UK based investors with Chinese roots are about to set their footprints on the Nigerian telecommunications market with a massive inflow of capital and expertise into the troubled Code Division Multiple Access (CDMA) segment, Nigeria CommunicationsWeek can now report.
The investors are already in talks with two major CDMA operators and another moribund operator with a huge spectrum lying fallow.
Though, the investors and the local operators are still guarding the deal closely, our investigations revealed that interest in the CDMA operators is already generating positive signs in the market.
In the past 24 months, the Nigeria telecom CDMA segment has come under bad weather due largely to lack of funds; poor business module; and poor corporate governance.
But with the eyes of the foreign investors focused on the CDMAs, good times appear to be ringing on all fronts both for the companies and Nigerians in dire need of alternative to GSM services.
Sources close to the investors told Nigeria CommunicationsWeek that the due diligences have been performed on the firms and that the investors are excited about the potentials of the companies.
According to our source, the icing on the cake is the frequencies of the moribund CDMA operator which can help the investors ignite a broadband war.
“The thinking is that they would be able to buy off the local investors and fuse them into one competitive firm. Yes, the stakes are high. Everything seems concluded, just the final signature and then the public unveiling. But I can confirm it is something worth the celebration in the telecom sector, especially among CDMA investors,” said our source.
Nigeria CommunicationsWeek gathered that the CDMA operators ran into troubled waters as both government and Nigerian financial institutions ignored persistent red flags that hobbled their operations.
As government on one hand refused to handout incentives to rejig the sector, financial institutions shun further credit facilities to them, preferring instead to lend to the more robust GSM operators.
In addition, poor corporate governance and limited mobility also served to exacerbate their problems.
The new FDI, with well defined investment and management strategy is expected to reshape the segment and indeed, the entire telecom landscape in the country.
“We don’t expect things to remain the same anymore. Mistakes have been made in the past, and I believe these new investors are well prepared for the challenges. If the GSM operators can make, there is every possibility for a CDMA success in Nigeria,” our source stated.
Elsewhere, Mr. Collins Onuegbu, managing director of Signal Alliance, a leading IT systems integration company in Nigeria had noted that the CDMA operators have the option of mergers or acquisition or die in the hash operating climate.
Onuegbu said telecom operators face daunting tasks for survival in the Nigerian operating environment, with such issues as multiple taxation regime and competition from free service providers like Skype and Google.
“The world is already converging and technology application is now universal. With Skype, you can talk free and across the world, it is nolonger the youth population that is using this technology application, corporate institutions also make use of its free service,” said Onuegbu.
He believes the CDMA operators in Nigeria, unlike in North America where they are still kings would die off very soon. “Without huge financial inflow into the segment, they would not be able to invest in critical infrastructure to deliver much needed services to remain competitive,” he stated.
Aside GSM operators, CDMA operators also are confronted with competition from internet service providers (ISPs) in the delivery of data services. They would need huge financial support base to build infrastructure to carry enough bandwidth to supply broadband which is the next big thing in the Nigerian communications evolution.