How To Start Telecommunication Business In Nigeria

Telecommunication Business In Nigeria: The Nigerian telecommunication sector is the largest segment of the Information and Communication sector. Nigeria has one of the largest telecom markets in Africa.

The Nigerian Telecommunication sector has evolved over the years to an oligopolistic market structure (a small number of firms have the majority of market share).

The sector includes a strong multinational presence. The leading players are MTN, a South African based multinational company with a market share of 37.21%, Airtel (an Indian based multinational telecommunication), Glo (a Nigerian multinational company) and 9mobile (formerly Etisalat).

What is Telecommunication

Telecommunications industry began in 1876 with the invention of the telephone, i.e. those old fashioned landlines that hung on your kitchen wall circa 1985.

Telecommunication means the transmission of signals over long distances for the purpose of communicating, and the term encompasses more than just telephones.

First, there was the telephone, then radio broadcasts came under the telecommunication umbrella a bit later in the 19th century. Next, television arrived. Today, the term includes the internet, cellular phone networks and all of the assorted goods and services required by these types of companies, such as security and software.

Why You Should Start Telecommunication Business In Nigeria

Huge and untapped opportunities: There are immense opportunities in the telecom sector in Nigeria which in our view overshadow any perceived risk.

Nigeria is the most populous country in  Africa.  The World Bank’s World Development Indicator database stated that Nigeria’s population in year 2000 was 126.9 million growing at a rate of 2.4% per annum. This implies conservatively an annual increase in population of 2m – 2.5m. There is therefore a lot of pent-up demand for telecommunication services. See the estimation below.

  • Pyramid Research estimated that from a market value of $800m in 2001, the Nigerian market will be worth $2.5 to $3.5 billion annually.
  • With that growth potential, Nigeria market is ranked best in Africa. However, with a Compound Annual Growth Rate (CAGR) of about 50% , Nigeria ranked first in Africa with the potential maximum wealth generation.
  • Based on the high demand from telecoms  companies, more  growth is expected from mobile services, internet, data communications and fixed voice services.

How To Start Telecommunication Business In Nigeria

1. Choose Telecommunications Business You Want to Start

Are you interested in opening up a cellular phone company? Or maybe your goal is a tech security firm? You could launch a network services, television, radio station,  start an internet provider, supply phone systems to businesses or develop and sell the software used in phone systems.

Some of these goals are more realistic than others, but they all fall under the umbrella of telecommunications in Nigeria.

However the first thing is that, you must choose and decide the type of telecommunications services you want to provide, then you can take steps to start your business.

2.  Write a Business Plan

A sound business plan is essential to get started and succeed. There are many sites and manuals out there that can guide you through

writing a business plan, or you can hire professionals to work with you on creating one. The essential elements of the plan should be:

  • Executive summary: This is a synopsis of your entire plan in a succinct paragraph or two. Imagine this as your elevator pitch to
  • investors. Whoever reads this should understand what your business is going to be and how it will work.
  • Business Description: What exactly will your business do and how will it operate?
  • Marketing Strategies: Where will your business fit into the current market and how will it capture that portion of the market?
  • Competitive Analysis: Who are your competitors in this space, and what is your advantage?
  • Development Plan: Describe where the company will go and how it will get there.
  • Operations and Management Plan: How will the company be run, who will run it and what are their qualifications?
  • Financial Projections: What are you projecting in terms of profits for the first five years?

3.  Name and Register Your Telecommunication Business

Once you’ve figured out your niche and developed your business plan, it’s time to get down to business, so to speak. There are some regulatory and legal steps you’ll need to take care of as soon as you can.

  1. Figure out the structure of your business.
  2. Name your business .
  3. Buy the internet domain for your business as soon as you can. Certain entities watch new business registrations and attempt to buy up all of the domain names, then charge you a bunch of money for them.
  4. Register the name after you secure the domain

4.  Obtain the Necessary Licenses and Permits

This part can be tricky. If you can hire a lawyer and accountant to help ensure you get started on the right foot, it’s a good idea.

The telecommunications industry in Nigeria is regulated by the Nigeria Communications Commission (NCC), an independent U.S. government agency overseen by Congress. It is the primary authority for communications law, regulation and technological innovation. This means that you need to make sure you’re doing everything the FCC says you must do if you’re running a telecommunications company.

