Nigerian wireless sector a solid investment opportunity

1 Jul 2003

Average revenue per user (ARPU) figures released recently by Nigeria’s leading mobile operator MTN show the country to be living up to its billing as a dynamic market ripe for outside investment. MTN Nigeria said its GSM network recorded an ARPU figure of USD57 in the first quarter of 2003, more than double the USD26 registered by MTN’s subsidiary in South Africa, its home market. MTN Nigeria recorded pre-tax profits of USD89.7 million on revenues of USD568 million for the twelve months to 31 March 2003. Had it not been for the depreciation of the Naira during the period, the company claimed net earnings would have been closer to USD140 million.

MTN Nigeria is part of the MTN Group, Africa’s leading mobile telephony company which in addition to South Africa, has operations in Cameroon, Rwanda, Swaziland and Uganda. It paid USD285 million for one of four GSM licenses in Nigeria in January 2001 and launched services seven months later. By the end of 2002 it claimed 908,000 subscribers, equal to 51% of the market which it shares with Econet (775,000 subscribers) and state-owned fixed line operator NITEL (118,000). The fourth concession holder, CIL, had its licence withdrawn after failing to pay the USD285 million asking price due to question marks over the spectrum it was to have been allocated.

MTN Nigeria plans to invest USD1.4 billion expanding its network over the next few years and is hoping to raise a significant proportion of this sum from local and international investors as well as through shareholders’ equity. So far the company has committed more than half of this planned investment to increase its coverage to 42 cities, more than 100 smaller towns and villages and well over 700 communities in Nigeria. In January 2003 MTN announced the completion of its digital microwave backbone network at a cost of USD120 million. Called the ‘MTN Y’helloBahn’, the network spans 3,400km and over 120 Nigerian towns, villages and communities and has the capacity to carry 1,900 simultaneous voice calls.

Nigeria,
CIT’s Yearbook of African Telecommunications 2003

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