…N5.9b generated as licencing fees
The Nigerian Communications Commission (NCC) has licenced 25 new companies to provide mobile telecommunications services under the Mobile Virtual Network Operator (MVNO) framework.
These companies will be providing the same services as MTN, Globacom, Airtel, and 9mobile, albeit on the same infrastructure built by the old operators. The entrance of the MNVO is expected to provide competitive offerings in the telecoms market and lower the costs of calls and data 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 telecom services to more rural, under-served, and unserved communities across the country.
According to industry experts, by buying network capacity from Mobile Network Operators (MNOs), the MVNOs can swiftly rise in the market through a business model that passes these savings down to the consumer. They added that the MVNOs can also offer a more tailored-made service versus MNOs, which tend to offer more of a generic service that suits the masses.
While the telecom regulators had created different categories of licences under the MVNO framework, which range from tier 1 to tier 5, Nairametrics gathered that the 25 companies so far licenced are in categories 2 to 5, while no company has acquired a tier 1 licence, which is the lowest.
According to NCC’s database, 7 companies were licenced 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 licenced in the tier 3 category are also 7 in number 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 licenced. 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.
Through the issuance of the MNVO licence to the 25 companies, the telecom regulator generated not less than 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 3 and tier 4 licences cost N130 million and N60 million respectively, while the tier 1 licence is to be issued at N35 million.
Speaking at a forum recently, 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.
Explaining the difference between the 5 tiers of licence categories, Danbatta said: “Tier 1 is a virtual operator, which relies totally on hosts facilities with restricted tariff control; Tier 2 is sample facilities operator, which owns an intelligent network, and has loose tariff control; Tier 3 is care facilities operator which can negotiate to interconnect agreements, has major tariff control; Tier 4 is a virtual aggregator/enabler, which performs aggregation and enabling but only operates in unserved regions and Tier 5 is the Unified Virtual Operator, which has the freedom to operate in the whole segments/tiers.”
Danbatta said 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.
Going by experience, especially from developed countries, the MVNO initiative can help Nigeria further bridge the access gaps in the country. Existing data from the Nigerian NCC showed that there are 114 access gaps with some 25 million people still without basic telephony service. But the MVNO initiative coupled with other innovations, the gap is expected to be bridged significantly.
As of February 2023, telecoms MNOs in Nigeria, the quartet of MTN, Globacom, Airtel, and 9mobile, had connected 323.6 million telephone lines, of which 226.8 million were active. In the same month, internet subscriptions via the narrowband stood at 156.9 million, while broadband was 48.49% deep in the country with some 92.5 million Nigerians on high-speed internet connections.
The arrival of the MVNOs is expected to further boost these figures as they expand services to areas not covered by the MNOs while also offering tailored services to the people in already connected areas.
A Mobile Virtual Network Operator (MVNO) is a telecommunications product and service operator that rides on top of the infrastructure capacity of a fully-licensed mobile telecommunication service provider or mobile network operator (MNOs). This means that the operators will not need investments in their infrastructure but leverage existing facilities across the country to provide services.
According to Fortune Business Insights, the global MVNO market size is projected to rise from $67.54 billion in 2020 to $123.40 billion in 2028, at a CAGR of 7.9% during the forecast period, 2021-2028.
