New mobile operator in Nigeria
April 3, 2009 New mobile operator in Nigeria No CommentsNew mobile operator aims for 1 million subscribers in first year
Usman Gumi, GiCell Chief Executive Officer
A new Nigerian mobile operator GiCell is launching at the end of the month and is confident of making an impact. With a number of high-profile companies already operating in the country, GiCell certainly has its work cut-out. Jaco Maritz reports
The growth of Nigeria’s telecommunications industry is one of the West African country’s most remarkable achievements. The success of the sector has re-assured foreign investors that Nigeria can be a highly profitable business destination regardless of the somewhat negative picture of the country sometimes portrayed by the media.
According to a report by mybroadband.co.za, Nigeria currently has 54 million mobile subscribers out of a total population of close to 150 million - because many Nigerians have more than one subscription, these numbers are however not always a reflection of the actual number of people using mobile phones.
Nigeria’s major operators include heavyweights such as MTN, Zain and Glo, as well as a number of smaller but still well established companies. With such a large number of players in the country, it is hard to believe that there are still operators brave enough to enter the market.
Usman Gumi, CEO of GiCell Wireless Limited, however differs from this viewpoint. “There is a need for another mobile operator because the current operators have not completely filled the gaps in terms of quality of service, nationwide coverage and affordability.”
GiCell will provide voice and data services using CDMA technology which it hopes to upgrade to the advanced EVDO technology as soon as possible. It is targeting 27 February for its technical launch.
GiCell’s business plan does however differ slightly from other providers in that it has partnered with the World Bank which requires it to roll-out its services in unserved and underserved areas. GiCell will therefore initially only target five Nigerian states, namely Adamawa State, Kwara State, Borno State, Oyo State and Cross River State but plans on covering the whole country in three years time.
Access in rural areas is still very low according to Gumi. “It is estimated that there are over 90 000 communities in Nigeria and if you add-up all the sites serviced by the current operators you will get to 20 000. If you assume each site is in a different community, it means we have only covered 20 000 communities out of the 90 000. A big percentage of Nigerians live in rural areas and are still not serviced.”
| “There is a need for another mobile operator because the current operators have not completely filled the gaps in terms of quality of service, nationwide coverage and affordability.” |
“We are targeting not less than one million subscribers in the first year, hoping to grow steadily over the next five years at 20-30% per annum. Despite the current number of subscribers there is still an addressable market of 50 million Nigerians who are yet to enjoy telecommunications services. This is also part of the World Bank project called Universal Access - meaning delivering service to each and every individual irrespective of location or the topography of the area,” says Gumi.
The World Bank will cushion a portion of the costs and the company has also received financing from various banks. GiCell is planning to keep its operating expenditure as low as possible and remain competitive but are not going to undercut the market.
Gumi lists obtaining financing as the main hurdle the company has faced up to now. “The biggest challenges we face is getting long term financing from our commercial banks. We have however received a lot of support from all the government agencies, especially the Nigerian Communications Commission because of their desire to see that services are provided to the rural communities in Nigeria.”
Since its return to democracy in 1999, Nigeria’s investment environment has improved significantly although problems such as poor power supply, corruption, bureaucracy and hostility in the Niger Delta remain. Addressing these issues seems to go very slowly and things have pretty much been two steps forward, one step back.
Gumi’s message to foreign investors looking to do business in Nigeria is a positive one. “Nigeria is heaven for investment. Investors should not take business decisions based on the negative media reporting; they should come to Nigeria themselves and discover the reality on the ground - they will find the visit an eye-opener.”