IMPACTof Mobile Services in NIGERIA

THE IMPACT OF MOBILE SERVICES IN NIGERIA
How Mobile Technologies Are Transforming Economic and Social Activities
THEIMPACTOFMOBILESERVICESINNIGERIA HowMobileTechnologiesAreTransformingEconomic andSocialActivities

ByPyramidResearch March2010
TheImpactofMobileServicesinNigeria
Tableofcontents
Tableofcontents....................................................................................................................................................................5 Tableofexhibits......................................................................................................................................................................9 Organizationsmentioned.......................................................................................................................................................12 Acronymsandabbreviations..................................................................................................................................................14 Executivesummary................................................................................................................................................................15 1.ThemobileindustryinNigeria:ContextandMilestones.....................................................................................................19 1.1Nigeriaspolitical,economicandsociodemographiccontext.......................................................................................19 1.1.1PoliticaloverviewofNigeria.........................................................................................................................................19 1.1.2EconomicoverviewofNigeria......................................................................................................................................22 1.1.3SociodemographicoverviewofNigeria......................................................................................................................24 1.2KeyeventsinNigeriasmobiletelecommunicationsmarket.........................................................................................27 1.2.1HistoryofthetelecommunicationsindustryinNigeria ...............................................................................................28 . 1.3KeyactivitiesoftheNigerianCommunicationsCommission(NCC)...............................................................................29 1.4EvolutionofmobilesubscriptionsinNigeria ................................................................................................................34 . 2.TheimpactofthemobileservicesindustryonNigeriaseconomy......................................................................................38 2.1Relevanceofmobileservicesrevenuetogrossdomesticproduct................................................................................38 2.2MobileservicesrevenueandNigeriaseconomy..........................................................................................................40 2.3Telecomlicensingfees,taxationandNigeriaseconomy..............................................................................................42 2.4Employmentanddistributionnetworksofmobileoperators.......................................................................................43 2.5Investmentininfrastructurebymobileoperators........................................................................................................45 2.6Introductionofnewtechnologiesbymobileoperators................................................................................................48 CASESTUDY:GramjyotiLightoftheVillagepilotprogrambroughtInternetaccesstoaremoteareaofIndia..........51 3.TheimpactofmobileservicesonoverallNigeriansociety..................................................................................................53 3.1Mobileservicesandmarketplayersstrategiesinenablingconnectivity......................................................................53 CASESTUDY:MobilephonesforallultralowcosthandsetsbyZainandZTE...................................................................57 CASESTUDY:Amobilenumberforall...................................................................................................................................58 3.2Nigerianendusersperspectiveontheoverallimpactofmobileservices....................................................................60 3.3Theimpactofmobileservicesinbreachingtheurbanruraldivide...............................................................................64 CASESTUDY:MillenniumVillages.........................................................................................................................................66 CASESTUDY:VillagePhoneUganda......................................................................................................................................67 3.4AdoptionanduseofmobileservicesinruralandurbanenvironmentsinNigeria.........................................................70 CASESTUDY:RuralTelephoneProjectinNigeriabringscommunicationstolowincomesegmentsthroughasustainable businessmodel.....................................................................................................................................................................73 MillenniumVillage:Pampaida,Nigeria.................................................................................................................................76 4.Theimpactofmobileservicesbyverticalsector.................................................................................................................78
PyramidResearch,2010
4.1Theimpactofmobileservicesontheeducationsector................................................................................................78 4.1.1ExamplesfromabroadofleveragingmobiletechnologyintheeducationsectorTanzaniaandSouthAfrica........80 CASESTUDY:MobiletechnologybringsinteractiveeducationtoschoolsinTanzania.........................................................81 CASESTUDY:Dr.MathleveragesamobilesocialnetworkinSouthAfrica...........................................................................83 4.1.2MobileservicesandtheeducationsectorwithinNigeria............................................................................................85 CASESTUDY:LongmanNigeriaintroducesMobileReadingtoNigeria.................................................................................87 4.2Theimpactofmobiletechnologiesonhealthservices..................................................................................................88 4.2.1ExamplesfromabroadofleveragingmobiletechnologyinhealthcareSouthAfricaandUganda...........................89 CASESTUDY:ProjectMasiluleketargetsHIVinSouthAfrica................................................................................................91 CASESTUDY:TextToChangetargetsHIVinUganda............................................................................................................93 4.2.2MobileservicesandthehealthsectorwithinNigeria..................................................................................................95 CASESTUDY:MyQuestion,MyAnsweranHIV/AIDScounselingandeducationprograminNigeria..............................97 4.3Theimpactofmobileservicesondigitalizationandproductivityofenterprises.........................................................100 4.3.1ExamplesfromabroadofleveragingmobiletechnologyinthedigitalizationandproductivityofenterprisestheUS