Nigerian telecoms market growing fast

By Damaria Senne, ITWeb senior journalist

Johannesburg, 26 Aug 2005

Investors need to have a long-term view when investing in the Nigerian telecoms industry, says MTN Nigeria CEO Sifiso Dabengwa.

Dabengwa was speaking at the South Africa/Nigeria Business Investment Forum, which is taking place at the Sandton Convention Centre.

According to Dabengwa, Nigeria is one of the fastest growing telecoms markets in Africa, with a recorded increase rate in subscribers of 155% in the 12 months to the end of 2004, with GSM as the main growth driver.

He says GSM licence obligations for network spread led to an even spread of mobile telecoms services, with a result that there is a presence in all 36 states of the federation and six geo-political zones.

However, there are infrastructure and operational shortcomings in the Nigerian environment that make the amount of capital investment required to commence and sustain operations exponentially high when compared to other countries.

Dabengwa says in order to provide Nigeria with a world-class telecom infrastructure to meet demand, an estimated US$9 billion to US$10 billion investment would be required in the next 10 years. GSM operators must therefore have a long-term view when it comes to return on investment.

The unexpected demand for GSM, which outstripped initial projections, also led to the need for high investment levels. Dabengwa says

the profit made by MTN Nigeria is being reinvested to fund the extensive capital investment programme. Third-party funding is also required over and above shareholder funds and reinvested profits.