Babafemi Akinkugbe

1490340

MTN Nigeria is part of the MTN Group that has various subsidiaries in various
part of Africa and has its headquarters in South Africa. They are a
telecommunication company that prides itself as Africas leading Telecoms
Company. On May 16, 2001, MTN became the first GSM network to make a call
following a Nigeria GSM auction conducted by the Nigerian Communications
Commission earlier in January 2001 and paid $285 million (two hundred and eighty
five million dollars) to secure one of four GSM licenses in Nigeria. (MTN, 2015)
Thereafter, the company launched full commercial operations beginning with
Lagos, Abuja and Port Harcourt. Upon resumption of operation in the country the
regulatory body of Telecommunication in Nigeria, NCC (Nigeria Communication
Commission) set out laws and regulation to govern the administration of telecom
service in the country. These laws and regulation were put in place by the Nigeria
Communication Act which was signed into law by the then President of Nigeria,
Chief Olusegun Obasanjo (GCFR) on the 8th of July 2003 after being passed by both
Houses of the National Assembly.
Laws and Regulations under which MTN Nigeria must operate are stringent
to the laws of the Nigeria Communications Commission. Some Key laws and
regulations include;
Quality of service: This regulation was modified in 2012 and it lists the
expectations of the commission and the responsibility of the company to its
consumers in terms of access of service, quality of service standard, ensuring
consumers get fair practices in matters relating to tariffs and charges, the
availability and quality of communications services, equipment and facilities.
Registration of Telecom subscribers: Registration of telecom subscribers holds
sway in the key Regulations of the NCC under which MTN Nigeria must operate.
Under this regulation, there is the regulation on activation of new subscriptions,
Registration of existing subscribers, Registration of Foreign Subscribers,
Deactivation and deregistration of a Subscription Medium, Prohibition of proxy
registration, Number of Subscription Mediums, Liability for Subscription Medium, it
also gives the penalties for failure to comply.
Mobile Number Portability: In this type of regulation Telecoms companies are
required to adhere strictly to the general porting guidelines which analyses what
should be done in terms of subscriber interface, porting eligibility, distribution of
porting eligibility and request forms. It also reiterates the need for the operators
relationship with other telecom companies when issues of porting arises. It carefully
states the rights and obligation of both donor and recipient operator. This regulation
also outlines the guidelines to follow when disputes of this nature between telecom
companies arises.

Code of practice regulation: The specific objectives of this Regulation is to

confirm and clarify the procedures to be followed by Licensees in preparing
approved consumer codes of practice in accordance with section 106 of the NCC
Act; and to determine and describe the required contents and features of any
consumer code prepared by, or otherwise applicable to, Licensees.
Regulations on Annual Operation levy: The regulation on annual operation levy
is one of the key rules and regulation of the NCC to MTN Nigeria and other telecom
companies in the industry and it states that;
Every Licensee that is a Network Operator shall pay to the Commission an
Annual Operating Levy assessed at two and a half percent of the Licensees Net
Revenue for the relevant period being its Gross revenue less its Roaming,
Interconnect and Bandwidth Costs for the period. (NCC, 2014)
The failure by a Licensed Telecom operator to pay its Annual Operating Levy as at
when due attracts a general administrative fine in addition to the daily fines
stipulated in the enforcement act of the NCC.
(NCC, 2014)

The Economy
How does the state of the economy influence the sales of this companys
products?
The telecommunications sector was deregulated in 1992 and it was to pave way for
private sector participation in the sector with the aim of expanding the nation's
communication facilities.
MTN Nigeria was one of the first Telecommunication companies that birthed in
Nigeria. Their establishment was borne out of the necessity for the country to join
up with the rest of the world in the advancement of communication technology. It
was at a time the economy of the country had just witnessed a dynamic turn around
in the administration of affairs. Nigeria was enjoying her third year of
uninterrupted democracy and as such the emergence of MTN in Nigeria was
largely accepted and an immediate sporadic increase in the sales of their products
as their services were heavily demanded.
This marked a turnaround in sales and market dominance for MTN Nigeria who soon
became the largest telecommunications company in Nigeria. MTN Nigeria currently
holds the largest number of subscribers with about eight million subscribers. With a
population of more than one hundred and seventy million, the Nigerian GDP at
purchasing power parity (PPP) tripling from $170 billion in 2000 to $451 billion in
2012 in an emerging economy, Telecoms operators have exponential increase in
sales with no negative turnover and they continually expand. Whereas, there is still
an emphatic clamor for communication to spread to all parts of the country.