andSenegal.........................................................................................................................................................................101 CASESTUDY:MobilitypaysforIntel...................................................................................................................................102 CASESTUDY:SMSbasedmarketinformationinSenegalboostsproductivity....................................................................103 4.3.2MobileservicesandthedigitalizationandproductivityofenterprisesinNigeria.....................................................105 CASESTUDY:FirstCityMonumentBankfindsmobiletechnologyindispensable...............................................................107 4.4Theimpactofmobileservicesonfinancialsector.......................................................................................................108 4.4.1Examplesofleveragingmobiletechnologyinthefinancialsector:AustraliaandKenya...........................................109 CASESTUDY:AustralianbankANZoffersWAPandJavabasedmbankingservice...........................................................110 CASESTUDY:SafaricomKenyatargetsthebottomoftheincomepyramidwithMPESAmobilebanking........................112 4.4.2MobileservicesandthefinancialsectorwithinNigeria.............................................................................................114 CASESTUDY:MoneyBoxAfricapromotesmbankingservicesinNigeria...........................................................................117 4.5Theimpactofmobileservicesontheagriculturalandextractionsectors...................................................................120 4.5.1ExamplesfromabroadofleveragingmobiletechnologyintheagriculturesectorUgandaandIndia..................120 CASESTUDY:GrameenhelpsdelivermarketinformationtoUgandasfarmers.................................................................121 CASESTUDY:LifeLinesSoochnaSeSamadhaninIndiaprovidesguidancetoIndiasfarmers............................................123 4.5.2MobileservicesandtheagriculturesectorwithinNigeria.........................................................................................125 CASESTUDY:Cassavagrowersreceiveamobileboost.......................................................................................................128 4.6Theimpactofmobileservicesonthetransportandlogisticssector...........................................................................129 4.6.1Leveragingmobiletechnologyinthetransportandlogisticssectoraroundtheworld.............................................130 CASESTUDY:OnStarbringstelemetrytotheconsumermarketintheUnitedStates........................................................132 4.6.2MobileservicesandthetransportandlogisticssectorwithinNigeria ......................................................................134 . CASESTUDY:HOTFMleveragesSMSfortrafficmonitoringinAbuja.................................................................................136 4.7Theimpactofmobileservicesontheentertainmentandmarketingsectors..............................................................137 4.7.1MobileservicesandtheentertainmentsectorinNigeria..........................................................................................139 CASESTUDY:DStvandMTNpartnerformobileTVserviceinNigeria................................................................................142 Annex:Methodologyofendusersurveyforthisstudy........................................................................................................144 Notes:..................................................................................................................................................................................146 AboutPyramidResearch......................................................................................................................................................147 Contactinformation.............................................................................................................................................................148
FOREWORD
Itisanestablishedfactthattheeconomicdevelopmentofanationcanbeacceleratedbyimprovementsinthe countrysICTinfrastructure.ThisisbecauseICTs,ifwellharnessed,provideaproperplatformfordevelopment across all sectors of the economy. ICTs not only contribute to the development of commercial activities, education,healthandgovernance,butarealsokeyenablersofbroadbasedsocialandeconomicdevelopment andofsustainablehumandevelopmentinamoregeneralsense. Tworeports,bytheWorldBank(InformationandCommunicationforDevelopmentReport,2006)andtheWorld Economic Forum (Global Information Technology Report, 20052006), underline the fact that economic developmentdependsonoverallprogressinacountrysICTssector,andthat,withoutsuchprogress,boththe economyandprivateenterprisessuffer.TheWorldBanksstudyalsofoundthatcompaniesthatuseICTsgrow faster,andaremoreproductiveandprofitablethanthosethatdonot. Indeed,ICTnetworksarenowmakingitpossiblefordevelopingcountriestoparticipateintheworldeconomyin waysthatsimplywerenotpossibleinthepast.Thisrealityisreflectedintherapidgrowthtelecommunications hasbeenexperiencingaroundtheworld:In1999,therewere1.4bnconnectedlinesworldwide(490mmobile, 905mfixed);today,therearemorethan5bnlines.Thusinthepastnineyears,over3.6bnlineshavebeenadded tothe1.4bnlinesconnectedinalltheyearsbefore.Infact,toquoteanITUpublication,mostoftheplanets 6.7bninhabitantsarewithinreachoftelephoneserviceTherearenowmoretelephonesubscribersworldwide than there are households. All these statistics go to demonstrate the importance the world attaches to the developmentoftelecommunicationsinfrastructure. Increased adoption of ICTs implies that nations need to adopt ICTs or become less competitive. Emerging economiessuchasNigeriahavethereforecreatedtheenablingenvironmenttoencouragethedevelopmentof ICT infrastructure. Indeed, the developing world has over the past decade become the destination for new investmentopportunities.Duringthisperiod,exponentialgrowthinthemobilesubscriberbasehasmostlybeen generatedindevelopingcountries. Nigeria is recognized as a major market for telecommunications equipment and services on the African continent. With a population of more than 140m, it remains Africa's most populous nation. Nigeria therefore has always had what it takes to attract the attention of potential investors. This potential was not, however, unleasheduntilaciviliandemocraticgovernmentcameintobeingin1999andanewboardwasappointedfor theNCC,withEngineerErnestNdukweasExecutiveViceChairmanandCEO.Sincethen,Nigeriahaspursuedan aggressivemarketliberalizationpolicythathasmadeitperhapsthemostliberalizedtelecommarketinAfrica. TheattentionoftheworldthusreturnedtoNigeriaasthemarketwiththehighestpotentialforICTinvestment onthecontinent,andmorethanUS$18bnhadbeeninvestedbyDecember2009. In a highly competitive market, the telecommunications industry in Nigeria has continued since 1999 to grow exponentially, which has led to increased access nationwide. The market has been described as one of the worldsfastest growingtelecommunicationsmarkets,especiallybetween2001and2007.Theseachievements can be attributed largely to the foresight of the government in embracing sector reform and creating an enablingandconduciveenvironmentwithrespecttopolicyandtheregulatoryregime.TheNCChasprovenits commitmenttopromotingaregulatoryenvironmentthatisindependent,fair,transparentandpredictable. The nations teledensity currently exceeds 50%, with about 74m subscriber lines as of the end of December 2009.Accesstomoderntelecommunicationservicesisnowwithinreachofmorethan90%ofthepeoplewho livewithinNigeria.
