MTN’s role in 20 years of Nigeria’s telecoms revolution
Telecommunications firm, MTN, recently celebrated 20 years of service in Nigeria. In this report, ADEYEMI ADEPETUN, writes on the journey and contributions of the firm in the country.
Some 20 years ago, precisely August 2001, the first GSM technology was launched when South Africa’s MTN established its Nigerian subsidiary, MTN Nigeria. Same period, Econet, now Airtel, also launched its own Nigerian subsidiary. Globacom entered the market in August 2003, to be joined by Etisalat, now 9mobile, in October 2008, and started commercial service in 2009.
The licensing of private operators was the result of a week-long spectrum auction, code-named Digital Mobile Licensing (DML) Auction, which took place in January 2001, in Abuja, and was conducted, by the Nigerian Communications Commission (NCC), under the leadership of Dr. Ernest Ndukwe, during the era of President Olusegun Obasanjo. That journey actually began Nigeria’s telecommunications revolution and gave birth to MTN, Airtel, Globacom, 9mobile and the rest.
MTN and Econet, which were the pioneer operators, paid $285 million each into the Federal Government coffers as DML fees. The licences were valid for 15 years, and the government raked in over $800 million at the time.
The license requirement had imposed on MTN and Econet the condition to connect at least 100,000 lines within a year; clearly, they surpassed this – beyond global expectations, with MTN connecting almost a million telephone lines in its first year of operation.
Indeed, efforts by MTN and others have deepened telephone penetration in the country, with the NCC reporting that the total number of telephone connections jumped from meagre 400,000 NITEL lines in 2001 to 297 million connected telephone lines within the space of two decades.
The GSM technology held the largest market share as of August 2018 with 99.80 per cent, followed by CDMA connections, fixed wireless and wired connections, and voice over Internet protocol (VoIP) services, which each held a market share of 0.2 per cent, according to the NCC.
The massive and quick expansion of MTN into the interior established it as a major and indisputable number one GSM service provider in the country and has remained so till today. More statistics showed that MTN has 39 per cent market share and currently services 73.1 million users across the country.
In 2006, MTN reached the 10 million customers milestone, and by 2013, it had connected 50 million subscribers.
MTN strength is not just in the reach of its service, but the fact that it is also the provider of the nation’s data backbone which has further reinforced its position as the power behind Nigeria’s effective telecommunication services.
MTN started with the N1500 recharge card and later the N700 value before introducing the N400 value. It also introduced the monthly N4000 Booster card, which would half the cost of calls made on the network. It also introduced the Business Package, which was prepaid.
Deepening telecoms infrastructure
With Nigeria having 297 million connected lines, out of which 189.3 million are active, this has pushed the country’s teledensity to 99 per cent. The country can also boast of 140 million Internet users with MTN servicing 59 million people.
Statistics from the NCC showed that there are now 36,998 base stations, spread across all states of the federation. Fibre optics deployment stood at 94,547.82km (terrestrial fibre and submarine cable) as at 2020.
Strengthening telecoms infrastructure in Nigeria, MTN, which claimed to have 20 million Nigerians live in places where it is the sole provider of communication, currently has 15, 552 2G sites; 16, 600 3G sites; 10, 058 4G sites; 818 rural telephony sites and 30, 011.6km of fibre optics backbone in Nigeria.
Today, by these investments, MTN is one of Nigeria’s largest retail networks having 16 owned service centres; 156 connect stores; 270 connect points; 58 new dawn shops; 41 trade partners; 145 data trade partners; 45 SIM Registration and Activation Agencies (SRAAs) and 50,000 SIM registration and activation agents.
The concentration of MTN services have been on voice, data, digital, financial technology services, wholesale and enterprise business.
Adding value to the economy
Within the last 20 years, MTN has contributed significantly to government coffers in different ways. Aside from paying $285 million in 2001 to get the DML license, the firm recently renewed that. It paid N71.6 billion for the spectrum license and N374.6million for the UAS license for another 10 years, precisely from September 1, 2021, to August 31, 2031.” Under the UAS, licensees shall be free to offer voice, data or multimedia services as they deem fit.
Besides, the telecoms operators have created 2.5 million jobs and contributed N2.3 trillion in taxes. Two years ago, the company had said it invested more than N2 trillion in the Nigerian economy and paid more than N1.7 trillion in taxes, levies and other regulatory fees.
MTN supported the economy with over N22 billion in corporate social investments and N2.81 trillion in capital investment.
The N22 billion, which came through MTN Foundation, had gone into 852 projects in 2,476 communities across Nigeria, which is benefitting 18.6 million people. Sectors impacted by this funding are Health N6.07 billion; Education N7.86 billion; Economic empowerment N5.37 billion and others N3.36 billion.
Beside all these, vendors around MTN have earned over N1 trillion in service offerings, while airtime retails have earned over N200 billion. Content owners have equally made over N120 billion within these periods.
