Etisalat, Alcatel-Lucent Sign Network Development Contract
Nigeria ' s fourth largest mobile network operator , Etisalat Nigeria , has selected Alcatel-Lucent for part of the next phase of its network improvement strategy. According to Etisalat Nigeria ' s CEO, Steve Williams, t he agreement, which was signed in December 2012, is a significant step towards solving the poor quality of service (QoS) issues that have plagued Etisalat ' s operations. Etisalat is keen to leapfrog its nearest rivals in the mobile market and BMI believes high QoS standards are a key element of its gro wth strategy.
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Although full details of the contract have not been disclosed, Williams revealed that Alcatel-Lucent will be heavily involved in the operator's planned deployment of 1,000 new base stations in 2013. In December 2012, Etisalat said it would spend around US$400mn in 2013 to expand and upgrade its infrastructure to cope with strong subscriber growth and usage on its network. Etisalat has been working closely with Alcatel-Lucent since it launched commercial operations in Nigeria in 2008 and the latest contract is reportedly the sixth major agreement between both companies. The operator also identified Chinese vendor Huawei Technologies as a technology partner for the network improvement project.
Etisalat's network improvement strategy is in line with BMI's view on the increasing significance of high QoS standards, as opposed to promotions-driven growth, in the long-term outperformance of Nigeria's mobile market. This view is supported by strong subscriptions growth and increasing regulatory oversight of operators' network quality. According to the regulator's data, Nigeria's mobile sector recorded net addition of 11.626mn subscribers during 9M12, putting significant strain on existing network infrastructure. Total subscriptions at the end of September 2012 were 106.8mn, a number expected to reach 117mn by the end of 2013 and almost 147mn by 2017. In mid-2012, telecoms regulator the NCC imposed a NGN1.17bn (US$7.4mn) fine on the country's four GSM service providers for poor quality services and has threatened to impose new fines if there are no noticeable improvements.
We expect investments in network infrastructure to continue over the next few years, despite the downside risks posed by high rollout and maintenance costs and security challenges in some parts of the country. Meanwhile, the selection of Alcatel-Lucent for part of the project caps a hugely successful year in Africa for the equipment vendor. BMI notes that Alcatel-Lucent won major contracts across the region in 2012, including LTE network deployment contracts in Tanzania and Uganda, a fibre-optic cable rollout contract in Tanzania and a contract to deploy a new backbone network to support Airtel's mobile broadband services across its 17 markets in Africa.