Nigeria kicks off mobile competition

Nigeria has just one phone for evey 250 people

Nigeria's state telecoms company Nitel has been left in the dust by two new mobile phone networks, after it failed to meet a government deadline to start its own mobile phone services.

All three companies were meant to open their new digital networks for business by 9 August, but only the two private operators managed to do so. The licences to operate in Nigeria cost them each $285m (£200m).

The new networks operate on the GSM standard, universal in Europe and used in total by over two thirds of mobile users the world over.

But Nitel said its impending privatisation - due in September, for which 16 companies have expressed an interest - had made it miss the deadline.

And it warned it could be months before its 1,000-user test network in the capital Abuja is expanded into a full commercial service.

Weak infrastructure

Demand for mobile services has sky-rocketed across Africa given the unreliability of landline calls.

Some countries have seen their services degrade due to the actions of organised gangs, who cut and then resell the copper wire which carries the calls.

Nigeria has barely 500,000 connected lines, not much more than 1 for every 250 people in a population of 120m.

In Nigeria itself, that made the old analogue mobile system attractive.

But it has faced severe capacity limitations, and could not cope with services such as text messaging, which have proved immensely popular everywhere they have been introduced.

New blood

The new operators, both owned by companies from other Southern African countries, are up and running.

Each launched a network with a capacity of about 100,000 lines before the deadline passed.

MTN, a subsidiary of South Africa's M-Cell, has now passed the big test: interconnecting calls on its network with the domestic and international fixed-line networks owned by Nitel.

It says it is investing $1.4bn in its services in Nigeria.

Econet, which is based in Zimbabwe, has signed interconnection deals, and is expected to achieve a successful connection within days.

Better services

Both are intending to market their services on the basis of reliability. Nitel has a reputation for small-scale corruption, exacerbated by a waiting list thought to be in the millions.

Nitel is unlikely to be heavily penalised for its failure to get its service up and running by 9 August.

In June, it was allowed to double phone charges ahead of liberalisation.

The Nigerian Communications Commission has accepted Nitel's contention that it needs to concentrate on making sure its backbone, the fundamental network which distributes calls around the country and out to international destinations, can cope with the new traffic.