CHAPTER ONE

INTRODUCTION

1.1         Background to the Study

The history of the Nigerian Telecommunication Industry can be divided into three phases (Okere, 2012). The first (sluggish) phase began from 1985, when Nigerian Telecommunications Limited (NITEL) was established till the time when the Nigerian Communications Commission (NCC) was established in 1992. The second (fast) period spanned through 1992 to 2000. This period witnessed deregulation agenda that led to the launch of the National Policy on Telecommunications. The third (supersonic) phase commenced in 2001 and continued to the present day. Mobile cellular services started on the Nigerian market in 1993 with the introduction of Mobile Telecommunications Services (MTS). The MTS was a joint-venture between NITEL and Digital Telecommunications of Atlanta. The two companies offered voice services, voicemail, and paging, from three switches (in Abuja, Enugu, and Lagos), with a joint subscriber base of 12,500.

The auction for Digital Mobile Licenses (DML) conducted by NCC in January 2001 brought about the emergence of three mobile operators. These companies are Econet Wireless now Airtel, Mobile Telecommunications Network (MTN) and MTel (a subsidiary of NITEL) while a fourth DML was issued to Globacom in 2002 (Baez et al., 2010). In order to foster market competition a fifth Mobile License with GSM spectrum was awarded to Etisalat, in 2012. Through the award of DML and subsequent introduction of unified access service licenses  in  February  2006  (which  replaced  all  existing  licenses),  NCC  facilitated  a phenomenal expansion of subscriber from about half a million connected lines in 2000 to over one hundred and thirty-four million connected lines as in September 2014 as shown in 1

Figure 1.1 (NCC, 2014). In addition, several licensed operators (including Airtel, Etisalat, Globacom, and MTN) have launched third-generation (3G) services in Nigeria. Figure 1.2 shows the market shares of Global System for Mobile communications (GSM) network operators in Nigeria as in September 2014 (NCC, 2014).

Subscribers (in millions)

140

100

126

90

112

80

96

70

Teledensity

56

40

84

60

70