TELECOMMUNICATION INVESTMENT OPPORTUNITIES

Investment Opportunities in the Telecommunication Sector

Investment Incentives in the Telecommunication Sector

Nigeria was among the early countries to initiate a reform programme in the telecommunications sector. The first such action was the establishment of Nitel following the merger of Nigeria External Telecommunications Company and the telecommunications component within the Department of Posts and Telecommunications in 1985. The government intended to rationalise all national telecommunications planning under one organisation.

In November 1992, the government established an independent regulator – Nigeria Communications Commission (NCC). The government mandated NCC to establish and foster an environment that will facilitate the participation of the private sector to increase and expand the extremely poor existing infrastructure.

This has not been successful, as telecommunications operates within the economic parameters that were affected by existing socioeconomic climate. In the recent past, the government has issued a new policy framework and set the following sector targets:

Increase telecommunication, growth rate to an annual minimum of 13.5% such that 10% of the rural communities are served in the short term, 30% in the medium term and 60% in the long term;
Achieve a teledensity of 1.5 by 2001 by installing 1.5 million lines and 1.2 million mobile telephone lines. Install 8 million fixed lines by 2005; and
Ensure that in the medium term, telephones are within 5 kilometres walking distance in stead of the current 50 kilometres.
Implementation of these programmes presents huge investment opportunities in supply of infrastructure as well as provision of services. Other opportunities include the local manufacture of equipment that the government will support in a bid to create jobs and enhance skill transfer.

2005, 2006 and beyond will be the years of opportunity in Nigeria, and indeed Africa. The continents telecommunications markets are the fastest growing in the world and are yet at very low levels of penetration, making it the most attractive investment arena in the world today. In at least 25 countries almost half of all countries on the continent either new fixed or mobile operating licenses will be issued during these two years or an existing player will be privatised, opening up a plethora of opportunities for strategic as well as financial investors. Liberalisation and deregulation are finally happening on the continent and corruption and bureaucracy are being addressed, providing an operating environment suitable for international investment. Nigeria as one of the largest and fastest growing markets offers particularly attractive opportunities, starting with the privatisation of the national carrier Nitel in 2005. A takeover battle is currently going on around V-Mobile, the countrys number three mobile network, and funding is being sought for Nigerias first own telecommunications satellite. Existing players in all market sectors require additional funding for expanding their networks and services at record pace in order to keep up with demand, and a new unified licensing regime to be introduced in 2006 will open up huge new opportunities to existing and new players alike for the provision of next-generation converged mobile, fixed and Internet services.