Zoom Mobile, Starcomms, Others Were Programmed to Fail

Nigeria mobile code-division multiple application (CDMA) mobile sectors is going through tough times and there appears no end in sight soon since government is not forthcoming with either a bail-out plan nor working out any mergers/acquisition scheme for the ailing firms.

Collins Onuegbu, a systems analysts and managing director of Signal Alliance Ltd, a full IT services company in Lagos told Nigeria CommunicationsWeek that the CDMA sector was programmed to fail when the Nigerian Communications Commission (NCC) initially adopted regional licensing for the CDMA operators; while opening up the market of universal licensing for the GSM mobile operators.

“The CDMAs are failing because their business model was flawed from the beginning. From the very beginning when the NCC decided to give them regional licences and the GSM operators were offered universal licence, it was evident the CDMAs will fail.”

“Nigerians are very mobile people and the very essence of the mobile phone is for you to connect wherever you go and there is no way you’d buy a phone that guarantees you connection only in Lagos and whenever you’ re out of town, you needed another system. So why not buy the one that connects you continually and leave the other one out of budget? So you see, the CDMAs cannot compete with that model of business in an environment like ours,” said Onuegbu.

He stated that elsewhere where copper (cables) are used to connected fixed lines, the model for regional licensing could work, but not in Nigeria where all the cables have either been dug up through road constructions or stolen by vandals.

Onuigbo noted that since the GSM operators had a heads-start, it opened windows of financing for them too which the CDMAs were shut out from.

“The CDMAs because of their regional operating licence couldn’t access bank financing or further investment for expansion and the resultant effect is that they’re dying one after the other.”

Starcomms PLC, the only telecom operator on the floor of the Nigeria Stock Exchange (NSE), is also not spared the meltdown as they struggle to remain afloat.

A recent attempt to merge with three other operators to form a medium size CDMA operator appear also to have hit a brick wall.

“I think Starcomms went to the stock market rather too early. They hadn’t spent enough time in the market to authenticate their real value. They needed to have been tested and trusted by investors. So that affected their market value and capitalization drive,” Onuegbu enthused.

Signal Alliance also has strategic affiliation with Microsoft, SAP, Cisco, CA Technologies and was recently rated the 27th fastest growing (non-listed) company in Nigeria by Michael Porter’s All World Network Nigeria Fast Growth 50 list.