It has been over a year since 43 operators obtained mobile virtual network operator (MVNO) licenses in Nigeria. However, the initial excitement has been replaced by operational challenges, particularly in forming commercial agreements with existing mobile network operators (MNOs). This deadlock puts Nigeria’s 2025 broadband target at risk and leaves 31 states underserved in terms of telecommunication infrastructure.
MVNOs were seen as a potential game-changer for the Nigerian telecom sector, similar to how the fintech revolution transformed banking. These operators were expected to utilize the infrastructure of existing telcos to provide telecom services to regions and demographics considered commercially unviable by larger players. However, the reluctance of telcos to finalize commercial terms and a pervasive atmosphere of suspicion and greed have significantly hindered these efforts.
Presently, the MVNO license holders find themselves in a precarious position, as they invested N8.6 billion for their licenses in March of the previous year. Without operational agreements, these investments remain uncertain, as the licensing framework mandates services to be launched within 12 months of license issuance.
This delay not only affects the financial viability of the MVNOs but also impedes the broader goal of expanding Nigeria’s telecom infrastructure. The Nigerian Communications Commission (NCC), which started the journey to MVNO licensing in 2017, issued these licenses early in 2023 following a detailed Request for Proposal (RFP) process. The framework envisioned that MVNOs would cater primarily to rural areas, thus helping bridge the significant digital divide across the country.
In Nigeria’s $76 billion telecom sector, major players like MTN, Airtel, Globacom, and 9mobile have connected approximately 318 million telephone lines, of which about 220 million are active. Despite these numbers, many communities remain underserved, which MVNOs are ideally positioned to address. The unique proposition of MVNOs lies in their ability to target market segments currently overlooked by major operators, potentially replicating the disruptive impact fintechs had on traditional banking.
However, the operationalization of MVNOs involves navigating complex relationships with MNOs, who are understandably cautious about ceding market share to new entrants that could disrupt existing revenue streams. This tension has led to protracted negotiations, with discussions often centered around the revenue-sharing model versus a wholesale model, where MVNOs would simply resell services purchased from MNOs.
The situation is further complicated by the differing capacities and business models of MVNOs, categorized from Tier 1 to Tier 5 in the licensing framework, each tier reflecting different levels of operational autonomy and infrastructure ownership. For instance, Tier 1 MVNOs operate without owning any network infrastructure and are entirely dependent on their host MNOs for network services.
To resolve these challenges and prevent the MVNO initiative from becoming a “rigmarole,” as one licensee put it, a more assertive regulatory approach might be necessary. While the NCC has traditionally refrained from intervening in commercial negotiations, the unique circumstances of the MVNO rollout might require a more hands-on approach to ensure that the potential benefits of this model are realized.
The future success of MVNOs in Nigeria will likely depend on the ability of all stakeholders to align their interests towards common goals: expanding access, enhancing service quality, and ensuring robust competition. This will involve not just negotiations over commercial terms but also a shared commitment to innovation and service diversification.
The launch of MVNOs holds the promise of liberalizing the telecom space in Nigeria, democratizing choices for consumers, and fostering a more inclusive and competitive market. However, for this potential to be realized, sustained collaborative efforts are essential—not only between MVNOs and MNOs but also involving regulators and other stakeholders. With the right mix of regulatory oversight, market-driven incentives, and strategic partnerships, Nigeria’s telecom sector can indeed undergo the transformation that MVNOs promise.
