Africa landscape for mobile and broadband : focus Nigeria

2014, March

David H. Page, Managing PartnerEniola Oyinmomo, Researcher, Lagos, Nigeria

Mobile Broadband Trends :Nigeria

Mobile Broadband Trends: Nigeria

• Executive Summary

• Defining mobile broadband in Nigeria

• Nigeria Mobile: not too early

• Landscape:

– Operators

– Common devices and OS

– Identifying the early adopters

• Payments in Nigeria: the nuances and trends for mobile

• Satellite v. cable in Nigeria: which is larger

• Appendix

Executive Summary

• Broadband in Nigeria means “wireless”• Government support of mobile broadband will ensure ubiquity

and 4G/LTE infrastructure

• Smart phone adoption by Nigerians is large and growing

• Now is the time to build infrastructure

Defining Mobile Broadband

• Up to now, the term broadband referred to high-speed communications networks that connected end-users at a data transfer speed greater than 256 Kbit/s.

• As such, broadband within the Nigerian context is now defined as an internet experience where the user can access the most demanding content in real time at a minimum speed of 1.5 Mbit/s.

The licensing, rollout and upgrade of Mobile networks based on 2.5G (GPRS), EDGE, UMTS, HSPA,

HSPA+, HSUPA, HSDPA and CDMA EV-DO technologies, as well as, the introduction of smartphones

and other mobile devices with seamless capability to connect the internet have been responsible for

the current growth in internet access and usage recorded in Nigeria.

This trend will receive further boost with the wider rollout of 3G, across the country making it

possible for many subscribers to access broadband internet using their mobile devices. Currently

outside the key cities of Lagos, Abuja and Port Harcourt, broadband access is generally unavailable.

While the investment in the deployment of 4G/LTE broadband networks is still being awaited,

operators have continued to deploy 3.5G, 3.75G, and HSPA technologies.

Mobile broadband is therefore emblematic of the potential quick win for broadband adoption and

usage in Nigeria.

Wireless technology is the primary delivery medium for broadband access

in Nigeria

• There are 167M people living in Nigeria;

• Mobile penetration in Nigeria stands at 71.8% or 127m active mobile subscribers (Jan '14);

• Mobile web internet users now stand at 64.2M people (Dec '14);

• Informa WCIS estimates that at the end of 2012 about 6 percent of the population has 3G; translating to ~10.5 million 3G subscribers in Nigeria

Nigeria Mobile: at a glance

Nigeria: 8th largest mobile market in the world

• Nigeria is the largest mobile market in Africa and the eighth largest in the world

• Mobile subscribers outnumber fixed lines almost 219:1 and PC penetration is very low

• Recently surpassed 127 million active mobile subscriptions, which equates to around 72 percent of the population

• Mobile device the de facto communications device for calls, messaging and accessing the Web

• It is common for individuals to have more than one SIM card and handsets with multiple SIMs

Nigeria Mobile: Operators

There are four main mobile network operators in Nigeria:

1. MTN Nigeria is the most popular operator, with 2/5 of mobile subscribers,

2. Globacom (1/5),3. Celtel/Airtel (1/5),4. EMTS (Etisalat) (1/10)-all GSM

Note: Etisalat has a lot of potential, as it has the highest share of mobile porting-in incidence and lowest share of mobile porting-out incidence.

Focus Market: Nigeria (cont’d)

• 74 percent of mobile visits come from Nokia devices, according to StatCounter, while the top 10 handsets with the Opera mobile browser installed are all Nokia.

• Culturally, Nigeria is very diverse with more than 280 languages.

• Nokia is the only device manufacturer to take this on board and has integrated the three major languages, Igbo, Yoruba and Hausa, into its handsets


Nigeria Mobile: Devices

Top 10 Mobile Device Vendors in Nigeria


Top 8 Mobile OS Systems in Nigeria



How Nigerians use their devices

Identifying Nigerians using Mobile Broadband now?

• When it comes to user adoption of broadband some demographic trends are clear:

• Mobile broadband use is more common and highly prevalent amongst youths and digitally literate adults in major metropolitan cities like Lagos.


Telecoms’ infrastructure: focus for Nigeria’s growth

• The level of infrastructure in Nigeria remains an issue, but the telecoms sector is seeing rapid improvements following sustained investment from local and foreign investors.

• The installation of fiber-optic cables to connect the country to rest of the world

• Government is on a drive to transform country into a knowledge-based economy.


Why is the Nigerian Government so Involved?

• It has been empirically proven that every 10% increase in broadband penetration in developing countries results in a commensurate increase of 1.3% in GDP.

• The Government will pursue, by the end of 2017, a fivefold increase in broadband penetration over the 2012 penetration rate.

• On a national scale, it is the intention of government to facilitate full rollout by operating companies of 3G networks as a minimum on all base stations by 2015.


By 2020, Nigeria will have a large, strong, diversified, sustainable and competitive economy that

effectively harnesses the talents and energies of its people and responsibly exploits its natural

endowments to guarantee a high standard of living and quality of life to its citizens”.

This Vision reflects the intent of the Federal Republic of Nigeria to become one of the top twenty

economies in the world by the year 2020, with a principal growth target of no less than $900 billion in

GDP and a per capita income of no less than $4000 per annum.

Vision20:2020; Nigeria Top Twenty World Economy by 2020.

…pervasive broadband access is a critical requirement for Nigeria

to achieve this vision.


