Telecoms: Targeting CDMA sector rebound


Though the recent acquisition of Visafone may have signalled an end to the Code Division Multiple Access (CDMA) segment in Nigeria’s telecoms sector, telecoms regulator says it will encourage a rebound of the sub-sector, reports KUNLE AZEEZ

The MTN Nigeria’s January 7 acquisition of the only surviving telecoms player in the Code Division Multiple Access (CDMA) segment of the nation’s telecoms sector has generated varied reactions from stakeholders. While some see the acquisition, whose actual financial deal was not disclosed, as an end to CDMA operations in the country’s highly competitive telecoms sector, others believe that the deal presents a lifeline, since Visafone will still remain as CDMA technology platform even under MTN, as the new owner invests in necessary areas to turn the fortune of its new ‘baby’ around.

Meanwhile, the optimistic view of the CDMA sector was also expressed by MTN Nigeria last week, suggesting its readiness to make Visafone a platform that delivers better services to Nigerians, especially in the area of high-speed broadband services that it decently does.

“The acquisition, which seeks to leverage resources for service enhancement, is a reflection of MTN’s concerted efforts to deepen the growth and rollout of broadband services across the country in support of the National Broadband Plan (NBP) for the benefit of Nigerians,” said MTN’ Corporate Services Executive, Amina Oyagbola, in an interview. Already, Visafone has the technology platform to offer a number of services including voice, high speed data (3G), internet and other value added vervices (VAS) and MTN will incorporate this to expand its offerings to its over 63 million subscribers and over two million telecoms consumer on the Visafone network.

“As we work to maximise our data capabilities towards achieving broadband of international quality, our objective is to ensure that Nigerians experience a boost in the quality of broadband internet services translating to the much needed enhanced data speeds and value to enhance personal and business productivity,” Oyagbola said. Myriad of challenges The CDMA, as a technology platform, made waves in the early 20th century, even in Nigeria, to the extent that the country had over 16 big players competing effectively and having close to 15 million subscribers.

However, its failure to reposition for growth, mismanagement, and lack of funds saw the Global System for Mobile Communication (GSM) technology platforms overtake it and since then, it has been a challenge for the CDMA players. Currently, while the GSM technology controls about 98 per cent of the Nigerian market, the CDMA, on the other hand, controls 1.58 per cent market share, according to statistics from NCC. Reports say while CDMA technology, through the only surviving operator-Visafone-could only boast of about two million customers, the major GSM players such as MTN Nigeria, Globacom, Airtel and Etisalat, as at November 2015, had 150 million connected subscribers.

While many challenges, including mismanagement, paucity of funds and outdated technologies were identified as part of the challenges that negatively impacted on the fortunes of the CDMA players, industry watchers further traced the chief challenge to the door step of the NCC. The CDMA operators alleged that the regulator over-pampered the GSM service providers whereas they were not protected.

They equally blamed government for its inability to provide the necessary infrastructure for the rollout of CDMA services, after collecting so much money from them as licence fees. In an interview, the Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTO), Gbenga Adebayo, said that CDMA fortunes could be revived if driven by new policies. He stressed that while the technology is very expensive, “telecoms business has become a volume business. The CDMA tries to compete with big players, which should not be.

“Today, all our telecoms operators operate on a national basis, which to some extent shouldn’t be. If our policy encourages regional, state and local operations, there will be room for all players. Players will be more focused on their area of strength rather than concentrating totally on a national basis,” he stated. CAPCOM’s failed rescue mission While blames continued, in 2012, a special purpose vehicle, by an American investor-CAPCOM, came with the hope of reviving the CDMA segment.

The plan by CAPCOM was to merge Starcomms, MultiLinks and MTS, in a deal that was worth $210 million, but retained Starcomms as the brand name. CAPCOM had thought that the merger in the CDMA sector would enhance Starcomms’ position in competing strongly with operators like MTN, Globacom and Etisalat, but the ambition was later cut short as a result of the inability of CAPCOM to raise the required money to seal the deal and to move the new company forward.

The inability of CAPCOM to succeed in the merger of the three CDMA operators eventually led to the death of MTS and Starcomms, leaving Visafone and MultiLinks as the only surviving CDMA operators in the country. However, the survival of the operators continued to be threatened by market forces, as revenue and subscriber base dwindled every month. High hopes were placed on the planned merger of Starcomms, MultiLinks and MTS because of the challenges they were facing then in the country.

Although Starcomms was the biggest CDMA operator at that time, its survival was threatened by market forces and it was beginning to lose revenue and customers to GSM operators. The challenges forced Starcomms to accept the sales offer from CAPCOM, and the merger process was announced, but could not fly. Giving an insight into how the CAPCOM deal became a flop, the Chief Executive Officer designate, who now chairs ConSol Limited, a contact management solution company, Ademola Eleso, in a recent interview, said: “The vision of CAPCOM was to help merge the CDMA operations in the country and make them have strong financial base, hence, it tried buying and merging Starcomms, MultiLinks and MTS, but, as at the time I left them, which was in December 2014, funding was an issue.

The funding from both local and foreign partners was not enough to realise the ambition of CAPCOM.” NCC’s and CDMA stimulus While the industry continued to postulate on how to ensure that CDMA technology did not eventually collapse completely in Nigeria, the Executive Vice Chairman of the NCC, Prof. Umar Danbatta, said that the CDMA sub-sector in Nigeria had been lagging behind. According to him, operators are more interested in providing mobile services and the subscriber base by operator attests to this, with MTN having over 63 million subscribers, Glo having over 31 million, Airtel with over 30 million, Etisalat having 23 million subscribers and MTN’s Visafone about 2.5 million subscribers.

According to the NCC boss, “if we can deliberately introduce incentives to any operator to come in and roll out fixed telecoms services we can do it. The Commission is open to negotiations on how this could be done.” Danbatta optimistically said: “We intend to convince government to key into this important initiative of the Commission. Through this medium, I send a message to operators, who will be willing to buy into this important idea of availing themselves the opportunity to get the incentives that we intend to put in place in order to revive fixed telephony services.”

Optimism Meanwhile, industry analysts are hopeful that with MTN’s acquisition of Visafone, the deal of which was endorsed by the NCC coupled with the expected investment which MTN will put into building a virile and robust network that offers better data services and the plan by the regulator to encourage investment in CDMA through incentives, the target of the country to achieve the much-touted 30 pr cent broadband penetration is on the horizon.