‘How Vodafone lost huge market opportunities in Nigeria’
United Kingdom’s telecommunications firm, Vodafone, was said to have lost the Nigerian market because it not only underrated, but also under-estimated its potential opportunities.
Vodafone was the first network operator the Nigerian Government contacted to come and jump-start the telecoms sector in 2000.
Kaduna State Governor, Nasir El-Rufai, recalled that Vodafone had the opportunity of being the major operator in Nigeria, when the telecoms revolution started, but it never saw the market potential.
El-Rufai said the telecoms journey actually started with the late dictator, General Sanni Abacha, but he couldn’t achieve much because of his death in June 1998. “Though, Abacha issued one GSM licence, which we waited for to switch on, but the firm never did, till Abacha died. Then came General Abdulsalam Abubakar. There was one Ibrahim Aliyu, who was the chairman of Intercellular, and later former Permanent Secretary, Ministry of Communications, who later became most senior adviser to Abubakar, so he was able to prevail on the Head of State, and some telecommunications sector’s move were facilitated. But still, nothing concrete was achieved until President Olusegun Obasanjo came on board.”
According to him, with Obasanjo on board, some telecoms experts, including Titi Omo-Ettu, Shola Taylor, and others in Diaspora, submitted a memorandum to the President, appealing to him to license GSM operators.
He said while the appeal was on, he (El-Rufai) was appointed the Director-General, Bureau of Public Enterprises (BPE), and was charged to privatised everything including NITEL.
“I think my appointment at BPE played some role in changing the direction. I went to President Obasanjo, who said he wanted to issue licences to GSM. I told him: ‘Sir, you (Obasanjo) cannot legally do it.’ He asked, why? I said because the Nigerian Communications Commission (NCC) that will issue the licence is not empowered by law to do so. He said: ‘the best I can do is that I have the executive power to license,’ I said sure, you can issue the licence as the government of Nigeria, but any serious operator/investor will want to speak with the regulator to know the terms, and regulations. He said what can we do because he wants to do it as quickly as possible,” El-Rufai stated.
He had told Obasanjo that the country would need to first build the sector, by writing the policy, which should be enacted as fast as possible.
According to him, in 2000, Obasanjo gave him the go ahead, but insisted that he will issue the GSM licence before the end of 2001. “Then, we started the process. I replaced the Minister of Communication, and we began the trustees. The Communication ACT of 2003 was drafted, and that was how we started the journey.”
How Vodafone lost it
El-Rufai said in 2000, while President Obasanjo was in a hurry to issue GSM licences, “he called me and the then Minister of Communications, and said: ‘I want to issue one GSM licence for $1 to any major operator, who do you recommend?’
“I said to President Obasanjo,Vodafone! Vodafone then was the largest mobile operator in the world. He picked the phone, called the then Prime Minister of Britain, Tony Blair, and he said that some Nigerian delegation are coming to Britain to make presentation on the opportunities in Nigeria’s telecoms market, and that Vodafone should be made to receive us. We went and met with the officials of Vodafone and we made our presentation,” he stated.
According to him, few weeks later, “we got a reply letter from Vodafone. They said they have looked at our presentation, their analysts have looked at it and the forecast is that the Nigeria GSM market is just about five million subscribers in 36 states. That is the size of the market will just be five million subscribers. That only five million people in general can afford to pay for GSM service in three years. According to them, the market was so small; Nigeria you are so poor to afford a mobile phone. We replied them to say our GDP figures are deceptive because 75 per cent of our economy is not capture in the GDP numbers, take a look at this again. They replied that even if 75 per cent of the economy is informal, it only means that only 20 million of Nigerians, 15 to 20 million can afford a GSM phone in the first three years, it was not worth Vodafone’s time.”
El-Rufai noted that the story changed when MTN and Econet came on board in 2001, within the first year of operations, they had over five million subscribers.
“This was Vodafone’s biggest investment mistake, because if they had come into Nigeria at that time, God’s know how much bigger they would have been today,” he stated.