million active subscribers on the networks. This is a very large subscriber base by any means. I know there are a few countries that are larger than us but Nigeria is among the top ten GSM countries that have registered high growth over the last two years. And so we continue to see this happening and of course with that growth comes also challenges.
" We have had to intervene in interconnection. Some of you might remember that early in 2001, even Nitel was resisting interconnecting the new operators. The Nigerian Communications Commission had to intervene to make sure that the interconnection happened and subsequently even when MTN and Econet in those days were connected, when Glo came subsequently in 2002 there was also that resistance to interconnect and the NCC had to make sure that that happened.. We followed that up with interconnect regulations and interconnect determinations in 2003 to set rates for the industry and even as recent as last year we came out with another interconnect regulation that the country is using now.
" So its been a very eventful period and what we've done is democratize telecom services and today services are for the big and small and for the rich and not so rich and for the ordinary people in villages, in cities, people are proudly clutching their mobile phones. Nigeria today is one of those countries where mobile is the main source of communications and the level of mobile services today is about 97 percent of the subscriber base. And as you know,we don't only have GSM mobile today, we also have CDMA mobile with some of the operators who have Unified Licences also providing fixed wireless and mobile wireless services".
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