Telecom stakeholders push expansion of virtual operators

Key stakeholders in Nigeria’s telecommunications sector have called for greater collaboration and strategic market positioning to unlock the untapped potential of Mobile Virtual Network Operators (MVNOs).

The resolution emerged from the sixth edition of the Telecoms Sector Sustainability Forum (TSSF), organised by Business Remarks in Ikeja, Lagos State, where stakeholders convened under the theme: Unlocking Nigeria’s MVNO Potential: Status, Trends, Investment, and Future Prospects.

The forum, which brought together major mobile network operators (MNOs), the Nigerian Communications Commission (NCC), and licensed MVNOs, served as a platform to diagnose the critical challenges stifling the growth of the MVNO sub-sector.

The forum stressed that the sustainability of MVNOs in Nigeria is a collective responsibility. It called for unwavering collaboration between MNOs, the NCC, and MVNOs to replicate the success stories seen in other nations, ultimately fostering a more diverse, competitive, and inclusive telecommunications market for all Nigerians.

In his keynote address, the Executive Vice Chairman of the Nigerian Communications Commission (NCC), Dr Aminu Maida, said the entrance of MVNOs is expected to provide competitive niche offerings as well as enhance the digital communications ecosystem in Nigeria for the benefit of subscribers and the national economy.

Represented by the Director of Licensing and Authorisation, Mr Usman Mamman, NCC noted that there are now over 1,000 MVNOs globally, with more than 500 operating in Europe alone, and that 46 MVNO licences were issued in Nigeria by the regulator in 2023.

Addressing stakeholders, Maida stated that the Commission is not oblivious to the challenges faced by MVNOs in Nigeria, particularly in relation to commercial negotiations. He therefore pledged that the NCC is working assiduously with Mobile Network Operators (MNOs) to improve network capacity.

Furthermore, the NCC’s EVC encouraged MNOs to partner with MVNOs to target new verticals, drive margin growth, and monetise spare capacity, while urging MVNO players to recognise the viability of the Nigerian market, invest boldly, and position themselves to reap long-term benefits.

In his speech, the President of the Association of Telecommunications Companies of Nigeria (ATCON), Mr Tony Izuagbe Emoekpere, dissuaded MVNO licensees from blindly adopting foreign MVNO models for Nigeria’s local market and consumers.

He urged players to conduct diligent market analysis and focus on service differentiation through specialised offerings. “MVNOs need to carve a unique niche specially designed for the Nigerian market,” Emoekpere said.

Speaking on this, the Co-founder and Executive Director of Infratel Africa, Dr Tola Yusuf, stressed that MVNOs in Nigeria’s market must adopt a more strategic approach to succeed in rural and underserved areas.

Categorically noting that there is immense potential in connecting these rural communities, Yusuf argued that MVNOs often focus on urban, high-density areas like Lagos, neglecting the vast majority of the population, estimated at over 25 million people, who remain completely unconnected.

“The true winners in the MVNO space will be those who develop a clear strategy to serve these markets, even if it requires significant logistical effort, such as using horses or boats to reach remote communities,” he said.

He also suggested that the current market might see future mergers and acquisitions, with some licence holders potentially selling their licences as they fail to compete effectively.

On his part, the Director of USK Mobile, Dr Chidi Ajuzie, called attention to the capacity constraints by host MNOs and the revenue-sharing model that can limit profitability.

According to him, “Tier 5 MVNOs are expected to build their own core infrastructure and billing systems (BSS/OSS), but they still rely on the MNO’s radio access network.

“This creates a bottleneck. Even if a Tier 5 MVNO has excellent billing systems, it can’t offer unlimited data or guaranteed high speeds if the MNO’s network is already at capacity.”

Ajuzie, however, said some higher-tier operators are now looking for innovative ways to go beyond the constraint by acquiring additional licences, such as Internet Service Provider (ISP) or Public Licence (PL) licences.

He also emphasised the need for a significant expansion of existing infrastructure, particularly by MVNOs integrating their own fixed infrastructure, such as fibre networks. This expansion, he said, is the only way to “expand the pipe” and create a truly competitive and viable market for all players.

Also speaking, ipNX’s Director of Strategic Business Initiatives, Mr Olusola Teniola, argued that the nation’s 40,000 telecom towers are grossly insufficient for a population of over 200 million, especially when compared to the United Kingdom’s 75,000 towers for a much smaller population.

He stated that, unlike developed nations, where public funds initially built a robust telecom backbone, Nigeria’s infrastructure was financed by a few dominant mobile network operators (MNOs) who have invested billions.

Teniola posited that the lack of widespread infrastructure, particularly outside major cities like Lagos, Abuja, and Port Harcourt, presents a major challenge for new MVNOs, which were intended to serve the millions of unconnected Nigerians, particularly in rural areas.

He also warned that without substantial new investment to expand the network, the MVNO business model will struggle to succeed, with only those that can survive a long-term, seven-to-ten-year investment cycle likely to see a return on capital.

In her welcome address, the Convener, who also doubles as the Managing Editor of Business Remarks, Bukola Olanrewaju, said the Nigerian telecom market is growing at an incredible pace, and the level of success recorded in each country with MVNOs is largely dependent on regulatory enforcement and interventions, wholesale agreements, spectrum access, and on how effectively MVNO players can navigate these hurdles.

“To succeed, Nigeria must collectively build an ecosystem that is both competitive and sustainable,” Olanrewaju remarked, as she brought into focus MVNO operations in South Africa, Thailand, and Argentina.

The forum, TSSF 6.0, stressed once again that the sustainability of MVNOs in Nigeria is a collective responsibility. It called for unwavering collaboration between MNOs, the NCC, and MVNOs themselves to replicate the success stories seen in other nations, ultimately fostering a more diverse, competitive, and inclusive telecommunications market for all Nigerians.

VON