Nigeria: new entrant sees big addressable market in under-served rural regions

On Tuesday this week Global Mobile Daily picked up a story from Nigeria's Daily Trust newspaper, drawn from an interview with the CEO of universal access provider Gicell. The company, founded in 2006 and was awarded a National Unified Access Service Licence by the Nigerian Communications Commissions (NCC), which includes digital mobile services, fixed telephony services, full international gateway services and national long distance services.

Gicell CEO Usman Abubakar Gumi told the Daily Trust that his company is rolling out a CDMA 450 network to provide voice and data services, making its market debut in the five states of Adamawa, Borno, Cross River, Kwara and Oyo, all regions which have been identified as un-served or under-served. Mr Gumi noted that this was a condition of securing funding from a World Bank supported programme. Also, Gumi stated that "as a Unified Access licensee we intend to cover the country within the shortest possible time."

Gumi was asked about the size of the genuinely addressable market and how effectively he expected his company to compete with established GSM MNOs Globacom, MTN Nigeria and Zain Nigeria. Gumi argues that "Nigeria, with a population of over 140 Million, is the most populated country in Africa... [and has] a young and rural–based population with youth under 35 years old occupying the main parts of the population, [which means that] despite the 50 million subscribers, according to the current statistics, there are still additional 55 million addressable markets" (sic).

At our recent GSM>3G Middle East event in Dubai, a notable segment of the exhibitors were from power supply companies keen to showcase solutions to the challenges of providing telecoms services in areas with underdeveloped infrastructure. In the case of Nigeria's rural regions, Gumi says "there are lots of challenges but we would do it the way others are doing it and also as much as possible maximize the use of alternative source of energy such solar panels."

World Bank involvement seems to be an important part of the Gicell funding mix because, as Gumi argues, "the Nigerian banks are short term lenders and the industry is very capital intensive." The role of the World Bank in the project, says Gumi, "is to cushion the cost of the deployment of services in those [rural] areas and to maintain the services for at least five years whether is profitable or not." Mr Gumi feels, however that "based on our study it will be profitable."

Rural communications, bridging the digitial divide, extending service availability to under-served population segments: these are all buzz terms which seem to be resonating ever more persistently at the many Com World Series events covering emerging markets. So I hope my colleagues are able to secure the involvement of Gicell at the Abuja, Nigeria-hosted West & Central Africa Com conference and exhibition in June this year. It is always refreshing to have the established players joined in the panel of speakers by new market entrants.

Informa bullish on mobile data during the economic downturn

During my time with Informa Telecoms & Media I have not had the opportunity to consult with Mark Newman, our Chief Research Officer, anything like a regularly as I would have liked. The last time I had cause to do so was in the lead-in to December's GSM>3G Middle East conference in Dubai, at which Mark was in the Chair, sharing the stage with heavy-hitters from the likes of Etisalat, Zain, Turkcell and Nawras. At that event, all of these companies made very positive noises about mobile data services in the context of the markets which they serve.

Yesterday, in Informa's telecoms.com blog, Mark reported a general feeling of optimism around mobile data worldwide. Mark began by noting the "widely held view that the mobile content sector is failing to live up to expectations, 3G has disappointed and mobile operators have thrown away an opportunity to develop a revenue stream that could ultimately surpass the voice business."

Mark feels that "if 2008 is remembered for one thing, it should be for being the year that this notion was dispelled. Until last year, the non-voice business was dominated by SMS. For a typical European operator, SMS accounted for up to 80% of non-voice revenues in previous years. But this figure has started to fall sharply. Operators such as Vodafone are seeing non-SMS services generating up to half of non-voice revenues. Investment in 3G - or 3.5G - is now generating payback."

While pointing out the erroneous nature of the idea that North America is a laggard in terms of mobile data adoption, Mark notes that Japan and South Korea continue to be the real hotbeds of enthusiasm for data services. This has been a well-worn truism for as long as I've been attending conferences and workshops themed around boosting the acceptance and profitability of mobile content, data and value-added services. I recall being asked to take over the running of a London conference about five years ago and hearing all kinds of actors in the mobile VAS value chain complaining about revenue sharing arrangements with operators and MNOs' 'walled garden' approaches. The participants were at least 90% European and content providers and aggregators were much better represented than network operators. Everyone seemed to be casting envious glances at their Japanese and Korean counterparts, speaking warmly about how the likes of NTT DoCoMo were enabling the growth of a healthy mobile content ecosystem.

Only last week, when I was asked to make a presentation on mobile social networking at the most recent Mobile Monday Istanbul meeting, I found myself referring constantly to the greater success of some of these services in the Far East. Quoting from an Informa Telecoms & Media report, I told the Turkish audience that according to a Sydney Morning Herald article published in December 2007, half of Japan’s top 10 works of fiction are now written on mobile handsets. These works, called keitai shousetsu’, each sells an average of 400,000 copies and are written entirely on cell phones complete with emoticons and common SMS abbreviations.

