While Nigerian and other Africans’ businesses in South Africa are being threatened by xenophobic attacks, South Africa is lording it over other business interests in Nigeria. A good example is MTN Nigeria, officially the dominant player in the Nigerian telecommunications industry.
MTN Nigeria is about to increase its behemoth status by the acquisition of a major CDMA operator, Visafone Nigeria, which runs a 800 MHz spectrum band that provides 4G LTE services. If pulled through, as it is very likely given that Visafone Nigeria owner, Jim Ovia, has reportedly decided to quit the telecommunications business in view of the impending change of government in Nigeria, the acquisition will place MTN Nigeria in the enviable position of being the only GSM operator with access to this spectrum band and thereby increasing its monopoly not only on the industry, but also the Nigerian economy. With its tentacles spread across diverse aspects, MTN prides itself as the ICT backbone of Nigeria, having impact in virtually every aspect of the Nigerian socio-economic life.
Last year, the Nigerian Communications Commission, NCC, declared MTN Nigeria as the dominant operator in the mobile voice segment of the market following a survey. But the company is not content with that and is pushing further to extend its lead into data services, which will allow it to remain the dominant player in Nigeria for many years to come. And if the price is a few tens of billions of Naira to take out Visafone, then it is eager to do that.
The Nigerian government is reportedly totally against the transaction and the potential full-blown monopoly and has told MTN that it can’t approve such a deal that sees MTN Nigeria digesting a million customers belonging to another Mobile Network Operator. This move, if completed, will deepen MTN’s dominant position and bring it deeper into monopolistic situation whereas the government would like to encourage better competitive conditions in the market with equality and promotion of the smaller players, especially indigenous ones. It will have dire consequences on the survival of other GSM operators and also various other smaller telecom players. In the end, the consumer will have little choices and may pay a heavy price as a result.
MTN has close to 50 per cent of the subscriber market in Nigeria. But its dominance is way deeper than that. Investigations revealed that MTN has more than 80 per cent of the revenues of all telecommunications companies in Nigeria. It recently reported worldwide profit of $6 billion in 18 countries of operation of which roughly half of it comes from its Nigerian operation.
The Nigerian government has been very sensitive about anti-competitive trends in the market. It is understood that the Central Bank of Nigeria, for example, has refused to grant MTN a mobile money license so that it does not become the dominant player in yet another strategic aspect of the country’s development. This has allowed locally grown companies, such as Paga, to flourish.
The telecom consumer is hopeful that the incoming leadership of General Muhammadu Buhari will not allow or encourage such acts of aggression in a market where other operators struggle to keep up.
Nigerians haven’t yet forgotten the years of a single telecommunications operator and their harrowing experience. With the absence of competition under the public-owned Nigerian Telecommunications Limited, NITEL the Nigerian consumer paid huge prices for services that were either epileptic or not available more often than not. It was therefore a huge relief when GSM service was introduced in 2001 and the revolution that has taken place since then makes for a must-read case study in prestigious business schools.
Every thriving economy or community encourages open market competition. However, the consumer stands to lose his/her ability to select from a bouquet when a monopoly is in place. By nature, the monopolist bullies the consumer into submission, while the consumer is unable to contend because of lack of choices. Sometimes the monopoly may not be all encompassing; it may be limited in the sense that a single player dominates the market to the detriment of other competitors.
When MTN Nigeria was declared a dominant player in mobile voice segment, specific obligations were imposed on the company to ensure it desisted from anti-competitive behaviour and also to ensure the sustenance of long term competition in the telecommunications industry. But these obligations have been observed largely in the breach.
Over the years, MTN has spread its tentacles across the Nigerian market, moving from offering just telephony services to being a one-stop telecommunications service entity. The quest to increase its market share has thrown up an unhealthy trend which, if unchecked by the industry regulator, will lead to a monopoly and total market dominance. The effect is that the Nigerian subscriber will lose the opportunity of having viable options that is the hallmark of an open market economy.
This advantage poses an emerging and real threat to the competitiveness of Nigeria’s telecommunication industry as it potentially leaves it with a single dominant player in both the retail voice and data markets. In the long term, the Nigerian subscriber will pay for this in the form of higher tariffs, poor quality of service levels, little or no incentive for innovation and a bully service provider due to the lack of competition in the market.
The Nigerian consumer’s ability to choose and the opportunities to expand the Nigerian economy via the survival of multiple businesses is no doubt under threat. The regulator cannot afford to stand by and watch as other operators wriggle in pains. NCC ought to carry out urgent review of the acquisition to ensure that it hasn’t given MTN an unfair advantage. Any other step may be detrimental to the growth of a viable and healthy telecommunications industry in Nigeria.
Jare Oladunmoye is an Abuja-based concerned telecommunications consumer