Funds, GSM Killing CDMA Operators Softly

A number of Code Division Multiple Access operators (CDMA) offering fixed and mobile services have seen bad times and are no longer operating optimally, Nigeria CommunicationsWeek can now reveal.
Growing subscribers’ preference for Global System for Mobile Communications (GSM) services, limited access to funds for expansion and poor network coverage are some of the factors responsible for the state of affairs.
It is surprising that CDMA operators are not able to operate at the same footprints as the GSM operators despite their overwhelming advantages.
CDMA operators are able to charge lower on-net and off-net call charges than GSM operators, and have fewer subscribers and less strain on their networks, which means they can provide better service quality.
They also provide very cheap and partly subsidized mobile handsets that appeal to the low-end market, especially those who have never been able to afford a handset.
CDMA operators who spoke to Nigeria CommunicationsWeek however accused financial institutions of preferential lending to GSM which are known for quicker turnover.
But the financial institutions are quick to point at some of the CDMA operators’ histories of poor accounting and book keeping.
Elsewhere, some of the CDMA operators like Starcomms, ZoomMobile, Intercellular, and Multi Links Telkom which hold unified licenses are not able to roll out services because the spectrum to do so is a scarce resource.
A unified license gives an operator the freedom to offer mobile, fixed and any other telecommunications service to its subscribers and especially opportunity for the CDMAs to play in the lucrative GSM market.
Operators complained of inadequate cellular frequencies (GSM-900 and GSM-1800) designated for the operation of the GSM for mobile phones.
“The general impression is that with unified license we can do almost everything but in real terms, there is no spectrum, the ones available have all been used up. We are handicapped, if we have the frequency to do GSM, the story will be different.” a top official of one the CDMA operators said.
Nigeria CommunicationsWeek gathered that CDMA operators have also focused on the same products, services and consumers, the resultant competition has beaten down profits.
In all, the CDMA operators’ contribution to the telecom industry growth has also remained feverishly modest at just 7.3 million subscribers as at October, 2009.  Total mobile (GSM) subscription for the period was 63 million.
It was a disappointing growth compared to the promises it showed earlier when the number of mobile CDMA subscriptions grew from just 380,000 in 2007 to more than 6million at year-end 2008.
Nigeria CommunicationsWeek gathered that there are palpable fears that the operators may also be at the outskirts of the $11.14 billion revenue estimated for the telecom industry this year.
It is already beginning to show with the signs of distress in some CDMA operators.
Operators like RainbowNet, MTS, First Wireless, Disc Communications, Intercellular, Webcom, XS Broadband and Nitel have either by design or some strokes of ill lucks, remained in the back seat operating in fits and starts
For some forward looking operators, emphasis is gradually shifting from voice centric postures to data said to posses the potentials to turnaround their fortunes.
Operators like Starcomms, ZoomMobile, Visafone and Multi Links Telkom are all playing deep in the data arena which is helping them underpin the continuous encroachment of GSM into the subscriber bases and shore up revenues.
But increasingly, consolidation either by way of merger or acquisition looks very likely in the coming months as the operators pull resources and energy together to weather the harsh operating environment.