Today, according to Mark Newman, the ratio of prepaid subscribers to postpaid goes a long way toward accounting for the differences among markets in mobile content adoption and usage. Postpaid subscriptions account for 99% of all subs in South Korea, 94% in Japan and 90% in the US. Mark points out that these are the countries with the highest mobile data ARPUs.

Overall, Mark feels that even if the most pessimistic scenarios for the economic downturn come to pass, it seems unlikely that the mobile content sector will stop growing. Mark points out that 2008 saw a switch to flat-rate and mobile Internet models and believes that 2009 will see this trend continue and will see the arrival of more-affordable mobile Internet devices. For Mark "the bigger uncertainty is whether mobile operators will accept a role as dumb pipes rather than continuing to invest in their own services and smart-pipe strategies. "

Today I should complete handing over my notes to colleagues who will be developing our annual Russia & CIS Com conference, set to take place in Moscow in early June. With the Russian MNOs having now deployed 3G networks in most major cities, our research respondents have expressed the desire to use the event to debate how best to accelerate the process of getting a return on these investments by encouraging customers to accept mobile data and content services.

More on the optimism expressed at GSM>3G Middle East

After considerable quantities of roast Turkey, mince pies etc., it's time to round up some more of what was discussed at our recent GSM>3G Middle East event in Dubai. The focus here is on the second day's proceedings.

One thing we took away from both days' discussions was the widely expressed sense of optimism that the Middle East's telcos will weather the economic downturn relatively unscathed. Day two opened with a speech from Dr Marwan Alahmadi, CEO of Zain's Saudi operation, who described the new entrant's successes to date - and was bullish about the way ahead.

Great confidence was also expressed by speakers from both FRiENDi mobile and Majan Telecom, two companies looking to thrive as MVNOs on the Omani market. The afternoon saw a robust presentation from Mobinil on the ever more pressing necessity to provide a dashboard of VAS to both protect current and expand future revenues. Judging by the enthusiastic questions directed at the Egyptian cellco's Commercial VP Guillaume van Gaver, this presentation struck a chord with a receptive audience.

For my part, I moderated sessions whose broad theme was around extending the availability and improving the affordability of communications services in lower ARPU markets with less easily addressable demand. Among the speakers in this session, it was great to meet Khaled Khorshid, currently the Regional COO of Zain Sudan. After sharing useful insights about how to grow a successful mobile operator, Khaled mentioned that his personal journey is about to take him to another outpost of the Zain empire - he is being dispatched to the Nigerian operation. Khaled was kind enough to volunteer to join the panel of speakers at the Com World Series event which takes place in that country's capital so I have encouraged my colleague who covers Africa to take up the offer. So look out for Khaled among the speaker line-up for West & Central Africa Com in Abuja in June 2009.

The Dubai event was enjoyable and rewarding for me - and I am looking forward hopefully to reading positive feedback from delegates early in the new year. The work leading to the creation of the 2009 Middle East event begins now.

Lebanese mobile market shake-ups: DT to withdraw?

A helpful colleague here at Informa Telecoms & Media recently forwarded me a story which reports changes on the Lebanese mobile market.

While preparing for our imminent GSM>3G Middle East conference in Dubai, I was surprised to receive news of a speaker cancellation. We had long planned to welcome the Chief Commercial Officer of Lebanese cello Alfa, one of the very first presenters to have confirmed his interest in sharing insights at the event. We have since replaced the planned presentation with one from Saudi Arabia's Mobily, but it's always disappointing to have to cancel a presentation which we have advertised for some time.

I cannot be sure, but we may have to assume that the Alfa cancellation is related to recent news that Lebanon's national unity government is forcing the company to abandon its contract to manage one of the country's two state-owned mobile phone networks, having criticsed its services. Alfa, a joint venture of Deutsche Telekom and Saudi Arabia's Fal Holdings, had to hand over control of the MIC1 network to the Telecommunications Ministry on 1 December, thereby ending its four-year management contract.

"With MIC1, we were not happy with the quality [of service] that we ended up with,"" says Gilbert Najjar, the head of the ministry's advisory board on the two networks.

The Kuwaiti operator Zain, which manages the country's second MIC2 network under its MTC-Touch brand, will also have to hand over its contract, but not until the end of January. Najjar has declined to criticise Zain's management of MIC2, and the Kuwaiti firm is therefore expected to rebid for its contract. Lebanon's telecoms regulator has indicated that Zain needs to reapply because the Council of Ministers (cabinet) is certain to change the terms of the contract.

"This is a legal and administrative issue. They are changing the terms of the contract so they cannot just renew the management contracts,"" says Lelia el-Khazen, a senior market analyst at the Telecommunications Regulatory Authority.