The liberalization of the economy has resulted in an increase in investment,

especially foreign direct investment (FDI) in telecommunications infrastructure,
which has consequently boosted productive and employment in several segments
of the economy. (Adegbemi, 2013)
Nigerias economic indicators are favorable to foreign investors and investments
thus, Telecom operators have been able to tap into the potential of the economic
developments and reforms currently taking place in the country and grow their
businesses.
Tax breaks were given to MTN Nigeria upon commencement of operation which
allowed them maximize profits, this allowed the company to create an asset base
that currently runs into billions of dollars.
The Trend with Telecommunication was picked up quickly and soon almost all
Nigerians wanted to have an MTN phone and sim card as it was sold together. The
prices for this service was at a premium and only for the middle and upper class but
has soon become a necessity rather than a luxury. It however set the tone for other
companies coming into the industry.
With the economy in an unstable situation, the profit margin from the past year has
been dwindled this year as many are not spending on some of the Value added
services that seem to complement the brand and in turns generates more profit for
the company.
Exchange rates are low and import duties have gone up almost 200%. For a
company that is a multinational with branches in other parts of Africa and some part
of the Middle East, procurement of essential equipment to upgrade their facilities
and rev service quality has been considerably slow and more expensive than it used
to be. This doesnt allow for a significant increase in profit margin.

Technology
What new Technology affect the company you have selected?
MTN Nigeria installed a digital microwave transmission system, the 3,400 Kilometer
Y'ello Bahn was commissioned by then President Olusegun Obasanjo in January
2003 and is reputed to be the most extensive digital microwave transmission
infrastructure in all of Africa. The Y'ello Bahn has significantly helped to enhance
call quality on MTN network. (MTN, 2015) Since 2003 till date several upgrades have
been made to the companys technology.
These upgrades have been able to accelerate growth in e-commerce, financial
services, media and entertainment and lifestyle services. MTN recently acquired
Visaphone communication limited, a CDMA company, to boost 4G LTE service in the
country. This move has further given the company an edge over others in the
industry as MTN Nigeria will be the first non CDMA Company to have 4G LTE service.

Also, MTN partnered with Alcatel-Lucent, an ICT company that specializes in IP

networking, ultra-broadband access, and cloud technology. Alcatel-Lucent was
contracted to build a 100G DWDM/OTN network using Alcatel-Lucents 1830
Photonic Service Switch (PSS) platform, a family of equipment that has been
designed according to the latest international SD-FEC zero touch photonics and
coherent technology. This influx of new technology has helped MTN to stay ahead of
many of its competitors when it comes to data exchange amongst consumers.
Telecommunication Companies are heavily dependent on technology and it could
either improve their service as well as customer base but it is the responsibility of
the company to provide new, reliable and cost effective technology.

Demographics
What changes in population might affect the companys data base?
Companies want to maximize profit but more still want to remain relevant through
the tide of time. This further reiterates the need to have constant market surveys so
as to understand the needs for the target market and adapt to the current trend
being set.
Nigeria is a country with an increasing population rate. The company will hope for
people in the age group (age 15 45) to align with their services. Many of the older
age groups (ages 46 80) use the service for receiving and making phone calls,
sending text messages and occasionally emailing. This sparks the need for the
concentration on the more hip and trendy to deliver most of its services to.
However the Company tries to ensure that it retains its customer base as the
demographics change with conscious effort to keep educating people on new
services available. Mortality rate will affect population thus, affect the demographics
of target customers. The rate of new births in the country will affect the companys
data base positively while the reverse is the case for deaths recorded.
The level of education and skill set in technology has grown massively, the company
cannot offer a product without properly considering how the customers are going to
receive it as compared to what was obtainable when they started operations in
2001 whereby, the company had outrageous call rates. There are more people
engaged in learning more about new products and services that best suit them. As
young professionals emerge on a daily bases, the company tries to constantly
adjust with the type of value added service to push out. Age groups also defined
how the company operates and has tremendous effect on the customer base of the
company. The company is now forced to cater to the very young minds in the hope
to captivate them with enticing offers, from lower call rates to bonuses on
purchases made to increase customer base
Therefore, the current labor force has grown beyond the initial ages of 15 65 as
stipulated by the Nigerian Labor Congress. Now everyone is an entrepreneur and

the zeal to take up the best network connection for business is paramount in the
minds of many Nigerians young and old alike.

Social Issues
What changes in society affects the market for your companys product?
Nigeria has become more aligned with the west in terms of what kind of products
they want, who is going to use the products and how they want it to operate. This
creates a change in the way Nigerians and Nigeria assumes services being offered
them.
However, some parts of Nigeria still did not want the communication technology of
this modern day in their towns and villages as they believe it exposes themselves
and their children to uncertainty. In these parts of Nigeria MTN Nigeria has devised a
means of penetrating their ideas by helping kids from these rural areas get access
to schools to read and write gradually introducing the young ones to technology and
the power of it thereof. These efforts by MTN Nigeria has yielded positive results as
most of these rural communities now identify with the network. This identification
runs deep that leaders of these communities do not want any other telecom
company to establish any kind of base in their land except for MTN. Many in these
areas can now keep in touch with their loved ones in the cities.
This has boosted the credibility and reach of the company, amassing more
customers to their database therefore, surpassing the bench mark for subscribers.

