“Now, it is a matter of cutting your coat according to your clothes. We are in an unusual time. From a governance perspective, our CAPEX is fixed in Naira, so with the devaluation of the Naira it does mean that you are going to get fewer dollars to spend.” – MTN Nigeria
This is one of the reasons why I think the Mobile Virtual Network Operator (MVNO*) framework may not deliver the alpha many people may be expecting in Nigeria. In Western Europe and US where MVNO companies are common, their main infrastructure firms like Verizon and AT&T are usually at overcapacity which means they have excess bandwidth, and can support more customers.
In other words, Verizon may have for RegionA a capacity to support 10 million customers, but at the moment, it has just 4 million customers in the network. When an MVNO comes, Verizon will be happy as it can “power” that MVNO to go out there, and get the customers in RegionA via better customer support, laser-focused marketing, etc. If that MVNO does get 2 million customers, the overall service level within Verizon remains intact.
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But in Nigeria, I do posit that some of our core telcos are already operating at above customer-capacity. For example, they are built for say 20 million users, but they have 30 million users, causing service failures, call drops, inability to browse efficiently, and broad network congestion.
If you now allow them to add an NMVO, and that company brings 2 million users, you are not helping any person. This is why I do not have a positive view of the MVNO market in Nigeria considering the Naira FX paralysis.
Indeed, with the above MTN warning where spending is expected to reduce on core infrastructure, customers cannot expect better service delivery if MVNOs are piled on top of the already over-congested network.
*A mobile virtual network operator (MVNO) is a telecommunications company that provides wireless services under its own brand name. MVNOs do not own the wireless network infrastructure they use, but instead buy network capacity from licensed mobile operators (MNOs). MVNOs then resell this capacity to consumers at a lower price.
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What kind of additional services can you offer effectively when the core infrastructure is inadequate? There’s really nothing left to do, other than massive investment. Our telecom industry currently mirrors our oil industry, both are grossly underfunded. We are just feeding on crumbs here.