Nigeria rises

But regardless of the power supply, base stations in Nigeria also need protecting from threats such as theft and vandalism, particularly in more remote sites. "We get equipment and infrastructure damaged, with people steeling our generators and stealing our fuel," he says.

At some remote locations, maintenance staff have been physically prevented from reaching base stations by people attempting to extract bribes to let them pass.

Like many other countries in the region, Nigeria's mobile sector is almost completely pre-paid, a situation that leads to significant levels of churn between the main operators.

"There is not a lot of customer loyalty," Goodluck says. "It means that subscribers are quick to churn based on little pricing differentials or other promotions, so it has been a challenge handling that."

One of the main ways to cope with this, according to Goodluck, is to ensure that "you are connecting a lot more than churning." Churn itself can be reduced through various management initiatives to keep it "within acceptable percentages."

Aside from these issues, operators also have to navigate a complex tax system that involves paying taxes at three levels, to the federal government, state government and local government. "At each of these levels there are taxes and levies. We are targeted for lots of taxes and levies as a telecom operator and we have been fighting this for a long period," Oparah says.

These challenges, which effectively mean that Zain is running "a GSM network, a power network, and a security network," led the operator to look at outsourcing as a means of cutting expenses and allowing it to focus more on customer services and strategy. The company signed a five-year outsourcing deal with Ericsson in 2009. "Following this we do not have direct responsibility for the maintenance of the sites now, Ericsson takes care of site maintenance, and that has significantly reduced our direct impact," he says.

To further increase efficiency, the GSM operators are also increasingly looking to share cell sites, allowing them to share the burden of fuel and security costs. "We currently share some base stations with MTN, we have an ongoing agreement with them and we are in discussions with other operators as well," Emeka says.

Data demand

While mobile voice and text messaging remain by far the biggest revenue drivers in Nigeria, the main mobile operators are optimistic about the potential of 3G data services in the coming years.

Mladen Risticevic, Nokia Siemens Networks' Nigeria country director, says that data demand is growing and is becoming the main factor for operator's market share growth. MTN, the number one operator has the widest 3G coverage in country with 1700 sites, he says.

"Zain and other operators are moving towards the same strategy, for example Zain is planning to deploy 1500 data sites within the next two to three years in order to increase its market share and customer satisfaction," he adds.

The operators themselves also seem to be optimistic about data, although they concede that it remains in its infancy compared with the overall mobile market.

"It has been very exciting and it is probably better than most had hoped," says MTN's Goodluck. "For sure, voice will remain key, but data is a very ambitious crown prince. 3G is doing quite well in the market now.

 "We expect that things will really take off when we begin to see the fibre optic cables bringing bandwidth into Nigeria, landing perhaps in the second and third quarters of 2010, this will impact prices and improve the quality of the services. At that time, I think we will really see data really take off with 3G as the primary platform for that."

Goodluck admits that Nigeria has suffered owing to its limited bandwidth capacity, but that this is set to change with the coming of three cables into Nigeria. "We are pretty confident that bandwidth prices will come down significantly and of course this will impact data plans."

Oparah agrees that most demand is currently for voice and text messaging, although data services are picking up in metropolitan areas, he says. He describes 3G type data services as representing "the next level" for the operator.

"We currently have many initiatives for demand creation, so of course the demand for data is improving."

Just as a lack of fixed infrastructure led to a market dominated by mobile communications, so the same trend may also apply to data services, according to Noel Kirkaldy and Raphael Udeugo, of Motorola.

Udeugo, Mototola's African director of sales, said that operators are already considering the future of data, and that LTE is being tried by some of the operators in Nigeria. "Definitely operators are looking at LTE and WiMAX as we speak," he says.

Kirkaldy, Motorola's director of solutions marketing, adds that operators interested in providing broadband services in the urban, suburban and rural areas could benefit when new spectrum becomes available.

He adds that new spectrum could allow operators to bypass 3G upgrades altogether in favour of a leap to technologies such as WiMAX and LTE, allowing them to "potentially get ahead of many other markets and put Nigeria on the front foot rather than playing a catch-up game."

Udeugo says there is a plan to auction spectrum for WiMAX later this year. "I think between 2011 and 2012 we are going to see a turning point of broadband being able to serve demand in Nigeria," he adds.

While wireless technologies are likely to pick up the demand for data services, fixed infrastructure will probably become more widely deployed as demand continues to rise, Kirkaldy says.

 "Once people access the broadband, the one thing that increases exponentially is the bandwidth and that will be the justification for operators to roll out fibre solutions in the coming years," he says.

Zain is already pushing in this direction. The operator has a 4000 km fibre optic ring, due to increase to 4,600 km this year. Capacity on this infrastructure, which has an East to West range, and an East to North range, will be sold to the other operators, an initiative that looks set to put yet more pressure on Nitel.