The telecommunication sector is a major infrastructural requirement for any meaningful economic development to take place in a country. Untill recently, the Nigerian Telecommunications Limited (NITEL) has been the incumbent operator in Nigeria and the only national carrier. Through its 100% owned subsidiary, M–Tel, it operated the country’s only mobile telephony (TACS) network.
NITEL gained one of the three nation–wide GSM licences issued in February 2001. NITEL was incorporated as a private limited liability company on 20 December 1984 to take over the assets, properties, rights and liabilities of the Nigerian External Communications Limited and the Telecommunications Department of the Federal Ministry of Communications. The Company was converted to a Public Limited Liability Company on 25 March 1992.
The Nigerian telecoms services market was estimated at approximately $500m as of late 2000, a conservative estimate that included only basic voice and mobile and Internet services and did not account for revenues from services such as domestic VSAT, private payphones or paging. These revenues are projected to reach more than $3.5bn by 2005 with approximately $2bn from cellular services and approximately $1.4bn from fixed telephony services.
Like many other market segments, the access local market is poised for substantial growth, though this is reliant on a certain number of conditions crystallising including lower connection costs from NITEL and the PTOs and a restructuring of NITEL’s operations. Nigeria’s transmission infrastructure is overburdened and inadequate to support the levels of traffic that are projected to follow the establishment of a liberalised market. Cellular operators, PTOs and corporates need a reliable transport carrier to reduce their own costs and therefore demand for a reliable transmission network is strong. It is projected that the Nigerian mobile market should reach 7.5m active subscribers at the end of 2005, establishing itself as West Africa’s largest market. This is projected to be worth between $1.5bn and $4bn by end of 2005. In addition, it is estimated that the addressable market for mobile services will reach nearly 34m people by late 2005, implying that only 22% of the addressable market will subscribe to cellular services. Based on this, it is anticipated that the Nigerian market will hit its saturation point well after 2005.