Nigeria: A Growing Weight

As of 2004, Nigeria is the largest mobile market in Africa. After competition was introduced in 2001 with MTN and VMobile (ex-Econet), and in 2003, with Globacom, the market experienced a positive boost in mobile adoption. Operator strategies in the country have focused on increasing their subscriber base and usage while maintaining steady ARPS. While the entire continent has experienced strong growth, the expansion of the Nigerian market has been unprecedented, with the market’s share of total subscribers almost doubling in twelve months between 2003 and 2004. This trend is set to continue: We forecast that by 2010, Nigeria will account for more than a quarter of Africa’s mobile subscribers.

The Nigerian market reached over 9.5m subscribers at end 2004, with close to 99 percent adopting the prepaid platform; this figure includes about 65%-70% of PTOs’ subscriber base (about 500,000 at YE 2004) we count as limited mobility subscribers.  This represented a 7 percent mobile penetration rate, up from 2.5 percent at YE2003. By June of 2005, the market had grown to 13.5m subscriptions, representing a penetration rate of 9.65 percent. Now although net additions have significantly grown over the past few years and almost tripled in 2004, more surprises are to come in 2005–2006.

By our estimates, we believe that under the right conditions, Nigeria can arguably hit the 41 percent penetration mark, translating to a subscriber base of 60m by 2010. Currently, only about 25 percent of the addressable market is being served. The market will continue to grow as operators continue to lower the minimum cost of ownership (MCO), which we currently estimate at about US$35. With vendors now feverishly engaged in the development and distribution of sub-US$30 handsets, we believe that their proliferation creates the potential for the 60m subscriptions by 2010.