In Nigeria today, daily activities such as shopping, entertainment, banking, manufacturing, office work, education,medicalcare,governanceandevencommutinghavebecomeincreasinglydependentoninformation andcommunicationsnetworks. The massive deployment of digital mobile services across the country and the speed at which they are being subscribed to havedemonstrated the importance of ICT services to the people. The Nigerian Communications Commission has established a regulatory environment that has led to the creation of a robust, pervasive and ubiquitous information and communications technology infrastructure across the nation. This has helped to drivesocioeconomicdevelopmentandimprovethelivingstandardsofthecitizenry. The current focus of the Commission is on facilitating broadband Internet deployment in Nigeria. With its applicationinareassuchaspublicsafety,nationalsecurity,telemedicine,egovernment,ehealth,ecommerce, distancelearningandutilities,broadbandisanacceleratorofsocialandeconomicdevelopmentinthemodern world.TheCommissionhasthusinitiatedprojectsaimedatfacilitatingandspeedingupwidespreaddeployment and usage of broadband services in Nigeria. One such project is the State Accelerated Broadband Initiative (SABI),whichistoensurethatbroadbandinfrastructureisspeedilyextendedtoallthestatecapitalsaswellas to urban and semiurban centers across the country. SABI was designed to provide operating companies with incentivestorolloutservicesfasterandencourageusage. The pace of Nigerias telecom growth also creates increasing demand for highcapacity transmission infrastructure to provide the necessary support for further expansion, especially in the area of bandwidth intensive data services. Anticipating this demand, the major operating companies in Nigeria responded with massive rollouts of fiber backbone infrastructure across the nation. Their efforts are being augmented by the CommissionsWireNigeria(WiN)initiativetoextendthefiberopticinfrastructuretoremoteandruralareasnot coveredbytheoperators. ThisinitiativeisnowbeingexpandedbytheCEOoftheNCCtoanAfricawidecampaigntermedFiberwithout Bordersencouragingdeploymentofhighcapacity,crossborderandcrosscountryfiberinfrastructurelinkingall countriesinAfrica.Governmentsintheregionarebeingurgedtoremoveobstaclestograntingpermitsforsuch projectsandwherenecessaryofferincentivestospeeduprollouts. In short, access to telecommunications and information technology holds the key to the nations ability to respondtothedemandsofitspositioninthenewworldorder. Under Ernest Ndukwe Era as CEO, the Nigerian Communications Commission has witnessed unprecedented transformation in the Nigerian telecom sector, resulting in what is now commonly referred to as Nigerias telecom revolution. Teledensity figures grew from less than 0.5% in December 2000 to more than 50% by December2009.Theimpactofthetelecomrevolutiononthesocialandeconomiclivesofthecitizenshasbeen tremendous. This study presents a scientific analysis of the positive changes telecommunications development and growth havebroughttoallspheresofNigerianlife.Itdocumentsthesechangesforposterity,andreadersinterestedin theroletelecommunicationsplaysinhumandevelopmentwillfindthestudyuseful. IkeddyIsiguzo Chairman,EditorialBoard,VanguardNewspapers
Tableofexhibits

Exhibit1:MobilesubscriptionsandmobilesubscriptionspenetrationofpopulationinNigeria,20012009................................15 Exhibit2:PrivateinvestmentbytelecomoperatorsinNigeria,20012008...................................................................................16 Exhibit3:WorkforcerelatedtomobileservicesindustryinNigeria,2008.....................................................................................16 Exhibit4:Whatoptionbestdescribestheimpactofmobileservicesinyourdailylife?Nigerianmobileendusers,2009...........17 Exhibit5:Haveyouseenapositivefinancialimpactonyourlifefromtheuseofmobileservices?Nigerianmobileusers,2009 17 Exhibit6:StructureofNigeriangovernment,2009........................................................................................................................20 Exhibit7:NigeriasVision2020goals.............................................................................................................................................21 Exhibit8:RealGDPCAGRin20012009inlocalcurrenciesinselectAfricancountries.................................................................22 Exhibit9:RealGDPpercapitaandrealGDPgrowthinNigeria,20012009(US$).........................................................................23 Exhibit10:RealorPPPadjustedGDPpercapitainselectedAfricancountries,2009(US$)..........................................................23 Exhibit11:TotalpopulationinNigeria,20012009........................................................................................................................24 Exhibit12:WorkingpopulationasproportionoftotalpopulationinNigeria,20012009.............................................................25 Exhibit13:PopulationbreakdownbygenderinNigeria,2006.......................................................................................................25 Exhibit14:PopulationdistributionbystateinNigeria,2006.........................................................................................................26 Exhibit 15: Size of the mobile market, nominal GDP per capita and mobile service revenue CAGR, in select African markets, 20032009.......................................................................................................................................................................................27 Exhibit16:NCCobjectivesandregulations....................................................................................................................................28 Exhibit17:NCCheadquartersinAbuja...........................................................................................................................................30 Exhibit18:MilestonesinlicensingandconcessionsawardedbytheNCC,20002009..................................................................31 Exhibit19:Keyactivitiesandmilestonesbymobileoperator,20012009.....................................................................................32 Exhibit19:Keyactivitiesandmilestonesbymobileoperator,20012009(Contd).......................................................................33 Exhibit20:MobilesubscriptionsandmobilesubscriptionspenetrationofpopulationinNigeria,20012009..............................34 Exhibit21:MobilesubscriptionsbreakdownbysubscriptiontypeinNigeria,20012009.............................................................34 Exhibit22:SnapshotofkeymarketindicatorsinNigeria,20012009............................................................................................35 Exhibit23:MobileoperatormarketsharesinNigeria,2009..........................................................................................................37 Exhibit24:FixedandmobileservicerevenuesinNigeria,20012009............................................................................................38 Exhibit25:FixedandmobiletelecomservicesrevenueinselectAfricancountries,2009.............................................................39 Exhibit26:MobileservicerevenueasapercentageofGDPinselectAfricanmarkets,2009........................................................39 Exhibit27:MobileservicesrevenuecontributiontoGDPinNigeria,20012009...........................................................................40 Exhibit28:MobilepenetrationofpopulationandGDPpercapitainselectAMEcountries,2009................................................41 Exhibit29:LicensingfeescontributiontotheeconomyinNigeria,20012007 ............................................................................42 . Exhibit 30: Total taxes paid bymobile operators and their contribution as a percentage of total tax