Nitel (MTEL) GSM Network Expansion, Nigeria
Nitel is one of the largest telecommunications companies in Nigeria. Established in 1985 and fully commercialised in 1992, the company is government owned but in 1996 was split into its terrestrial line (Nitel) and Nitel GSM (MTEL) components so that the two branches could focus on running two very different businesses.
Since the split the MTEL network has been going through a series of phase expansions to increase the coverage of its GSM network further across the nation’s cities and townships. There are now 20 million mobile subscribers across Nigeria but MTEL is still only the third largest mobile operator with 500,000 and there is much potential for growth.
OLD PROBLEMS FOR MTEL
The company managed to install a viable GSM system in 2001 to 2002 but has been plagued by connection problems, corruption and the inability to reach cross network agreements with the two largest Nigerian mobile concerns, V Mobile (formerly ECONET Wireless) and MTN who wanted exorbitant amounts of money from MTEL for each call carried from an MTEL caller to one of their subscribers.
From mid 2003 MTEL (NITEL GSM) was run by Pentascope International of the Netherlands under a three-year contract (who received US$4m per year for their efforts). The Pentascope contract has now expired although the company did turn MTEL around and make it a profitable enterprise for the Nigerian government to sell off.
The Nigerian government has always intended to sell NITEL and MTEL but up to 2001 they found no buyers. Finally in July 2006 they struck a deal and sold 75% of both of the companies to Transcorp for $750m. Transcorp, a Nigerian multi-national, multi-sectoral conglomerate emerged the winner in a negotiated bid, beating six other companies to the sale. Ndi Okereke-Onyiuke, Chairman of TransCorp said the company would invest over $1bn to turn NITEL and MTEL around and that TransCorp had secured €1bn at 4% interest from the European Union Development Council (EUDC) to fund the acquisition at a minimum cost.
TransCorp has now entered into a Memorandum of Understanding (MoU) with British Telecom for services in the management and operation of NITEL and MTEL during the turn around. After trading off 75% of its stake in MTEL, the Federal government said it would soon return to the market to sell the remaining 25% to Nigerians through Initial Public Offering (IPO).
TELECOMMUNICATION INDUSTRY DEREGULATION
Nitel was formed in 1985 from a merger between Post and Telecommunications (P&T) and Nigerian External Communications (NET). The company even predates the controlling body the Nigerian Communications Commission (NCC). In 1992 there was a formal deregulation of the industry by the NCC.
This development led to the emergence of licensed Private Telecommunications Operators (PTO). While other PTOs flourished in the relatively free market, Nitel seemed to be held back by a mixture of bureaucracy, corruption and poor business decisions.
In 2001, Nitel awarded a contract to Ericsson to deliver a GSM network with a capacity of 118,000 lines for subscribers. The network was rolled out very quickly to provide coverage to major cities such as Lagos, Abuja, Kaduna, Kano, Ibadan and Port Harcourt, but after the first year of GSM services the company had only 10,000 subscribers.
In July 2003 Ericsson was awarded a contract for $53m for a further round of expansion and upgrade to provide 400,000 lines for subscribers. As of mid 2004 the expansion had been completed and MTEL had 120,000 subscribers compared with over two million for V Mobile and MTN.
MTEL however has now turned things around by increasing its efficiency and improving the network management systems which were previously losing the operator valuable revenue. The network has undergone a series of expansions to take the GSM network to a further 13 cities and 776 government areas in Nigeria. The contracts were awarded to ZTE of China, Motorola and Ericsson in late 2004 and were completed by mid 2005.
The company also had plans for GPRS on the network by mid 2006 and these were achieved with GPRS now established right across the network. It awarded Motorola a $33m contract to begin the rollout of a new CDMA2000 1× network. This was awarded in May 2006 and was up and running by the end of 2006 in the major cities.
In December 2006 Motorola was awarded a further GSM expansion contract by MTEL worth $75m. The scope of the expansion project covers installation, commissioning and the upgrading of sites in the cities of Benin, Ikorodu and Yola. With this full turnkey project, Motorola is now offering MTEL their network integration services to enable rapid and seamless deployment of all network elements..
Medallion Communications installed Intec software solutions to support multi-operator interconnect billing clearing houses across Nigeria in August 2005. Intec Telecom Systems is now the leading OSS (Operations Support Systems) software vendor for fixed, mobile and next-generation networks in Nigeria.
Medallion Communications is an interconnected clearing house for all telecommunications service providers in Nigeria. This means a combined interconnect transiting switch and interconnect settlement scheme under one platform. Medallion Communications installed Intec’s InterconnecT and Inter-mediatE solutions at MTELS headquarters to support its inter-carrier settlement operations.