Poor showing from the last couple of years may be one 9Mobile would like to put behind it as it looks for new strategies to steady its struggling ship.
Data from the Nigerian Communications Commission (NCC) show that the telecommunication company has struggled to get back on its feet in terms of recruiting data and voice subscribers to its platform.
In terms of voice subscribers, 9Mobile suffered the most loss in 2019. It opened the year with 16.3 million users and ended it at 13.6 million – losing about 2.7 million customers. Before then, the company saw a 10-month drop in subscriber number starting from March.
On the data subscriber side, between January (9,882,966) and December (8,068,175), the company saw a record 1.8 million subscribers exit its platform. Remarkably, 9Mobile which is the fourth largest telco in Nigeria did not add a single subscriber for the entire 12 months.
Apart from not adding a single subscriber for the entire 2019, 9Mobile has also gone for about three years without seeing a new subscriber; instead, it lost more than 8 million subscribers between 2016 and 2019.
Sources close to 9Mobile told BusinessDay that current owners are having a difficult time finding a buyer for the telecom company in desperate need of new investments.
“The company really struggled after the banks took over because of the debt,” one of the sources who asked not to be named told BusinessDay. “People running it now are looking for a buyer. It is a royal mess. They will sell but the value keeps dropping daily.”
Experts have suggested three options before the telecom company to attract the investors it needs.
New spectrum bands
Mayowa Owolabi, convener of Mobile Monday Nigeria, told BusinessDay that 9Mobile requires additional investments in spectrum.
Spectrum is the name given to a range of radio-waves used for communication purposes. This includes FM or AM radio broadcasts that people listen to on their way to work, and even other wireless forms of communication like Bluetooth and WiFi. Smartphones also use same radio waves to transmit data.
If anyone could broadcast signals at any frequency, there would be total chaos, and it would lead to a lot of interference, effectively rendering the spectrum useless for any kind of meaningful communication. That’s why the spectrum gets divided into bands by the government. Mobile networks and carriers in Nigeria began with two GSM bands with 2G capabilities and I UMTS band with 3G capabilities. This has since grown to include bands with 4G capabilities such as LTE 700 (28), LTE 800 (20), LTE 900 (8), LTE 1800 (3), and LTE 2300 (40).
By the time it left Nigeria, Etisalat handed over three frequency bands to the new owners of 9Mobile. Currently, the company also supports band 3 (1800MHz), a 4G LTE network. While the company has invested resources trying to push this band across the country, it is no match to MTN which controls a far more superior band 7 (2600MHz) and 20 (8000MHz).
Telecom spectrum starts from 800MHz and goes up to 2300MHz. Beyond that, it starts getting into the bands used for technology such as Wi-Fi and Bluetooth – Wi-Fi used to be 2.4GHz (2400MHz) and has started to shift to the 5GHz band.
Cashing in on PSB approval in principle
Last year, it looked like 9Mobile hit a bull’s eye in the chase for the mobile money market in Nigeria when the CBN granted it an ‘Approval in Principle’ for a Payment Service Bank. However, an Approval in Principle (AIP) does not mean the CBN has granted the licence. It is merely a stepping stone and an indication that the regulator is willing to issue the licence subject to specific conditions.
In the meantime, an AIP gives 9Mobile leverage to start positioning itself for the mobile money market. Unfortunately, since September when the CBN issued the approval, little has been seen in terms of plans by 9Mobile regarding the space.
New products and equipment
9Mobile maintained a stoic silence on investment for the greater part of 2019, but the telco would need to invest in equipment for 5G, more base stations and possibly launch new products and conduct promos like other networks, said Owolabi of Mobile Monday Nigeria.
Adedeji Olowe, CEO of Trium Network, a venture capital firm, said 9Mobile requires “massive cash investment to expand the network, upgrade the equipment, drive a massive marketing campaign, develop innovative products”.
Down memory lane
In June 2017, Etisalat Group terminated a management agreement with its Nigerian arm and gave the business time to phase out the Etisalat brand in Nigeria. This was a result of Etisalat Nigeria’s failure to reach an agreement with a consortium of 13 Nigerian banks to renegotiate the terms of a $1.2 billion loan it obtained in 2013.
The company’s inability to repay the loan it collected was reportedly caused by Nigeria’s currency crisis which overshadowed the country’s economic outlook two years prior to the default. Intended as a medium-term seven-year facility to fund the company’s network expansion, the value of the $1.2 billion loan spiked after Nigeria devalued its naira due to difficult economic climate.
Following the exit of Etisalat, a number of suitors came calling. Leading the line was Teleology, a special purpose vehicle comprising telecom industry veterans and led by Adrian Wood, pioneer chief executive officer of MTN Nigeria.
Expectedly, Teleology got the NCC approval, but the company ownership only lasted two months before it was over. Teleology reportedly said it pulled out because it was becoming “increasingly uncomfortable” as parties to the deal were taking actions outside of the agreed business plans since its takeover. The company is currently being managed by Emerging Markets Telecommunication Services (EMTs).
A telco’s best investable asset is the number of subscribers it can boast of. The bigger the number of active subscribers it has the more attractive it is to would-be investors and vice versa. In 2018 when the ‘For Sale’ sign was up for 9Mobile, it could boast of between 10 million and 11 million internet subscribers. Also, costs to provide attractive products necessitate a large number of consumers and revenue and regulated industry make it difficult for small players to build sustainable competitive advantages.
“It is all about scale and scale will suggest that if 9Mobile has a customer base in the region of 7-8 million subscribers, then they should be looking to grow that at least to double to justify their existence,” Olusola Teniola, president, Association of Telecommunications Companies of Nigeria (ATCON) and national coordinator Nigeria, Alliance for Affordable Internet (A4AI), told BusinessDay.