receipts in select African countries,2006...............................................................................................................................................................................43 Exhibit31:EmploymentrelatedtomobilesectorinNigeria,2008................................................................................................44 Exhibit32:Streethawkersellingprepaidscratchcards,Nigeria....................................................................................................44 Exhibit33:MTNandGlopointsofsale,Nigeria.............................................................................................................................45 Exhibit34:PrivateinvestmentbytelecomoperatorsinNigeria,20012008.................................................................................46 Exhibit35:MTNNigeriacapitalexpenditures,20032009.............................................................................................................46 Exhibit36:Asnapshotofacelltower,Nigeria...............................................................................................................................47 Exhibit37:OverviewofmobilenetworktechnologiesavailableinNigeria....................................................................................48 Exhibit38:PosteradvertisingBlackBerryhandsetsinaNigerianairport.......................................................................................49 Exhibit 39: Effects of Internet access across three broad aspects of society: Development, resource management and networking......................................................................................................................................................................................49 Exhibit40:Projectedmobilebroadbandaccountpenetrationofthepopulation,globallyandinAfricaandtheMiddleEast,2009 and2014.........................................................................................................................................................................................50 Exhibit41:GramjyotisInternetaccesssites..................................................................................................................................51 Exhibit42:Gramjyotistelemedicineprovision..............................................................................................................................52 Exhibit43:ForecastofmobilesubscriptionpenetrationofpopulationinAfricaandtheMiddleEast,2008and2014 ................53 . Exhibit44:MobileandfixedlinepenetrationofpopulationinNigeria,20012009......................................................................54
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Exhibit45:NigeriansusingcallingcentersandvisitingGSMvillage...............................................................................................55 Exhibit46:Sampleprogramstoreduceacquisitioncostsofmobilephones .................................................................................55 . Exhibit47:ExampleofultralowcosthandsetprovidedbyZain.....................................................................................................57 Exhibit48:MKADIserviceserver....................................................................................................................................................58 Exhibit49:Snapshotoftheapplicationscreen,andapersonenablingaccesstothesharedphonewhowillalsobenefit...........59 Exhibit50:BreakdownofmobilephoneuseamongNigeriasmobileserviceusersbyagegroup,2009......................................60 Exhibit51:FrequencyofmobilephoneuseamongNigeriasmobileservicesusersbyagegroup,2009......................................61 Exhibit52:ImpactofmobilephoneuseonintervieweeslivesamongNigeriasmobileservicesusersbysocioeconomicgroup, 2009................................................................................................................................................................................................61 Exhibit53:FinancialbenefitsofmobilephoneuseamongNigeriasmobileservicesusersbylocation,2009..............................62 Exhibit54:TypesoffinancialbenefitderivedfrommobilephoneuseamongNigeriasmobileservicesusers,2009...................62 Exhibit55:TypeoffinancialbenefitsderivedfrommobilephoneuseamongNigeriasmobileservicesusersbyagegroup,2009 ........................................................................................................................................................................................................63 Exhibit56:Specificactivitiesperformedonhandsetsbymobileserviceusers,byagegroup,2009..............................................64 Exhibit57:Ruralpopulationasaproportionoftotalpopulationglobally,2007............................................................................64 Exhibit58:RuralpopulationasaproportionoftotalpopulationinselectAfricancountries,2007...............................................65 Exhibit59:Sampleofruralconnectivityprojectsleveragingmobiletechnology...........................................................................65 Exhibit60:MillenniumVillagesacrossAfrica,2009........................................................................................................................66 Exhibit61:VillagePhonekitandVillagePhoneoperator...............................................................................................................67 Exhibit62:MTNUgandaVillagePhoneBusinessmodelandpartners........................................................................................68 Exhibit63:VillagePhoneoperatorstraining..................................................................................................................................69 Exhibit64:UseofmobilephoneforsocialpurposesamongNigeriasmobileservicesusersbyurbanization,2009....................70 Exhibit65:UseofmobilephonesforworkpurposesamongNigeriasmobileservicesusersbyurbanization,2009 ...................71 . Exhibit66:ICTpenetrationamongNigeriasmobileservicesusersbyurbanization,2009............................................................71 Exhibit67:Communityphoneshop,SouthAfrica..........................................................................................................................72 Exhibit68:Ruraltelephonyprogrampartnersandtheirrole,2004June2009.............................................................................73 Exhibit69:RuralTelephonyProjectstartuppackageandaphoneladyontheoutskirtsofSuleja,acityof105,000inhabitants northofAbuja.................................................................................................................................................................................74 Exhibit70:TestimonialofaRuralTelephoneProjectbeneficiary..................................................................................................74 Exhibit71:NewmobiletowerinPampaida,Nigeria......................................................................................................................76 Exhibit72:Transformationoftheschoolfacility:ontheleftbeforetheMillenniumVillage,ontherightafter...........................77 Exhibit73:SelfperceivedusesandbenefitsofmlearningbyLearning2Goprojectlearners .......................................................78 . Exhibit73:SelfperceivedusesandbenefitsofmlearningbyLearning2Goprojectlearners(Contd)..........................................79 Exhibit74:Sampleprogramsleveragingmobiletechnologyandconnectivityinemergingmarkets.............................................79 Exhibit75:ClassroomusingBridgeITvideotoassistinschoolteaching........................................................................................81 Exhibit76:StudentsusingtheDr.Mathapplication......................................................................................................................83 