Regional cellphone providers move north

South African cellphone giant MTN and Zimbabwe’s sole listed mobile phone operator Econet Wireless Holdings have broken into the potentially lucrative Nigerian market. MTN clinched one of four Nigerian cellular network licences on Friday for a final bid offer of US$285 million. Econet, bidding a similar amount, also won a mobile phone licence, and said on Monday its Nigerian subsidiary would launch itself in the coming months. MTN expects explosive growth in the Nigerian cell phone industry - with about 18 million users in five years time. The prediction of high cell phone usage in Nigeria explains why MTN was prepared to bid a hefty US $285 million in the licence auction, which was much higher than analysts expected. MTN corporate affairs executive Yvonne Muthien told IRIN on Tuesday that the deal would have a significant developmental impact. “Not only are we talking about huge skills and technology transfer between South Africa and Nigeria, but MTN will be installing 300,000 telephone lines as part of the deal,” Muthien said. “Thousands of jobs will be created as well, we’re training up Nigerians to run the network, we won’t be using expatriates,” she added. The company will invest more than US $1.4 billion in the next 10 years to ensure it meets the coverage and subscriber-number obligations set out in the licence. Econet said that it had raised the appropriate levels of finance to meet its Nigerian licence requirements and hoped to be investing about US $1 billion in the country over the next five years. Econet, along with the other two successful bidders would between them install nearly a million new telephone lines as part of the deal. About 20 percent would be in rural parts of Nigeria. The country has one of the lowest teli-usage rates in the world - just three phones per thousand. The Zimbabwe-owned company is eyeing other potential markets as well. On Monday Econet said it had also secured an unspecified amount of funding towards its recently launched bid for a 49 percent state in Kenya’s public telephone company, Telkom Kenya. MTN will be facing a more competitive environment in Nigeria than it does at home, with four operators in the market. But it hopes to gain a larger market share than its competitors, primarily through the use of pre-paid cards, a scheme that it pioneered in South Africa to bring cellphone usage to low-income groups. MTN’s success is the latest in a string of business deals between Nigeria and South Africa, the two largest economies in sub-Saharan Africa. South African companies have targeted Nigeria’s power generation, oil and information technology fields. Nigeria, with a population of over 100 million people, has begun to liberalise controls since its return to constitutional democracy in May 1999, after 15-years of repressive military rule.