MTN Acquires Visafone

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Umar Danbatta

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With the acquisition of the Visafone by the MTN Nigeria, the use of Code Division Multiple Access is expected to increase in the country as services rendered to users improve

By Anayo Ezugwu  |  Jan 18, 2016 @ 01:00 GMT  |

NIGERIA is expected to witness improved services and increased usage of the Code Division Multiple Access, CDMA, in the country. This is because the MTN Nigeria has finalised the acquisition of Visafone Communications Limited, one of the leading CDMA operators in the country.  The acquisition is expected to provide MTN the robust voice and data platform of Visafone and cater for the booming internet population in Nigeria.

The MTN latest acquisition plan has received the blessing of the Nigerian Communications Commission, NCC.  Under the plan, more than two million existing Visafone subscribers will be migrated onto the MTN Nigeria network, a development that will now enable them use their voice and data services, anywhere MTN has network coverage.

The MTN launched 4GLTE in South Africa in 2013 and since them has been looking at how it could launch the technology in Nigeria. According to NCC’s frequency allocation table on the regulator’s website, MTN, Glo, Airtel and Etisalat operates on 900MHz and 1800MHz while Visafone, Megatech, Prestel, Lakes, Odu’a Telecom, Sunmail, ICL, Multilinks, LT Mobile, Rainbownet, Intercellular and MOC|ZTE are allocated 800MHz spectrum bands.

Visafone was formed in 2007 after acquiring the networks of Cell Communications, Independent Telecommunications Network, ITN, and Bordex Telecoms in Aba, Abia State. It has, however, faced increased competition from GSM operators who had huge cash to roll out new services, expand and compete aggressively. The 800MHz frequency band covers 790-862MHz. Together with the 700MHz both are referred to as the Digital Dividend Spectrum by the ITU.

Based on the national broadband plan of the federal government, the aggressive launch of 4G LTE services by the merged entity of MTN and Visafone is also expected to drive the broadband penetration in the country from under 10 percent to the targeted 30 percent by 2018, and help meet the national broadband plan targets. A World Bank survey recently stated that empirical evidence pointed to a GDP growth of 2.5 percent for every 10 percent growth in broadband penetration.

With about 150 million mobile subscribers and about 97 million internet users, Nigeria ranks among the fastest growing countries in terms of mobile subscribers and data penetration. However, the vast majority of the 97 million internet users today are limited to narrow band internet at 2G/3G speed.

Presently, majority of data users depend on 2G/3G technologies but it is estimated that LTE users will constitute 80 percent of all data users by 2019. Availability of 4G LTE mobile broadband services on a national scale starting in 2016 is expected to act as a catalyst to many sectors of the economy like the booming e-Commerce sector, banking, insurance and financial services, software and IT enabled services, among others, and are likely to widen the revenue base of the federal government into non-oil sectors.

Nonetheless, the NCC has promised to revitalise CDMA with attractive incentives that will encourage GSM operators and other licensed CDMA operators, to roll out fixed telecoms services across the country. Umar Danbatta, executive vice chairman, NCC, who rekindled the hope that the CDMA sector would be revitalised this year, said, “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. We intend to convince the government to key into this important initiative of the Commission. I am therefore calling on 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.”

In a recent statement, Danbatta admitted that fixed networks have been neglected, stressing that nobody was interested in them despite the promises they hold. According to him, GSM operators are more interested in providing mobile services, even though they also have the fixed line licences and the subscriber base by operator attests to this, with MTN having over 62 million subscribers, Glo and Airtel having over 30 million subscribers each, while Etisalat has over 20 million subscribers, yet the combined subscriber number of the two surviving CDMA operators is 2.13 million, according to industry statistics released by the NCC in October 2015.

CDMA operations focus on fixed and wired telecommunications service offerings, using a different technology from that of the GSM. Owing to serious setbacks, the operators have lost market shares and customers to GSM operators in the past five years. Out of the initial 13 registered CDMA operators in the country, only two were operational as at last year, with few loyal customers to service. The other 11 operators had since gone under, following their inabilities to cope with market realities.

The CDMA sub-sector in Nigeria can be said to be left with nothing, though the only living operators, Visafone and MultiLinks are left with less than two million subscribers. The sector has continued to maintain downward profile in the last five years.

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