Nigeria's mobile free-for-all: Nigeria's huge mobile market often resembles dramatic episodes from television soaps as big and small players battle it out for a bigger share in this ever growing segment. The latest row involves Celtel's controlling acquisition of Vmobile. Report by James Knight and Katrina Manson.

Author:Knight, James
Position:Telecommunications - Takeover of Vmobile

Customers, and most shareholders, of the embattled Nigerian phone company Vmobile breathed a sigh of relief at the news in May that one of the continent's leading mobile operators, Celtel, was stepping in to bail out their ailing brand.

For its part, Celtel was pleased as punch with its nifty acquisition of a controlling 65% stake in the company, for $1.005bn. A long-coveted entry into one of the major African telecoms markets (the others being Egypt and South Africa) was described by Celtel CEO Marten Pieters as "Celtel's most important expansion in Africa to date".

Meanwhile Nitel, the troubled state incumbent that Celtel was once eyeing as a potential route into the Nigerian market, is still without a buyer. Privatisation has been described as imminent for years, but workers have not been paid for four months, and went on strike in June.

Then, less than a week after the Celtel announcement, the Abuja offices of the leading operator in Nigeria, MTN, were surrounded and shut down by police, acting under the direction of the Consumer Protection Council (CPC). Operator and watchdog are locked in a fierce battle over sales promotions that have been conducted with all the diplomacy of a Clint Eastwood movie.

Behold, another fraught fortnight in the world of Nigerian telecoms, which moves faster than the average episode of the baffling TV series '24' and is equally hard to follow. These three snapshots reflect the high-stakes nature of Africa's most exciting, most lucrative, and most challenging telecoms market.

Attractive market

Sub-Saharan Africa's mobile phone usage is growing faster than anywhere else in the world. Nigeria itself saw growth of 114% between 1998 and 2003, compared with a continent-wide average of 65%. This accelerated to 191% in 2004.


In comparison, South Africa's market is positively anaemic, with 'only' 20% growth. As Africa's most populous country, Nigeria is expected to account for about one fifth of the continent's 350m mobile users predicted in the next three years, making it a key battleground for the companies fighting for market dominance.

"I can tell you that being in Nigeria is for every operator really important," says Celtel's Pieters. "In three years it will overtake South Africa as the biggest mobile market in Africa."

Returns are not bad either, particularly when considering the overheads that Nigeria's chronic lack of a reliable power supply, poor transport infrastructure and the...

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