Exhibit77:Adultliteracyrate(15andover)inselectAMEcountries,20002007.........................................................................85 Exhibit78:UseofmobiletechnologyforeducationamongNigeriasmobileservicesusers,2009...............................................85 Exhibit79:FrequencyofmobileuseforeducationamongNigeriasmobileservicesusers,2009 ................................................86 . Exhibit80:SampleLadybirdKeywordsReadingbooks...................................................................................................................87 Exhibit81:EmergencypersonalcommunicatorproductlinebyPhilips.........................................................................................88 Exhibit82:UNAIDSmapofHIVinfectionsacrosstheglobe,2007.................................................................................................89 Exhibit83:SampleofAIDS/HIVinitiativesleveragingmobiletechnologiesinAfrica.....................................................................90 Exhibit84:PleaseCallMeHIVmessage .........................................................................................................................................91 . Exhibit85:TextToChangeusers....................................................................................................................................................93 Exhibit86:TextToChangewinners................................................................................................................................................94 Exhibit87:Texting4Healthinitiative...............................................................................................................................................94 Exhibit89:UseofmobilehealthservicesamongmobileserviceusersinNigeria,2009................................................................95 Exhibit90:UseofmobilehealthservicesamongNigeriasmobileserviceusersbyurbanization,2009.......................................96 Exhibit91:MyQuestion,MyAnswersthreeinterfaces ................................................................................................................98 . Exhibit92:EVAstaffmonitoringSMSandWebbasedquestions.................................................................................................99
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Exhibit93:Perceptionofhowtechnologiessuchasmobilephones,PDAsandlaptopsaffectproductivity................................100 Exhibit94:Sampleofmobileapplicationsenablingproductivity.................................................................................................101 Exhibit95:Flexibilityofworklocationasaresultofincreasedmobility......................................................................................102 Exhibit96:ManobiXamMarsserviceadvertisement................................................................................................................103 Exhibit97:ManobiSMSMarsenablesaccesstothelatestmarketdatabecauseofitsnetworkofdatacollectors..................104 Exhibit98:UsesofmobilephoneforworkrelatedpurposesamongNigeriasmobileserviceusers,2009................................105 Exhibit99:FrequencyofworkrelateduseofmobilephonesamongNigeriasmobileserviceusers,2009................................106 Exhibit100:Usagedistributionbytypeofactivity.......................................................................................................................107 Exhibit101:Overviewofmobilefinancialservices.......................................................................................................................108 Exhibit102:Technologyplatformsofmobilefinancialserviceprovidersinvariousmarkets......................................................108 Exhibit103:Breakevencostbytypeoffinancialtransaction.......................................................................................................109 Exhibit104:ANZmbankingmenu...............................................................................................................................................111 Exhibit105:MPesaoperatingmodel...........................................................................................................................................112 Exhibit106:UseofmobiletechnologyforfinancialpurposesamongruralandurbanmobileserviceusersinNigeria,2009....114 Exhibit107:FinancialinstitutionscompeteoverprimerealestateandadvertisingspaceinurbancommercialcentersinNigeria ......................................................................................................................................................................................................115 Exhibit108:UBAoffersaddedvaluetoitscustomersthroughitsUMobileservice...................................................................116 Exhibit109:MoneyBoxAfricaQuickSaveservice........................................................................................................................118 Exhibit110:MoneyBoxAfricasidentificationrequirementsforAccountsOnTheStreets..........................................................119 Exhibit111:Sampleinitiativesleveragingmobiletechnologyforagriculture..............................................................................120 Exhibit112:Thecommunityknowledgeworkeratwork.............................................................................................................121 Exhibit113:SnapshotsofusersusingGoogleSMSapplications..................................................................................................122 Exhibit114:Afieldcoordinatorinteractingwithafarmerandexplainingtheservicetoafarmerduringahomevisit..............123 Exhibit115:FarmerscallingtheLifeLinesservice.........................................................................................................................124 Exhibit116:Sahayak,TataIndicomsmobilevalueaddedserviceforfarmers............................................................................124 Exhibit117:UseofmobiletechnologyinruralareasforproductivitypurposesamongNigeriasruralmobileserviceusers,2009 ......................................................................................................................................................................................................125 Exhibit118:TypeoffinancialbenefitsderivedfrommobilephoneuseamongNigeriasruralmobileserviceusers,2009........126 Exhibit119:PreferrednewapplicationsamongNigeriasruralmobileservicesusers,2009.......................................................127 Exhibit120:AmarketplaceinNigeriawithanAgriBusinessInformationPoint..........................................................................128 Exhibit121:Samplemobileapplicationsusedinthetransportandlogisticssector....................................................................130 Exhibit122:OverviewofM2MapplicationsinthetrafficspaceinWesternEurope...................................................................131 Exhibit123:OnStarautomaticairbagdeploymentresponseservice...........................................................................................132 Exhibit124:Scopeofuseofmobileservicesrelatedtotransportandlogisticsactivitiesamongruralandurbanmobileusersin Nigeria,2009.................................................................................................................................................................................134 Exhibit125:LagosandAbujacitylayoutsandtraffic....................................................................................................................135 Exhibit126:Hot98.3FMtrafficjamshow ...................................................................................................................................136 . Exhibit127:Evolutionofmobileentertainmentservices.............................................................................................................137 Exhibit128:Examplesofmobileentertainmentinitiatives..........................................................................................................138 Exhibit129:Breakdownofglobalmobiledatarevenue,20082014............................................................................................139 Exhibit130:FrequencyofuseofmobileentertainmentamongNigeriasmobileserviceusers,2009........................................140 Exhibit131:AdoptionofmobileentertainmentservicesamongNigeriasmobileusersbyagegroup,2009.............................140 Exhibit132:MobilevalueaddedservicesbythetopthreemobileoperatorsinNigeria.............................................................141 Exhibit133:DStvmobilebroadcast..............................................................................................................................................142 Exhibit134:DStvmobilechanneloffering....................................................................................................................................143 Exhibit135:Endusersurveyexecutionintheintervieweeshouse,2009...................................................................................144 Exhibit136:Endusersurveyintervieweeprofilebygenderandagegroup,2009......................................................................145 Exhibit137:Endusersurveyintervieweeprofilebyurbanizationandlocation,2009.................................................................145
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Organizationsmentioned
ABSA AccessBankNigeria ActionHealthIncorporated AfricanDevelopmentBank(AfDB), AfricanUnion(AU) AIDSInformationCenterUganda Alcatel AlheriEngineering ANZ ApolloHospitals Apple BridgeIT BritishTelecom(BT) BusogaRuralOpenSourceDevelopmentInitiative(BRODSI) ButterflyWorks CanadianInternationalDevelopmentResearchCentre(IDRC). CartoonNetwork CentralBankofNigeria(CBN) CiscoSystems Claro CNN Commonwealth CommunicationsInvestmentLimited(CIL) Ctrack DAARSAT DangoteGroup DatamationFoundation Deloitte Dr.Math DStv EarthInstitute EconetWireless EconomicCommunityofWestAfricanStates(ECOWAS) EconomistIntelligenceUnit(EIU) EDFEnergy EducationasaVaccineAgainstAIDS(EVA) Edurite ElimukwaTeknolojia eNowNow Ericsson EricssonIndia Etisalat FCMBNigeria FederalGovernmentofNigeria FederalMinistryofTransport FinalistITGroup FinancialSectorDeepeningTrust FirstCityMonumentBank(FCMB) FNBBanking ForumforAfricanWomenEducationalists(FAWE) FranceTelecom frogdesign GalloImages GeneralMotors GirlsPowerInitiative(GPI) GiCellWireless GloMobile
Google GrameenFoundation GramjyotiRuralBroadbandProject GrowingBusinessesFoundation(GBF) GSMA GTBank HandinHand HiTV HotFMAbuja IBRD, ICSL IdealServices IndianSocietyofAgriBusinessProfessionals(ISAP)), infoDev IntegratedCassavaProject(ICP) Intel Intercellular InternationalFinanceCorporation(IFC) InternationalInstituteofTropicalAgricultureinNigeria(IITA) InternationalMonetaryFund(IMF) InternationalYouthFoundation(IYF) InvestmentInternationalLimited IRRAD iTeach JohnDandCatherineTMacArthurFoundation KellyServices KNect LAPO LearningAboutLiving Learning2Go LifeLines LongmanLadybirdMobileReading LongmanNigeriaPlc ManobiDevelopmentFoundation MaritimeOrganizationofWestandCentralAfrica(MOWCA) MillenniumPromise MillenniumVillages MinistryofEducationandVocationalTraining(MoEVT) MISSLtd MobileTelecommunicationsLimited(Mtel) MobileXceteraLimited MobileXcetera MobitelNigeria MoneyTextMe MoneyBoxAfrica Movirtu MPESA MTNBanking MTNFoundation MTNFoundation(MTNF) MTNNigeria MTNSouthAfrica MTNUganda MTSFirstWirelessLtd(MTSFirst) MubadalaDevelopmentCompany Multilinks MXit
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MyQuestion,MyAnswer NationalBureauofStatistics(NBS) NationalCouncilforPrivatization(NPC) NationalGeographicSociety NationalTransportCommission Network of Agricultural Market Information Providers of Nigeria(NAMIN) NewPartnershipforAfricasDevelopment(NEPAD) NigerDeltaDevelopmentCommission NigeriaEducationResearchandDevelopmentCouncil(NERDC) NigeriasMinistryofAgriculture NigerianCommunicationsCommission(NCC) Nigerian Ministry of Health and the Nigerian Ministry of Education NigerianNationalAgencyfortheControlofAIDS(NACA) NigerianTelecommunications(Nitel) Nokia NokiaCorporation NokiaSiemensNetworks(NSN) NonalignedMovement(NAM) Novib O2UK OneWorld OneWorldSouthAsia One97 OneWorldUK OnStarTelematics OptoAfrica OrganizationofPetroleumExportingCountries(OPEC), OrganizationoftheIslamicConference(OIC) Oxfam PearsonEducation PearsonFoundation Philips Pikitup PopTech PraekeltFoundation PrestCable&SatelliteTVSystems ProjectManobi ProjectMasiluleke Reltel SafaricomKenya
SaltandEinsteinLtd ShellPetroleumDevelopmentCompanyofNigeria SMSSokoniProject SNDTWomensUniversity Sonatel Spectranet StandardBankofSouthAfrica Starcomms TARAhaat TataIndicom Telenor TelkomSA TextToChange(TTC) Texting4Health TheWomenofUgandaNetwork TradeNetAfrica TransnationalCorporationofNigeria(Transcorp) TurnerBroadbandSystems UBAMobile UgandanMinistryofHealthf UNDepartmentofEconomicandSocialAffairs(UNDESA) UNAIDS UNDP UNESCO UNICEF UnitedNations, USAgencyforInternationalDevelopment(USAID) USDepartmentofstate VAS2NET VianetvOpen VillagePhone VillagePhoneUganda Visafone VMobile Vodacom Wizzit WorldBank WorldTradeOrganization(WTO) ZainNigeria ZenithBank ZoomMobile ZTE
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Acronymsandabbreviations
Acronym 2G 3G 4G AIDS AME ARPS ATM CAGR CDMA DRC DTH DVBH EDGE EMEA EVDO FWA GB GDP GPS GSM GPRS GHz HIV HSPA ICT IP IVR LTE MoU MMS MNP MVNO M2M N NBS NCC NGO PIN SIM SMS UASL UMTS US USSD WAP WCDMA WiMAX
Definition secondgeneration thirdgeneration fourthgeneration acquiredimmunodeficiencysyndrome AfricaandMiddleEast averagerevenuepersubscription automatedtellermachine compoundannualgrowthrate CodeDivisionMultipleAccess DemocraticRepublicofCongo directtohometelevision DigitalVideoBroadcastingHandheld EnhancedDataRatesforGlobalEvolution Europe,MiddleEastandAfrica EvolutionDataOptimized FixedWirelessAccess Gigabyte grossdomesticproduct GlobalPositioningSystem GlobalSystemforMobileCommunications GeneralPacketRadioService Gigahertz humanimmunodeficiencyvirus HighSpeedPacketAccess informationandcommunicationstechnology InternetProtocol interactivevoiceresponse LongTermEvolution minutesofuse multimediamessagingservice mobilenumberportability mobilevirtualnetworkoperator machinetomachine Naira NigerianNationalBureauofStatistics NigerianCommunicationsCommission nongovernmentalorganization personalidentificationnumber subscriberidentitymodule ShortMessageService UnifiedAccessServiceLicense UniversalMobileTelecommunicationsSystem UnitedStates UnstructuredSupplementaryServiceData WirelessAccessProtocol WidebandCodeDivisionMultipleAccess WorldwideInteroperabilityforMicrowaveAccess
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Executivesummary
Mobile services are having apositive impacton Nigeriaby enabling greater interaction and bringinga wide variety of services to the majority of the countrys population. To develop an overview of the mobile industrys effect on the country, Pyramid Research has analyzed mobile adoption trends as well as the perspectives of key mobile operators, vendors, international organizations and 1,500 Nigerian end users. We also assessed relevant examples of mobile applicationsacrossindustryverticalsindifferentcountriestoillustratethefarreachingimpactmobiletechnologieshavein emergingmarkets.Thetopfiveconclusionsofourstudyare: 1. Mobile services have ample reach in Nigeria and will continue to post rapid growth. According to PyramidResearchsestimates,mobileservicesarealreadyinusebyasignificantproportionofNigerias population. The number ofmobile subscriptions in thecountry was roughly73m in2009, resulting ina mobilepenetrationrateof49%ofthepopulation.
