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TMCNet:  ICT - Nigeria Remains Top Investment Destination, Says Study

[February 13, 2013]

ICT - Nigeria Remains Top Investment Destination, Says Study

(AllAfrica Via Acquire Media NewsEdge) Nigeria may soon attract more foreign direct investment, FDI, particularly in the ICT sector, as Pyramid Research has just released the report of its 2013 top trends in global communications with a declaration that Nigeria still remained top spot for telecom investments in Middle East and Africa.



For 12 years, following the 2001 liberalisation of the telecoms sector, coupled with favourable regulatory regime in Nigeria, the industry continues to witness significant growth in both investments and mobile subscriptions.

While local and foreign direct investment in the sector stood at $25bn in mid-2012, mobile subscriptions has surpassed over 150 million out of which 113.1 million are active at the end of December, 2012.

In the same vein, teledensity has grown to 80.21, giving the regulator, the Nigerian Communications Commission, NCC the leverage to drive more investment in the country with various policies and frameworks on broadband infrastructure deployment, review of interconnect rates among the operators. Executive Vice Chairman of the NCC, Dr. Eugene Juwah, had also reiterated that his commission was highly committed to engendering fravourable regulatory environment for investors.

Meanwhile, the Pyramid 2013 report said that Nigeria's continued retention of top investment economy in emerging markets was as a result of the growth projections envisaged by its study in the next few years.

The study, tagged 'Pyramid Perspective 2013: Top Trends in the Global Communications Industry', provides information on top trends in telecoms landscape in Africa and Middle East (AME), Asian Pacific, Europe and Americas. According to the study, economic growth in emerging markets is expected to be nearly quadruple the economic growth in developed markets. Telecom service revenue in emerging markets will increase five times faster than in developed markets.

Emerging markets to post higher revenue The study predicts that this trend will make mobile service revenue in emerging markets in 2015 larger than mobile service revenue in developed markets for the first time ever as nearly 90 per cent of the 2 billion subscribers to come online in the next five years are expected to reside in emerging markets. The study affirms that "exposure to emerging markets has become a critical factor for success in an industry characterized by stagnation in developed markets, intense competition, consumer choice and disruptive business models,".

Nigeria, others share 35% of 1bn subscriber mark Meanwhile, of the anticipated one billion mobile subscription mark, the report said that Nigeria, Egypt, South Africa and Turkey, will account for 35 per cent of that figure.

According to the Managing Director, Pyramid Research, Mr Daniel Amparan, the year 2013 will also accelerate the rate at which emerging market-based players take advantage of financially challenged developed market assets to bring much needed capital, but also commercial innovation and expertise. It will also be a year of important milestones.

"By year's end, mobile subscriptions will reach 7 billion, on par with the global population. Mobile subscribers in the Africa & Middle East region will surpass the one billion mark in the first quarter, making it the second region to reach this milestone after Asia-Pacific," he added.

Amaran noted that consolidation has progressed most quickly in recent years in markets where subscriber growth has slowed, competitive pressures are squeezing margins and upcoming capital requirements are high and therefore, "we believe that the same forces driving consolidation in developed markets will now force the hand of players in emerging markets. In Africa we see potential for consolidation in markets such as Cote d'Ivoire, Ghana, Nigeria, Tanzania and Uganda, each of which is home to five operators or more,".

Emerging markets lagging on broadband On broadband development, the study noted that though emerging markets are lagging, there were great potentials to be better positioned in the years ahead.

It stated: "As governments rush to allocate 4G spectrum, the lure of being the first to offer 4G/LTE is strong, but the results are somewhat messy. In many countries across Asia-Pacific and in North America, spectrum is being allocated in multiple bands, with minimal planning around network efficiency and limited harmonization at the national, regional and international levels. This situation is unsustainable and will force prices of devices and services to stay high, potentially limiting adoption of 4G services.

"However, countries where 4G demand is still low or not yet a reality, such as in most of Africa and in several emerging economies, will be better positioned to properly plan for 4G spectrum, including taking advantage of the digital dividend spectrum in due time, and to deploy efficient 4G networks that maximize the benefits of harmonization.

Benefits of lagging behind For the report, a key benefit of lagging in 4G deployment in the short term may be greater efficiencies from proper planning in the medium-to-long term for Africa. In Nigeria, growth in revenue will lead to consolidation in the mobile sector, which will see smaller players especially in the Code Division Multiple Access segment being swallowed up in the name of mergers and acquisitions. Another highlight of the Pyramid study is the prediction that big players such as MTNt and investors like Vodafone and France Telecom will record quantum leaps and a guaranteed return on investments.

Copyright Vanguard. Distributed by AllAfrica Global Media (allAfrica.com).

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