Because the telecommunications industry is regulated by a federal agency, you’ll need a federal license or permit in order to legally operate your company. The FCC provides guidance on its site about the type of license you will require, depending on the type of telecommunications business you are running; however, it is complicated and it wouldn’t hurt to have legal guidance.

5.  Pay the NCC Permit

Several fees are required by the Nigeria Communications Commission. Here is a list of fees you may be required to pay, depending on the nature and needs of your business.

  • Application processing fees for licenses, equipment approvals and more
  • Annual regulatory fees
  • Freedom of Information Act fees if you need to process a request under this act
  • Forfeitures, i.e. penalties you would need to pay to the NCC for violations of law or noncompliance with authorizations.

6.  Find Funding

There are several avenues for funding a business. The way you decide to fund yours will depend largely on your means and how much money you need to get started. Since you already have a business plan, you should have a number in mind.

A few options:

  • Get a small business loan.
  • Find angel investors. These are wealthy individuals who invest in new companies.
  • Find venture capital funding. If you need a lot of money to get started, this may be the best route. Venture investors usually have more money to invest than angel investors because they are backed by firms.
  • Use crowdsourcing. This method of fundraising is gaining popularity. Start a site and ask for individuals to invest. In return, they will get a share in the company or special perks once you’re up and running.

7.  Get Started

Starting a company is challenging. But if you have a good idea and you’ve secured funding and all of the necessary permits and regulations, it’s time to get started on opening your business.

Telecommunication  Regulations And Operators In Nigeria

Telecom is regulated in Nigeria by the Nigerian Communication Commission (NCC) which grants licences and manages available spectrum.

Types Of Telecommunication Business In Nigeria

There are three broad categories of telecom operators in Nigeria, namely-

  • The fixed wire/wireless services providers such as the Government owned Nigeria Telecommunications Limited (NITEL), the newly licensed Second National Operator (Globacom), a number of fixed wireless operators and those operating the Fixed Wireless Access technology.
  • The cellular operators such as MTN Communications and Econet Wireless, the two dominant GSM operators. NITEL and Globacom also hold Digital Mobile Licences to provide cellular services based on the GSM technology.
  • The Long Distance Operators such as NEPSKOM Communications Limited and Mobile Telecommunications Service Limited. Interestingly, NEPSKOM is a Joint Venture (JV) between ESKOM, a South African electricity company, and the Nigeria Electric Power Authority (NEPA). The JV is basically expected to utilize NEPA’s transmission infrastructure to provide transmission backbone to telecom companies that may require it.

Challenges in the Nigerian Telecommunication Business

There has been a decline of GSM mobile subscribers as the market grapples with shifts in product options. Consumers are moving away from traditional cellular services to data bundle packs, which allows them to use Over the Top (OTT) services.

Q42016 saw an increase in total GSM subscribers of 0.84% to 154 million (mn). However, subscribers dropped in Q12017 by 1.38% to 152mn; Q22017 results were worse, dropping 6.15% to 143mn.

Telecom operators and Internet service providers are currently at loggerheads to deliver data at relatively cheaper prices. The fierce price competition among telecom operators on their voice and internet data has led to the contraction in the sector revenue over time. Consumers benefit from temporary low prices only in the short run.

The sector has also contended with OTT players that utilize technology to convey voice/video calls at a fraction of traditional voice call costs. While Nigeria’s data bundle prices are the lowest in subSaharan Africa, they are priced below actual costs which can harm the sector and puts longterm customer benefits at risk.

Solutions to the Challenges in the Nigerian Telecommunication Sector

To ensure sustainable growth, the sector is in need of reform. Previous changes (e.g. the Nigerian Communications Act 2003) are outdated as they focus on how voice calls are regulated and not on matters that relate to the new technological era.

The focus today should cover competition in the sector, the market and other services the telecom sector is linked closely to such as finance, technology and media services.

The current government has shown its commitments in creating an enabling environment for the private sector to contribute innovative solutions to allow consumers to benefit from Information Communication Technology (ICT) advancements. This will in turn bring about efficiency and productivity in the telecom sector and eventually enhance economic growth.


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