Nigeria's telecommunications sector has been dominated by the big four since Airtel (then Econet) and MTN entered the country in August 2001, with Glo and 9mobile (then Etisalat) following in August 2003 and October 2008, respectively.
But there's about to be an influx of 43 new firms.
The Nigerian Communications Commission (NCC) has given these new players mobile virtual network operator (MVNO) licences, and according to Ernest Akinlola, MVNO's will be the most talked about subject in Nigeria in a few months.
Akinlola, who is currently in the renewable energy space as the Managing Director of Bboxx, speaks so confidently because of his experience, having been in the MVNO business since it began in the UK in 1999.
After serving as a Launch Manager at Virgin Mobile MVNO, the first MVNO in the world, he became the Head of MVNOs at American telecom giant, T-Mobile.
Akinlola believes that MVNOs have been quite successful since their creation. From Lyca Mobile to Lebara in the UK, they have played a very significant role in the UK's telecom space.
However, MVNOs could play out very differently in Nigeria. But what are MVNOs and what do they mean for Nigeria's telecoms space?
What is an MVNO?
Mobile virtual network operators (MVNOs) provide wireless services just like your mobile network operators (MNOs) — MTN, Glo, and Airtel.
Akinlola defines the MVNO model as "piggybacking off an MNO" because unlike MNOs, MVNOs do not own infrastructure. They do not spend huge sums of money investing in infrastructure to provide their services; instead, they rent from MNOs that earn secondary revenue from this arrangement.
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MVNOs can also reach certain demographics that MNOs haven't.
In Nigeria, for example, MVNOs can create niche telecom products that serve the needs of people living in rural areas.
Because they only rent infrastructure, they can operate a lean business process that makes them agile, helps offer cheaper services, and allows for experimenting with different product categories.
In the UK, MVNOs such as Lyca Mobile and Lebara offer significantly cheaper international calls, unlike MNOs.
Describing how the above-mentioned operators created a market where they can dominate with niche products and lower prices, he says, "They carved out a proposition for international calls and made it their mantra."
The influx of 43 MVNOs certainly means cheaper mobile services in Nigeria, which would be great for the economy at large.
But while MVNOs could be a net positive to Nigeria, the reality cannot be taken for granted if MNOs, and the MVNOs do not go beyond what Akinlola describes as "default thinking" — looking beyond the obvious and figuring out where problems could arise.
Why are MVNOs just coming to Nigeria?
Although MVNOs have been around for over 20 years, a global trend of creating MVNOs just started in the past five years. The Connector, attributes this growing trend to an increase in the number of people who need communication services and MNOs and an increase in the number of MNOs interested in MVNOs.
This growing trend is probably one reason Nigeria is just catching the MVNO fever. Another is that Nigeria's MNOs weren't ready for MVNOs in the 2000s.
"I brought Lyca Mobile to Nigeria in 2014 and we met with the then vice president [Namadi Sambo] and the view was that our operators were still building out their networks."
Back then, MNOs couldn't house MVNOs as they were enhancing their infrastructure.
How will MVNOs affect Nigeria's telecom sector?
"By definition, the whole idea of an MVNO is to identify areas that the mobile network operator is not really focusing on."
Akinlola explains this with an example of an MVNO that decides to offer farmers in Nasarawa cheaper calls with the added benefit of getting periodic weather predictions on their feature phones.
Essentially, MVNOs will make the telecom sector more vibrant because of competition.
However, Akinlola raises several issues that could impede the smooth running of MVNOs in Nigeria if they don't have robust business cases or business plans.
Nigeria has four MNOs that have to somehow offer 43 MVNOs piggyback rides.
Hosting all the MVNOs would mean the MNOs are doing a lot of investing, and quite unlike API connections in software companies, this is not a simple plug-and-play scenario.
How are the MNOs going to host all of them?
Akinlola pointed out that in the UK where MVNOs began and have become commonplace, it took 20 years for 20 MVNOs to emerge, but Nigeria will start with more than double that from the get-go.
However, there's a solution in the form of tier 5 MVNOs.
MVNO licences are in five tiers.
Tier 1 holders are what Akinlola describes are super dealers, companies that sell MNOs' products for profit, but don't own their SIM card.
Tier 2 MVNO license holders, on the other hand, will own cards and sell their services with their branding.
Tier 3 holders get all the benefits of tier 1 and 2 plus a switching network and core network.
Holders of tier 4 MVNO licences are aggregators and can host tier 1, 2, and 3 licence holders.
Tier 5 holders are almost indistinguishable from tier 4 licence holders but Akinlola says the one notable difference is that they can have low level infrastructure — that will still be plugged into an MNO's — making them mini MNOs.
These tier 4 and tier 5 licence holders are the ones Akinlola predicts will be the solution to MNOs hosting so many MVNOs.
"It is unlikely that the MNOs will launch 10 MVNOs from the get-go." One solution would be to bring on the strongest tier 4s or 5s, and tell them, "Since you can aggregate tiers 1 to 3, aggregate them through your platform.'
While this solves the problem of MNOs taking in too many MVNOs, there are other challenges.
There's a steep learning curve for all ecosystem players
As an experienced figure in the space, Akinlola emphasises that there's a need to quickly upgrade ones knowledge of the operations of an MVNOs. He says while some know how to run an MVNO, there's going to be a steep learning curve for most of them.
"The successful ones are those that have engaged the right professionals and advisors to tell them how to orientate their MVNOs."
Judging from the amount of competition in the market, Akinlola says MVNOs will have to be very creative to be successful.
While MNOs will be profiting from MVNOs, competition could also arise between them.
"MNO's retail teams are going to have to learn how to co-exist with an MVNO as their partner.
Telecom services will be available in rural areas
Unlike the UK where MVNOs sprung up solely for commercial gains, the NCC is encouraging MVNO licence holders, through legislation, to focus on rural areas.
The influx of MVNOs in Nigeria will also lead to "better data quality because an MVNO would want to want to prove its worth."
Another plus is economic development and employment, which Akinlola is excited about. But for this to happen, all parties involved need to look beyond the obvious, to make sure that MVNOs are a net positive for the country.