Suppliers
How does your companys relationship with suppliers affect profitability?
MTN Nigeria has been on the forefront of partnering with several suppliers to ensure
the relativity of their network and expand the influence of their services on the
everyday life of their customers. With a strong supply network with mobile phone
manufacturers and distributors, MTN has been able to personalize some services
that has made the company more relevant in todays telecoms industry. Direct
involvement of their value added services department has more than tripled the
companys profits.
Consequently, MTN Nigeria maintains a solid business relationship with suppliers of
their Value added services which bolsters their accessibility and ability for them to
reach out and cater to more of their subscribers needs, this is visible by the amount
of VAS available to their customers through MTNs platforms.
Some of this Value added services and their suppliers include TV on the Go powered
by DSTV which was launched in 2015 and thus, making MTN become the first
cellular network in Africa to offer its subscribers an opportunity to watch television,

while on the move, from their mobile devices. Yello Health Insurance scheme
supplied by the National Health Insurance Scheme (NHIS) allows MTN subscribers to
gain access to pre-defined treatments and also the freedom to choose their own
Health Maintenance organization (HMO), and healthcare provider from over 6000
registered partners across Nigeria.
Furthermore, MTN maintains a leadership stance in terms of the many Value added
services aligned with the brand which gives their customers a wide range of
services to choose from as well as use in their everyday life.

Competitors
What Companies compete with the firm you have selected? Do they
compete on price, on quality or on other factors?
Several new mobile telecommunication companies have emerged in the country
since MTN the major ones include Airtel, Globacom and Etisalat. These companies
have increased peoples access to telephone services, in addition to providing a
variety of telecommunications services such as Ethernet, Small Messaging Services
(SMS), Global System of Mobile Communication (GSM) and mobile banking. While
MTN Nigeria prides itself as the leading telecommunication brand in Nigeria,
Globacom prides itself as the first indigenous mobile telecoms firm, some would say
Etisalat is Nigerias fastest growing network while Airtel has been dubbed the
peoples network.
Competition between these major brands stem from tariff rates, quality of service
and even societal influences.
Tariff Rates; Call rates in Nigeria has dropped considerably unlike it was when MTN
Nigeria were the major telecommunication company offering the service. Call rates
in Nigeria as at 2003 is 20 times less than what call rates are today as competitors
in the industry tirelessly try to upstage the other.
Quality; This

New entrants
Are new competitors to the company likely? Possible?
The market for telecoms in Nigeria keeps growing daily. Though, MTN Nigeria are by
subscriber base the largest network in Nigeria they only account for about 40% of
the Nigerian population. There is constant education going on and other
Telecommunication companies are digging into the potential of the large population
trying to get more subscribers to use their services.
New Telecommunication firms arise regularly to compete with MTN Nigeria.
Currently there are other companies in the industry making giant strides at offering
customers a new appeal in their communication lives. Airtel Nigeria, Globacom

Nigeria, Visa phone, Smile, Swift Communications, Multilinks Telkom etc. are just a
few of the other establishments after MTN Nigeria began operations. Since 2001 till
date, the telecommunication industry in Nigeria has experienced tremendous
changes and transformation as new firms come in to offer services in direct
competition to MTN Nigeria.
However, there is strong competition being faced by MTN from others in the
industry with more to come.
Besides, all the Telecommunication companies currently in existence in Nigeria
accounts for about 65% of the total Nigerian population. There is a large number
still to be exploited. In todays global world where the next competition could come
from the next door neighbor, it is not only likely but possible MTN Nigeria will face
new competition apart from the ones on ground.
Government still canvasses for foreign investment in the Telecoms industry as there
is a lot to be exploited if communication is to reach its full potential in the emerging
economy of Nigeria.

Substitutes and complements

Is there a threat of substitutes for the industries existing products? Are there
Complementary products that suggest an opportunity for collaboration?
In an industry such as Telecommunication there are always close substitutes and
complementary products and services. Close substitues to MTN Nigeria include
Globacom, Airtel Nigeria and Etisalat. These other companies also hold majority
stake in the telecom industry.

Customers
What characteristics of the companys customer base influence the
Companys competitiveness?
To remain relevant in the industry MTN Nigeria carefully mapped out their major
consumer market trying to capture both the young and the older generation.
Knowing that other Telecom companies strategize majorly around the youths, taking
into consideration the demographic characteristics, which identifies the age of their
consumers in the 18 to 24, 25 to 34, 35 to 54, 55 to 65, and 65+ age groups.
Companies identifies these demographic characteristics through market research
surveys used to discover which demographic groups comprise the majority of their
customer base.
However, Consumer behavior is quite predictable when you understand your market
and seem to carter to the yearnings of the consumers.
MTN Nigeria has been able to secure about 40% of the entire Nigeria population
owning to continuous at driving new innovations. This has made many youths to

identify with the company as their major source of communication. This enables the
company have more of the working labor force on their platform. Many, young
professionals see MTN as the most stable mobile network and thus, stuck to the
network despite pressing offers from competitors.
Young people using the network

References
Adegbemi, O. (2013). Academia. Retrieved from Academia:
http://www.academia.edu/3215145/Impact_of_Economic_Reform_on_the_Nige
rian_Telecommunications_Sector
MTN. (2015). About MTN. Retrieved from Mobile Telephone Networks:
http://www.mtnonline.com/about-mtn
NCC. (2014, July 29). Nigeria Communication Commission. Retrieved from NCC:
http://ncc.gov.ng/index.php?
option=com_content&view=article&id=74&Itemid=89