There are strong indications of possible mergers and acquisition in the Code Division Multiple Access (CDMA) segment of the Nigerian telecommunications market as the big players, Global System for Mobile communications (GSM) operators, continue to dictate the direction of the market.
Major CDMA operators like Starcomms, Visafone, ZoomMobile and the soon-to-be resuscitated MultiLinks are believed to have engaged in some forms of discussion or the other on how to cooperate to move the segment forward.
Though the CDMA operators had, through their various promotions, recorded some progress, over 80 per cent of the total subscribers are on GSM platform.
The rate of expansion by the GSM operators since the telecom revolution started in 2001 has been tremendous, with massive investment of over $22 billion. This has accounted for the huge market share which the GSM operators have attained since commencement of commercial operations, thereby reducing the footprint of CDMA operators despite the proactive initiatives so far adopted.
The poor performance of ZoomMobile, which commenced service in the country with all vigour, is now undergoing some restructuring, while Starcomms, the only Nigerian telecom company listed on the stock exchange is currently acquiring more spectrums in order to improve on its services to its existing and potential subscribers. MultiLinks, on the other hand, is trying to recover from its lost glory.
Industry analysts have been debating the recent statement by Logan Pather, chief executive officer of Starcomms Plc, that there may be merger among the CDMA operators in the present circumstance where they can not compete favourably with their GSM counterparts. Pather based his argument on the fact that the fourth entrant like Etisalat has recorded over 10 million active subscribers in just three years of commercial operation while some of the CDMA operators have been in the market for over 10 years but with less than one million subscribers.
Pather stated that the possible merger will make the CDMA operators compete favourably with their GSM counterparts, increase subscriber base and also to grow their networks through expansion in telecom infrastructure to the nooks and crannies of the country. “If both companies merge, it may then be called StarFone or Visacomm, each company losing a part of its name to make it a much stronger brand to brace up with competition, and this may happen in the next 12 months,” he said.
According to Pather, the CDMA market is very lucrative, but has been subjected to various challenges such as the epileptic power situation which has forced operators to spend huge funds on providing alternative source such as generators, diesel and security. For instance, MTN has spent over N500 million monthly in providing power to its base transceiver stations (BTS), funds which would have been used in network expansion and infrastructure roll out.
Stakeholders Comment
Dr. Eugene Juwah, executive vice chairman, Nigerian Communications Commission (NCC), recently stated that the CDMA sector is very vital to the growth of telecommunication in the country.
Juwah pointed out that though Visafone has shown tremendous success in terms of coverage, there is still need for more aggressive rollout if it is to compete with the GSM operators.
Dr. Emmnauel Ekuwem, former president of the Association of Telecom Companies of Nigeria (Atcon), said the CDMA operators are too small and lack the required financial muscle to compete with the big players like the GSM service providers.
Also, Engineer Titi Omo-Ettu, president of Atcon, advised that though CDMA operators started out as regional licencees, they should engage in massive investment to enable them compete with other GSM companies.