Nigeria’s Targets for broadband growth


Nigeria’s Targets for broadband growth


Payments in Nigeria: Telecoms

• In the telecoms sector, prepaid subscription accounts for over 80% of total mobile subscription for both voice and data even though more priority is given to postpaid subscribers.

• The postpaid subscribers, more often than not, fall in the middle to upper class. They are usually the managers, directors, CEOs and medium to large scale entrepreneurs.


Payments in Nigeria: Telecoms (cont’d)

• Nigerians prefer the prepaid pay-as-you-go method • The Nigerian economy is generally cash based, where 65% of

transactions occur outside the bank.• In 2012, over 85% of financial transactions were cash • In June 2012, the CBN introduced the cashless policy where

limits were placed on daily cash withdrawals, in order to raise the adoption of e-payments and card or PoS purchases. August 2013, CBN reported that card purchase was growing at a rate of over 30% and electronic payment was growing at about 25%.


Payments in Nigeria: Mobile Money

• There are 18 licensed mobile money operators• Since commencement of mobile money operations in 2012,

overall performance is as given below:

Total number of Subscribers 9,989,297Total number of Agents enrolled 67,494Total volume of Transactions 11mTotal value of Transactions N105bn


Payments in Nigeria: Mobile Money “Volume”


Payments in Nigeria: Mobile Money “Value”


Satellite vs. cable – Penetration and Subscribers

• Nigeria has very few Cable TV networks but much local coverage. This is due to the lack of infrastructure;

• Two Pay TV technologies are popular in Nigeria: 1)Satellite TV and 2)DVB-T (Terrestrial) TV;

• Most networks are carried via Satellite TV, because of ease of deployment. Startimes and GOtv are 2 pay TV networks using DVB-T, which requires no dish (thus cheaper);

• It is estimated that 4.7% Nigerians owned/had access to Satellite TV;

• There were 1.35 million PayTv subscribers In Nigeria, putting the penetration rate at 0.80%. The subscriber base is predicted to rise to 4.36 million by 2018.



Appendix

Broadband penetration for each country now and predicted; (Mobile)

2012 2013 2014 2015 2016 2017

Botswana 11.50% 12.99% 14.68% 16.59% 18.75% 21.18%Namibia 12.94% 15.52% 18.63% 22.36% 26.83% 32.19%S. Africa 41% 50.43% 62.03% 76.307% 93.84% 115.42%DRC 1.68% 2.26% 3.053% 4.11% 5.54% 7.47%Ghana 17.11% 23.26% 31.64% 43.03% 58.53% 79.60%Liberia 3.79% 4.85% 6.21% 7.95% 10.17% 13.02%Nigeria 32.88% 36.79% 71.22% 90.04% 110.74% 136.22%Ethiopia 1.48% 2.01% 2.74% 3.72% 5.06% 6.89%Kenya 34.56% 44.31% 57.15% 73.17% 95.07% 122.62%

Zimbabwe 17.09% 18.95% 21.01% 23.30% 25.85% 28.66%

Broadband Adoption chart for African countries (Sub-Saharan)

Low

Medium

High

Microwave infrastructure has fast become the dominant medium for delivering long distance transmission

and in many cases backhaul capability. The following charts show the explosive growth in the deployment of

base stations or microwave towers across the country. The subsequent success led to increased mobile service

and mobile internet service penetration.

Microwave infrastructure

African Regions

Western Africa:

• Benin• Burkina Faso• Cape Verde• Côte d'Ivoire (Ivory

Coast)• Gambia• Ghana• Guinea• Guinea-Bissau• Liberia• Mali• Mauritania• Niger• Nigeria• Senegal• Sierra Leone• Togo

Eastern Africa:

• Burundi• Comoros• Djibouti• Eritrea• Ethiopia• Kenya (Nairobi)• Madagascar• Malawi• Mauritius• Mozambique• Rwanda• Seychelles• Somalia• Tanzania• Uganda• Zambia• Zimbabwe

African Regions (cont’d)

Middle (Central) Africa :

• Angola• Cameroon• Central African Republic• Chad• Democratic Republic of the

Congo• Equatorial Guinea• Gabon• Republic of the Congo• São Tomé and Príncipe

Southern Africa :

• Botswana• Lesotho• Namibia• South Africa• Swaziland

African Regions to activate

• Botswana (Pop: 2M)• Namibia (Pop: 2.2M)• South Africa (Pop: 53M)• DRC (Pop: 75M)• Ghana (Pop: 26M)• Liberia (Pop: 4M)• Nigeria (Pop: 177M)• Ethiopia (Pop: 87M)• Kenya (Pop: 43M)• Zimbabwe (Pop: 13M)

Varying experiences a user can have on 3G versus 4G LTE.

In order, Popular TV genres in Africa

• Soap Operas• Infomercials

(advertisements)• Educational• Drama• Actuality• News• Movies• Religion

• Variety• Magazine• Sitcom• Children• Reality• Sports• Music• Competition• Documentaries

Pay TV genres for Africans

• Soapies• Movies• Reality• Music• News• Education• Actuality• Variety

• Nigeria’s Nollywood film industry was ranked third for globally generated

revenue in 2011.

• It generated close to N126.4 billion (about U$D800 million) in the three

years spanning 2010- 2012.

• The two film industries ahead of Nigeria’s are the US’ Hollywood and India’s

Bollywood.

• The global film and entertainment industry generated N14.5 Trillion

(U$D90.6 billion) in 2010. This was projected to increase to N16.2 trillion

(U$D102.7 billion) in 2012.

Nigeria’s Nollywood film industry

Notes

Business

Africa landscape for mobile and broadband : focus Nigeria