Boston, MA -- (ReleaseWire) -- 05/05/2014 -- In February 2014, the NCC fined three of the country's four MNOs the sum of NGN647.5mn (US$3.89mn) for missing their QoS targets for the month of January. This development supports BMI's view that increased regulatory pressure over poor QoS would drive capex spending and efficiency improvement strategies among operators in 2014 and beyond. Some operators sealed network and IT outsourcing deals with leading vendors in late 2013 and early 2014. Meanwhile, there are reports of impending tower deals as the operators look to outsource the management of their tower sites to independent vendors. We expect this trend to continue over the long term given the current market dynamics and growing regulatory pressure.
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- Mobile subscription growth accelerated to 5.2% quarter-on-quarter (q-o-q) in Q413, bringing total growth in FY13 to 12.8%.
- Mobile ARPU declined by 4% in FY13, largely driven by cuts to mobile termination rates in April 2013.
- The fixed-line sector contracted by 0.5% in Q413 and 13.8% in FY13. This was considerably less than envisaged owing to the impressive performance of alternative operators targeting corporate customers and highbrow neighbourhoods.
- The number of mobile data users grew by more than 107% in the 12 months to December 2013.
Nigeria regained top position this quarter on BMI's Q2 2014 Risk/Reward Ratings (RRR) for Sub-Saharan Africa. Nigeria's aggregate score is boosted by comparatively high Industry Rewards, Industry Risk and Country Risk scores, reflecting high voice and data services growth potential, regulatory independence and strong private consumption growth outlook. However, Nigeria's Country Rewards score is held back by a low GDP per capita and high unemployment rate.
Key Trends And Developments
Smile Communications launched commercial 4G LTE service in Lagos in March 2014, one year after launching a similar service in the nearby city of Ibadan, albeit it with less fanfare. Smile will compete directly with Spectranet, which launched 4G LTE services in Lagos in August 2013. The operator has also signed a three-year network deployment agreement with Swedish vendor Ericsson to develop over 1,100 LTE sites across the country. Presently, Smile and Spectranet are concentrating their efforts on the major urban cities of Lagos, Ibadan, Abuja and Port Harcourt, but would have to expand beyond those cities to sustain growth when more players enter the 4G LTE market.
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