Nigeria's telecommunications industry: Looking back, looking forward - Part 2


Nigeria's telecommunications industry

Looking back, looking forward - Part 2

Whilst the potentials for developing new services is endless, Telcos must brace themselves for a probable scrutiny by regulatory agencies. In this regard, there would be a need to continually engage relevant agencies in each industry to obtain clear guidance around a new service opportunity to ensure certainty when the dividends begin to roll in

The telecommunications industry in Nigeria is one that can currently be described as self-aware and steadily adapting to the stark realities of business – changing trends, intense rivalry, regulatory uncertainties etc. There is a general understanding that to remain sustainable in the current industry, there is a need to recreate existing products, diversify into new areas for which the capabilities and resources are near, improve on general business processes and navigate through the regulatory landscape.

In Part One of this article, we alluded to the diversification of Telecommunication Operators (Telcos) into other areas of business e.g. financial services. However, we did not explore the mechanics. What exactly are they doing? Are they becoming banks, insurance companies, record labels, film production companies etc. in which case, do they create and sell these services like traditional players or are they just conduits – acting as enablers?

Telcos are currently collaborating with different industries, acting as conduits (and creating new revenue streams) to reach out to potential customers. These industries understand that Telcos have a direct and unavoidable access to a huge customer base and own the network infrastructure to conclude a commercial dialogue. For instance, Telcos are enabling banks and insurance companies sell financial packages to hitherto 'invisible customers'. Using data analytics, Telcos can unearth 'invisible customers', promote solutions and ensure a sale is made.

The following are typical case studies:

I) Mobile money: Before the turn of the 21st century, most money transfers from the urban or suburban areas to the rural areas was largely manual. Transferors generally used messengers to physically deliver cash to recipients in the rural areas with the hope of 'privacy and security of the transaction' – a hope that was often dashed. Enter the 21st century and there was an explosion of bank branches and consequent surge of new account holders – a scenario that did not overcome this challenge.

In conjunction with the banks, Telcos are able to provide a solution that allows a user execute a money transfer using a personal identification number and secured text message. At the end of the text message is the recipient who can reach out to the corresponding bank to get the transferred money. Whilst the fee earned from this transaction represents increased income in the bank's primary business, the fee earned by the Telcos represent income from a new line of business.

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Nigeria's telecommunications industry: Looking back, looking forward - Part 2
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