The number of active telecommunications subscribers on the various networks operating in the country as released by Nigerian Communications Commission for the second quarter of this year indicated that Global System for Mobile communications (GSM) operators have continued to make impressive additions to subscribers on their networks compared to Code Division Multiple Access (CDMA) operators.
In the report CDMA operators recorded a decrease on the subscribers to their network from 9,115,165 in April to 8,658,318 as at June this year. But, GSM operators within the same period recorded an increase from 58,063,300 to 59,194,972. The implication of this is that in spite of different network expansion plans embarked upon by major operators in this space as well as promotions, Nigerians still prefer talking on GSM platform.
The issue that arises, is how can operators in this space survive in terms of competition with GSM operators bearing in mind the harsh economic downturn facing the country? This situation may have informed the recent promo embarked upon by some operators on the CDMA platform to shore up their subscriber base. Visafone and Starcomms have launched their promo campaign while Multi-Links Nigeria CommunicationsWeek gathered is planning a similar promo. In the Visafone ‘Enjoy the N0.00 advantage’ new subscribers to Visafone network will only need to purchase and activate a Haier FM phone for just N3, 333 or a Huawei C2802 model for N2, 222. The subscriber will in turn get back the full cost of buying the phones in the form of free airtime worth N3, 333 and N2, 222 respectively in three months.
More so, a subscriber is expected to use at least N200 over a 30 day period to get N1,045 worth of free airtime with 15 counts of free On-net SMS on the Haier FM phones while subscribers who purchase, activate and use up to N200 on the Huawei C2802 will get N741 worth of free airtime with 15 counts of free On-net SMS in each 30 day cycle. At the end of a 90 day period, the subscriber participating in this package would have gotten back the full price of his phone.
The free airtime is automatically credited to the phone as soon as the subscriber uses up to a minimum of N200 in a 30 days circle.
In a similar promo, Starcomms is offering two categories of mobile telephone, the ZTE X175 and the popular Haier D920, in a promotion that ultimately gives back the purchase money to the subscriber.
This new 100% money back promo by the company allows any subscriber who purchases the ZTE X175 and Haier D920 to enjoy on-net bonus airtime covering the value of the purchased phone within 30 days of their activation. The ZTE X175 phone is priced at N1,999 and upon minimum first time recharge of at least N100 (one hundred naira), the purchaser will get automatic bonus airtime and the Starcomms customer would  be able to make free on-net calls to the tune of N1,999 within the first month of activation. The same token goes to the subscribers who buy the Haier D920 for the price of N2,299 and will be able to make free calls to any Starcomms line to the value of N2,299.
Starcomms in a statement acknowledged that the promotion is coming at a time when the purchasing power of many is generally dwindling and subscribers are keen to get adequate value for their money.
Speaking on the offer, Maher Qubain chief executive officer, Starcomms, said Starcomms acknowledges the adjustments people have had to make in the last few months of challenging economic situation. “It is therefore apt for us to respond positively, as we always do, to the yearnings of our subscriber, especially students and other people in the lower segment of the economy. We have therefore made it easy for people to join the Starcomms network without having to overstretch themselves financially. This is part of our strong resolve to always bring the best offer to the reach of our teeming subscriber,” he said.
The use of this free airtime can be enjoyed by Starcomms subscriber within only one month starting from the moment of first activation. The new subscribers will enjoy this offer alongside the value-added services like the missed call notification and the call waiting options.