Exhibit1:MobilesubscriptionsandmobilesubscriptionspenetrationofpopulationinNigeria,2001 2009
80 70
50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009
Mobile subscriptions (millions)
60 50 40 30 20 10 0
Mobile subscriptions
Subscription penetration
Source:PyramidResearchMobileDataForecast,2009
Duetointensecompetitionandconstantinnovationfrommobileserviceproviders,agreaternumberof people will see value in and be in a position touse mobile services in thenear future. Weproject that Nigerias mobile subscriptions will surpass 129m by 2014, creating a substantial user base for the developmentofthemobileapplicationsmarket. The mobile industry has generated substantial investment in infrastructure and employs a significant number of Nigerians. Pyramid Research estimates that in the time since the Nigerian government successfullyliberalizedtheindustryin2001,capitalinvestmentsinmobilenetworksandoperationshave constituted80%ofoverallinvestmentgoingintothetelecommunicationssectoratotalofmorethan $12bn by the middle of 2008. Total figure for the industry, as of March 2010, according to the NCC reached$18bn,ofwhich$16bnisrelatedtomobile.
2.
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Exhibit2:PrivateinvestmentbytelecomoperatorsinNigeria,20012008

Foreign capital investment (US$ billions)
$12 $10 $8 $6 $4 $2 $0 2001 2002 2003 2004 2005 2006 2007 2008
120% Net increase in private investment
100%
80% Previous years' cumulative private investment Mobile operators' share of cumulative private investment
60%
40%
20%
0%
Note: 2008 private investment figures do not reflect the full year Source:NCC
In addition, the mobile industry has contributed more than 3m direct and indirect jobs in Nigeria, including employees of mobile service providers and those in independent distribution channels and pointsofsaleacrossthecountry. Exhibit3:WorkforcerelatedtomobileservicesindustryinNigeria,2008
Source:PyramidResearch,2009
3. Nigerianmobileendusersagreethatmobileserviceshavepositivelyinfluencedeveryaspectoftheir
lives,connectingthemtoclients,coworkers,relativesandfriends,thushelpingpeopleaccess information,creatingbusinessopportunities,loweringtransactioncostsandenhancingsocial interaction. Morethan60%ofthe1,500NigeriansinterviewedbyPyramidResearchbelievethatusingmobileserviceshas improvedtheirlives,includingmorethan35%ofintervieweeswhosaythatamobilephonehasdramatically improvedallaspectsoftheirlives.
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Exhibit4:Whatoptionbestdescribestheimpactofmobileservicesinyourdailylife?Nigerianmobile endusers,2009

100% 90% 80% 70%

Percentage of respondents
Having a mobile phone has negatively impacted my life Neutral Having a mobile phone has made some of my daily tasks easier Having a mobile phone has improved most aspects of my life Having a mobile phone has dramatically improved all aspects of my life
60% 50% 40% 30% 20% 10% 0% Male Female
Source:PyramidResearchsurveyof1,500mobileserviceusersinNigeria,2009
Furthermore,morethan80%ofoursamplehasseenfinancialgainsfromusingmobileservicesthrougha combinationofsavingoncommunicationsexpensesandgeneratingadditionalincomebywayofstaying connected. Exhibit5:Haveyouseenapositivefinancialimpactonyourlifefromtheuseofmobileservices? Nigerianmobileusers,2009

100% 90% 80% 70%

No financial benefit
60% 50% 40% 30% 20% 10% 0% Metropolitan South East North
Benefited from savings in telecom and other areas
Benefited from additional income
Benefited both from savings and additional income
Source:PyramidResearchsurveyof1,500mobileserviceusersinNigeria,2009
4.
Ananalysisofmobileapplicationsintheareasofagriculture,education,health,productivity,transport and finance across different emerging markets shows that these services are generating interest and participationfromendusersthankstotheirtangibleimpactondaytodaylives. Pyramid Research has identified numerousexamples of initiatives using public and private funding that leveragemobileservicesinsocialprogramsandpromotetheadoptionofconnectivityservicesbylower
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5.
