At this point, it is no news that the NCC gave 25 companies MVNO licenses. The news, which started circulating around July comes nearly two years after the Nigeria Communication Commission’s (NCC’s) initial statement explaining their plan to license and allow the operation of MVNOs in an attempt to improve and increase the state of the telecommunications landscape.
This development, if implemented properly promises to pose short and long-term benefits for Nigerians and the Telecominucations Industry as a whole.
MVNOs: What Are They And Why Do They Matter
The term MVNO is short for Mobile Virtual Network Operator and they are an offshoot or in better words an adaptation of the Mobile Network Operators (MNOs) that we know and use today, MTN, Airtel, GLobacom, and 9Mobile. How they work is simple. MVNOs are Mobile Network providers who do not possess or own any major infrastructure of their own.
What does this mean?
It means that they don’t have the equipment to provide network services and work by leasing or renting network capabilities from existing MNOs and then provide services to specific localities or demographics to stand out and become profitable. You might be wondering why MNOs would be willing to lease out network capability and provide services to companies that stand to compete with them. Well, the answer to that is simple.
Running an MNO is no easy feat, to start one needs to pay for expensive items and services, including things like business and network licenses, office spaces, and other such start-up costs. After that more money gets spent building infrastructure such as telecommunications masts and rigs, underground and undersea cables as well as maintaining these things for extended periods. This means that when an MNO is unable to effectively utilize all the infrastructure that they have built, then they are running at a loss as the already paid-for network capability is being wasted.
MVNOs remove or at least reduce this cost of wastage as they pay for leases. This symbiotic relationship is driven largely by the need for innovation and growth in the telecommunications sector, the search for profitable ventures, and the need to deal with what would in most cases be a wasteful situation.
Now how does this all fit into the Telecommunications landscape that we know today?
The Nigerian Telecommunications Landscape
The Nigerian Telecommunications Landscape is one that is at first glance, very easy to understand. At the moment there are only four MNOs in the telecommunications scene, these four: MTN, Airtel, Globacom(Glo) and 9mobile provide Network and Internet Services for the 100+ Million active internet users in Nigeria.
These four companies have over the last few years competed with and among themselves for more users and a higher percentage of the overall market share. Information from Statista places MTN as the leading operator with a market share of 37.9% with Globacom and Airtel following behind at around 28% each. In another report, it was estimated that in 2022 between January and December over 20,123 users switched to MTN from different networks and as a result, their market share increased to around 40% while Globacom and Airtel maintained a market share of 27.13% and 27.03% respectively, 9mobile was also estimated to be holding around 6.78% of the total market share.
Now with the introduction of MVNOs, this uneven four-way spilt might just be broken.
What MVNOs Mean For The Telecommunications Landscape And For You
Before I go into what MVNOs could mean for you, let’s talk a little about what they mean for MNOs and the Telecommunications landscape as a whole.
For starters, MTN and Airtel cumulatively spent ₦115.36 billion ($176,869,618) on renewing their 2100MHz spectrum license for 15 years. This is just a part of the costs that MNOs face on a daily basis as they engage in their activities and this cost as well as the low level of competition are in some ways contributors to the quality of service available to Nigerians.
That is why the relationship between MNOs and MVNOs is integral, it is also one that requires careful planning, collaboration, and strategy so as to ensure that no party loses out. This means that Nigerian MNOs will have to change their operations and scale their services, building systems that will allow efficient and effective collaboration.
So you see, MVNOs have the potential to bring change to the Nigerian Telecommunications Space and to how MNOs Operate. Now what does that mean for you?
Improved Quality and Quantity of Services: The introduction of MVNO’s means that MNOs are forced to step up their game, partly as a result of the competition but also because they need to provide quality services to the MVNOs and not just their users. This means that Average Nigerians will end up benefiting from improvements in the quality as well as the overall quantity of services available.
More Diversified and Niche Offerings: MVNOs usually make a profit by differentiating, innovating, and taking care of niche markets and demographics. This means that there is a possibility that different sorts of offers and services will be made available to Nigerians, Increasing their overall options at any point in time.
More Accessible Services: MVNOs can target specific niches, and unserved or underserved marketers that MNOs did not focus on. This means that there is an expected increase in overall market penetration, bringing mobile services to areas that previously had limited or in some cases no access at all.
Better Customer Service: MVNOs will have to find ways to differentiate themselves. One such way is to prioritize excellent customer service. Doing this will in most cases drive MNOs to improve and enhance their own customer support and service quality so as to remain competitive and lead to a net positive for the average Nigerian.
At the end of the day, MVNOs have the potential to cause a lot of positive changes for you and the telecommunications landscape, but one has to wonder how well it will turn out.
See, the relationship between MNOs and MVNOs is in most cases born out of a dynamic need for innovation but in Nigeria, MVNOs are born out of a government initiative to foster competition and changes. This begs the question of whether the MNOs are prepared to handle the challenges of adapting their infrastructure and operations to accommodate MVNOs?
As for the answer to this problem, only time will tell.
The Nigerian Telecommunications scene is one filled with complacency and comfort as the Major players no longer seem to drive innovation the way that they should. One reason this might be the case is as a result of a comfortable lack of competition. This implementation of MVNOs practically mandated by the NCC posses to change this for the better.
The Average Nigerian stands to gain a lot if MVNOs are successfully integrated into the telecommunications scene, and we hope that they are. Now it is simply a matter of waiting to see what happens next.
And wait we shall!
Jed Eromosele is a Direct Response Marketer and Copywriter as well as an Economics Student at the University of Benin.