The firm currently has over 200 sales partners; 2.5 million local suppliers and 2.4 million active retailers.
MTN has enabled broader economic development by supporting over 50, 000 ATM and PoS for electronic payments; connecting over 100 universities and polytechnics with Internet facilities and enabled 4.3 billion rapid and expedient transactions via USSD.
Indeed, these contributions have contributed significantly to the country’s Gross Domestic Product (GDP). In fact, it has lifted the economy out of recession on several occasions.
Statistics from NCC showed that telecoms contribution to GDP in 2012 was 7.7 per cent, but the figure doubled to 14.3 per cent as at the second quarter in 2020. This represented an N2.3 trillion growth, whereas the total contribution of Information and Communications Technology (ICT) to GDP was put at 17. 5 per cent.
According to the statistics, telecoms contribution to GDP had maintained a steady growth rate between 2012 and 2020, except for 2013, when there was a slight drop in the contribution, compared to the contribution in 2012.
It showed that in 2012, telecoms contribution to GDP was 7.7 per cent and in 2013, the contribution dropped slightly to 7.4 per cent, but it picked up again in 2014, contributing 7.6 per cent to GDP. In 2015, telecoms contribution to GDP further increased to 8.5 per cent and it had another increase in 2016, contributing 9.13 per cent. In 2017, it contributed 8.7 per cent to GDP and in 2018, telecoms contribution to GDP grew to 9.9 per cent.
In 2019, the contribution to GDP grew again to 10.6 per cent and in 2020, as in the second quarter, it climbed to 14.3 per cent, representing N2.3 trillion, whereas the entire contribution of ICT to GDP within the same period was 17.5 per cent.
The burden of fines
Being the largest operator by market share and penetration, MTN also suffered some infractions and subsequently came under the regulator’s scrutiny and hammer.
In October 2015, the Nigerian Communications Commission (NCC) imposed an N1.04 trillion fine on the telecoms operator for alleged non-compliance with the deadline set by the commission to disconnect all unregistered SIM cards.
The NCC, via the compliance audit carried out by it, said MTN had about 5.2 million SIM cards it had refused to disconnect or deactivate. Invoking Section 20, subsection One of Telephone Subscribers Regulation, (TSR), Law on MTN, the NCC fined the GSM service provider a sum of $1000 for each of the 5.2 million lines that were not deactivated by the service provider amounting to $5.2 billion.
After much intervention, which even saw the former South African President, Jacob Zuma in Nigeria, the regulator reduced the fine to N330 billion after MTN agreed to list shares on the Nigerian Stock Exchange (NSE) – now Nigerian Exchange Limited, among other considerations.
In September 2018, the Attorney-General of the Federation, Abubakar Malami, also demanded that the telco pay $2 billion in tax arrears. Last year, Malami dropped the multi-billion dollar tax dispute.
On different occasions, MTN denied wrongdoings and reiterated its commitment to comply with the Nigerian tax laws.
Readies N640b for telecoms expansion in Nigeria
In readiness and commitment to the future in Nigeria, MTN has revealed plans to latch onto the deployment of Fifth Generation (5G) technology to expand its services in Nigeria.
The operator said its plans would rely on the NCC, which it described as the major determinant of the 5G roll-out in Nigeria. It stated that its 5G service rollout plans will be guided by the regulator’s guidelines and timelines. The company said it can only begin to roll out 5G services in Nigeria when the spectrum is made available and licences are issued.
To deepen infrastructure in the country, MTN plans to invest N640 billion ($1.5 billion) over the next three years to expand broadband access in line with the Federal Government’s 2020-2025 National Broadband Plan and in support of MTN Group’s strategy, “Ambition 2025: Leading digital solutions for Africa’s progress.”
CEO of MTN Nigeria, Karl Toriola, who confirmed the proposed spending on broadband infrastructure expansion, disclosed that the firm would reconstruct the Enugu-Onitsha expressway as part of its tax remittance to the Federal Government and commitment to public-private partnerships.
“For instance, in support of the National Broadband Plan in 2021, we plan to have additional 510 2G; 616 3G; 4,745 4G sites as well as 200 U900; 1,226 fibre to site and 232 E-Band connections.
“But we also talked them through our wider plans to deepen our support for Nigeria, as we transition through COVID and into an expanding digital economy. It’s important that we, like MTN, are supporting national priorities, not just areas where we have opportunities to grow as a business. My team has been working hard to define key areas of focus for expanded investments to support key social sectors like healthcare and education, above and beyond the existing commitments we have made through the MTN Foundation.
“We’ve also been identifying government programmes we can support, like the Road Infrastructure Tax Credit (RITC) scheme, which we have agreed to participate in, fronting the funding for one of the priority road projects in the country, in return for tax credits later on. Finally, I am pleased that we were able to communicate an expanded partnership with the CACOVID coalition, to continue to support their priorities for the next two years.”