Nigeria: More Investment Coming for Phones' Data Despite Insecurity and Erratic Power Supply

With recent moves in the adoption of rapid data-carrying smartphones, phone companies are planning to invest at least $5 billion in Nigeria. Nigeria is combating myriads of crises affecting mobile communications. The most central threat to the carriers comes from Islamist militants called Boko Haram as well as erratic power supply. The insurgents target phone company installations and well have killed thousands as well as destroyed massive properties.

The number of Nigerian smartphone users has been projected to increase to more than 35 million in 2017 from 5.6 million at the end of last year, according to researcher Informa. About 10 percent of Nigerian wireless subscribers use smartphones today. “Voice will remain the major chunk of revenue, but data is where the growth is,” Airtel’s Ogunsanya said. His company says its Nigerian business will expand at 10 percent or more this year.

The threat of bomb attacks is almost the biggest challenges facing wireless operators in Nigeria. Some days before Christmas in 2012, two suspected Islamist militants killed themselves in separate bombings that rocked offices of Airtel and MTN Group Ltd. (MTN) in northern Nigeria. MTN added 1,175 3G sites in Nigeria in 2012, almost triple its installations the previous year, while doubling capital expenditure in the country, according to the company. MTN also operates in Yemen, Iran and Afghanistan,

“It’s becoming increasingly challenging to operate” in areas where rebels are active, Segun Ogunsanya, CEO of Bharti Airtel Ltd. (BHARTI)’s Nigerian unit, said by phone. “We are not security experts,” he told Bloomberg. Nigeria remains Africa’s most populous country and is expected to grow by 7.2 percent this year, versus an average of 5.6 percent for sub-Saharan Africa, according to the International Monetary Fund. It is a major market in Africa with a population of about 160 million.

Nigeria's mobile market is also the continent’s biggest, at 114 million subscriptions. That will grow to more than 200 million subscriptions by 2017, researcher Informa Telecoms & Media predicts. The militants continue to threaten the existence of the service providers.

MTN, Nigeria’s biggest mobile-phone provider, in April said it secured a $3 billion loan to invest in the country. Globacom Ltd., the No. 2 carrier, is investing $1.25 billion to upgrade and expand its network in Nigeria. No. 3 Airtel has invested $1.2 billion in Nigeria since 2010. Emirates Telecommunications Corp. (ETISALAT), the fourth-largest carrier in the country, said its Nigerian unit has secured a $1.2 billion loan for expansion.

The numerous and fearsome attacks have drastically reduced since the declaration of the state of emergency by President Goodluck Jonathan in Borno, Adamawa and Yobe states but the Islamists did not give up though; this time, mainly targeting students. Phone services which were suspended to break the communication links of the insurgents have also been restored following improvement in the security situations of these states.