The introduction of Unified Access License by Nigerian Communications Commission (NCC) in 2006 after the expiration of exclusivity right given to Global System for Mobile communication (GSM) operators was what Code Division Multiple Access (CDMA) operators needed to stamp their feat in the telecommunications industry. Before then, they were operating under limited mobile access license which restricted them from operating mobile service in unified manner. They as a result concentrated on offering fixed wireless and mobile service within the state they secured license to operate. More so, if any operator wishes to operate in another state outside its primary state of operation such operator would be required to apply for a license to operate in such location. This made it expensive to operate even as they were not required to offer roaming service like GSM operators. As a result of these, CDMA operators were mere local operators who concentrated their service in Lagos and Abuja commercially viable cities. They were struggling for subscribers with GSM operators that offered broader service, basically, because a GSM subscriber can take his or her phone outside Lagos and it works in as much as such network has coverage in the location, but mobile service rendered by CDMA could not offer this service, thereby giving them advantage over CDMA service. With the introduction of unified  licensing  regime, individual service provider is allowed to offer multiple services such as mobile telephony, fixed telephony, internet services and long distance services, there are over ten operators in this space. They included Starcomms, ZoomMobile, Intercellular, Multi¬-Links Telkom, Visafone, Rainbownet, Prestel, MTS First, among others. Under the current dispensation, CDMA operators that want to play in the big league are required to operate nationally, though there is choice of playing local but most see it as not economically viable to play local which has led to most of them going for national unified access license which is the prerequisite. Playing at this level entitles having foot print in almost every town in the country to be able to garner enough subscriber base which is the basis for profitability. To do this, they require strong financial base which most of these operators does not have. This situation changed the landscape of operation in CDMA space as they had to change their operational module to be part of the moving train in the industry and has ignited a contest for supremacy among them. This saw Starcomms selling some of its equity to Actis to raise money to expand its network, since then it has secured foreign loans in this regard making it to claim the biggest in the space. The company has already invested some US$800 million since it launched its network in 2002. It set for itself a target of reaching 2.5 million subscribers by the end of 2008, 5 million by the end of 2009 and a ten fold jump to 50 million by 2011. The company was listed on the Nigerian Stock Exchange (NSE) and raised around US$60 million. “We have always wanted two sectors of the economy, they are the oil and telecommunications sectors, represented in our market”, said Binus Yaroe, the NSE general manager of listing and quotations and a representative of the director general of the exchange. The stock market floatation raised funding for the company, while also allowing two investors, Actis and ECP to reduce their holdings.
Other operators did not seat to watch their Starcomms claim subscribers in a business they are also part of and equally have opportunities of playing big. Zoom Mobile, another contender had raised N25.9billion from investors through private placement. The company currently covers 62 cities and 350 villages and has a capacity for five million subscribers.
A foremost operator in that space Multi-Links deal with Telkom of South Africa, which saw the later acquiring 75% share of Multi-Links and later the remaining 25%, was what the company needed to re-launch itself into the market. Telkom has injected funds and managerial skills to make the business profitable; this is yet to be achieved as the company is yet to start making profit. Visafone, the youngest by name in the CDMA sector of telecommunications industry emerged from nowhere and is putting up an impressive performance having emerged as the fourth largest telecommunications operator in the country in two successive quarters. The company which is brainchild of Jim Ovia, a banker and industrialist has witnessed him bringing his managerial competence which he has used to make Zenith bank one of the strong banks in the post consolidation era to bear.
It has become worrisome to CDMA operators while some of them are being heavily affected by the economic meltdown, which calls for overhaul of business module and operational strategy. Against the backdrop of NCC’s planned introduction of Number Portability, CDMA operators’ faith of survival is hanging. Ken Aigbinode, executive vice chairman, Zoom Mobile, expressed fear on what will be the faith of CDMA operators when NCC introduces Number Portability. According to him, GSM and CDMA technology are two different technologies and that the GSM technology will play well with number portability than the CDMA because the CDMA technology is customized and fixed.
Possibilities of Survive
In spite of the wide differential in the subscriber base between CDMA and their GSM counterparts there are possibilities of surviving if they apply the right business model that is relevant to the operational environment. More so, the license they are operating with allows them to deliver service with their chosen technology without barriers. They need to adopt a cost effective way of rolling out service, such as sharing of infrastructure among others.
Gbenga Adebayo, chief executive officer, Community Network Support Services Limited, alluded to this when he cited situation in United States of America, where CDMA technology is the dominant while GSM operators are trailing behind. He said that what is happening in USA is possibly to play in Nigeria especially, when the right and quality of service is provided.