Nortel Claims African First
Nortel Networks Corp. (NYSE/Toronto: NT) has made further inroads into the potentially lucrative Nigerian market with the commercial launch of Africa's first CDMA200 1X wireless network at Private Telephone Operator (PTO) Multi-Links Telecommunications Ltd. (see Nortel Supplies Nigerian 1X).
The deal has seen Nortel upgrade its existing TDMA network as Multi-Links aims at an initial 500,000 users in capital city Lagos, followed by the rollout of additional infrastructure in six other Nigerian cities.
Nortel is making a big song and dance about its being the first vendor to bring 3G capabilities to the continent, but this is perhaps overstating the impact of such a deal. Multi-Links is a fixed wireless operator able to provide limited mobility access only in certain areas and is not one of the country’s four main GSM players (MTN, EWN, Nitel, and Globalcom). Multi-Links is one of ten such companies offering limited wireless coverage.
However, Nortel’s director of wireless strategic marketing, Mark Morell, is convinced that the win is of strategic importance to the vendor. “It indicates our significant progress and success in this region, following last week’s CDMA2000 1X announcement with Telecom Egypt,” he tells Unstrung. “These networks are fully capable of evolving to CDMA2000 EV-DO and will allow Multi-Links to introduce new data services. For many Nigerians, this will be the first opportunity for them to experience Internet-type applications.”
This may be great in theory, but it is too early to realistically expect the country to adopt data services in a big way, as the ability to use voice services remains the primary application for most users. The deal does, though, give Nortel the opportunity to compete further in a country that, with over 120 million inhabitants, is the continent’s largest potential telecom market. Mobile penetration in the country has grown fivefold in the last twelve months, according to Pyramid Research, which expects to see rates increase from 1.2 percent in 2002 to 8 percent over the next five years.
“Nortel will have a lot riding on Multi-Links as far as Nigeria is concerned,” says Pyramid’s EMEA research director, Guy Zibi. “Nortel’s presence in Africa has not been that strong, compared to Siemens AG [NYSE: SI; Frankfurt: SIE], Alcatel SA [NYSE: ALA; Paris: CGEP:PA], and LM Ericsson [Nasdaq: ERICY], and the deal puts them in a position where they can get a foothold on a market that is certain to be one of the largest in Africa. Having CDMA2000 1X in place will also put Nortel in a position to enable Multi-Links to offer services that the traditional GSM operators are currently unable to. Whether that is going to be enough to differentiate Multi-Links from its competitors and, as a result, enable it to gain more subscribers, is still unclear.”
Last month Alcatel joined the local party by securing a €675 million (about US$720 million) deal with Globalcom for both fixed and mobile networks (see Alcatel Supplies Network in Nigeria).
— Justin Springham, Senior Editor, Europe, Unstrung