incomepeople.Otherapplicationshelpimprovetheoperationandefficiencyofvariousverticalindustries acrossemergingmarkets.HighlightsofavailableapplicationsinNigeriainclude: i. ZainsultralowcosthandsetinitiativeinNigeriaallowssubscriberstoacquireasub$20handset. ii. TheMillenniumVillageprojectissponsoredbytheUNDPinPampaida,Nigeria,withtheobjective ofbringingmobilecommunicationsandInternetservicestoinhabitantsofselectedvillagesinsub SaharanAfrica. iii. TheRuralTelephoneProjectinNigeriaaimstoprovideconnectivityforruralandsemiruralareas, targeting mostly villages and population clusters on the outskirts of major towns. The program empowerswomenwiththenecessarytoolsandfinancingtorunapublictelephonebusinessin their community. The program has benefited over 1,500 Phone Ladies in rural and semirural Nigeria,whooperatein21ofthecountrys36states. iv. TheLadybirdMobileReadingprogramwasintroducedinsevenschoolsinLagosinmid2009by Longman Nigeria PLC, a subsidiary of Pearson Education in collaboration with MobileXcetera, a Nigerianmobilecontentprovider.Theprogramtargetsstudents59yearsold,allowingthemto download reading, spelling and grammar activities to their parents mobile phones. The applicationprogramisWAPbasedandrequiresaGPRSor3GhandsetandanInternetconnection. v. In the health area, programs such as My Question, My Answer provide awareness, counseling and education through SMS and mobilecall interaction about sensitive topics, suchasHIV. vi. Inthefinancialservicesarea,MoneyBoxAfrica,amobilecommerceplatform,allowsusersto store and move money, make payments over distance and perform a host of transactions via mobilephones. vii. In the agriculture sector, mobile applications are only beginning to take off. A current initiative is the Cassava Growers project, which disseminates information Agribusiness InformationPointsrangingfromthepricesofkeycropstovolumesindicatingdemandtrends. viii. SMS and shortcodebased information systems disseminate traffic information in Lagos andAbuja. ix. A wide variety of mobile entertainment services, ranging from ringtones and music downloadstomobilevideoandTVareofferedbyleadingplayersMTN,Zain,EtisalatandGlo Mobile. The development of the mobile data market in Nigeria will be driven by collaboration among equipmentandhandsetvendors,mobileoperators,localgovernmentandinternationalorganizations. Thereisamplespacetodevelopmobiledataapplicationsintheareasofagriculture,education,financial servicesandhealthinNigeria.Endusersvaluemobileconnectivitygreatlyandarefrequentusersofthis platform, yet the availability of specific applications is still limited. Developing a set of tools and information systems will require close collaboration among local and international entities; telecom vendorsandoperatorscanplayakeyroleinimportingsuccessfulinitiativestoNigeria. Intheareasofentertainmentandproductivity,mobileoperatorsarealreadymovingquicklytolaunch newvalueaddedservices.Sincethedisposableincomeofthelocalpopulationislimited,content sponsorshipwillplayakeyroleinpromotingadoptionofmobileentertainmentservices.
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1.ThemobileindustryinNigeria:ContextandMilestones
In this section, Pyramid Research examines the macroeconomic and policy context in Nigeria and highlights the most important aspects of the development of the countrys mobile telecom industry. Economic development, a widely distributedpopulationandapolicyframeworkenablingcompetitionamongmultipleoperatorshaveallcontributedtothe growthofmobileservicesinNigeriaoverthepastdecade.
1.1Nigeriaspolitical,economicandsociodemographiccontext
1.1.1PoliticaloverviewofNigeria ThecurrentpoliticalclimateinNigeriaisstable.After16yearsofturbulenceinthepoliticalenvironmentundermilitary rule,NigeriaelectedaciviliangovernmentinMay1999.LedbyOlusegunObasanjo,theciviliangovernmentsuccessfully completedtwoterms,lastingfouryearseach.ThefirstdemocratictransitioninthehistoryofNigeriatookplaceinApril 2007 when power was successfully transferred from one civilian leader to another and the elected president, Umaru MusaYarAdua,formergovernorofKatsinastateundertheObasanjoadministration,formallyassumedpower.OnMay 29,2009,Nigeriacelebrateditsfirstdecadeofdemocraticrule. Thecurrentrulingpoliticalparty,thePeoplesDemocraticParty(PDP),hasdominatedpoliticssinceNigeriasdemocracy began: both the previous and currentpresidents were candidatespresented by PDP. Theother majorpolitical parties includeAllNigeriaPeoplesParty(ANPP)andActionCongress(AC). Nigeriaoperatesafederalpresidentialsystem.Theadministrationisstructuredalongthreelevelsofauthority:Federal, stateandlocalgovernments.Thecountryhas36states,whicharefurtherdividedinto774localgovernments.Poweris sharedamongthethreearmsofgovernmentexecutive,legislatureandjudiciary. Theexecutivecabinetconsistsofthepresident,vicepresident,ministersandspecialadvisers,andtheirassistants.There are19federalministries,oneofwhichistheFederalMinistryofInformationandCommunications.TheMinistryworks withtheindependentnationalregulator,theNigerianCommunicationsCommission(NCC),andbothcollectivelyestablish thepoliciesandregulatoryframeworkthatgoverntheNigeriantelecommunicationsindustry.
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Exhibit6:StructureofNigeriangovernment,2009
Government: Federal, state (36), local (774)
Executive
Legislature
Judiciary
President Umaru Musa YarAdua
Vice-president Goodluck Jonathan
Ministries (19)
Special advisers & assistants
Minister Ministry of Information & Communications Dora Akunyili
Nigerian Communications Commission (NCC): Independent regulator
Executive vice chairman Ernest Ndukwe

Sources:NigeriaDirectOfficialinformationgatewayoftheFederalRepublicofNigeria;NigerianEmbassy;NCCwebsite
SincethestartofthedemocraticerainNigeria,thegovernmenthasfocuseditsstrategyonfinancialsectorreform,debt management,foreignreservesaccumulation,exchangeratestabilityandthefightagainstcorruption.Nigeriasnational debt declined from 36% of GDP in 2004 to just 4% in 20071. To further economic progress, the elected government developed the National Economic Empowerment and Development Strategy (NEEDS), which aims to drive economic growth,reducepovertyandachievetheMillenniumDevelopmentGoals(MDGs).Theprogramhasbeensuccessfulsofar, inthepastfewyearswinningthesupportofinternationalinstitutionssuchastheIMF,whichreviewedandapproveda PolicySupportInstrument(PSI)forNigeria. TheearlyyearsofPresidentYarAduasadministrationweredevotedtotacklingthesociopoliticalissuesinthecountry.As mostofthesehavenowbeenrectified,thegovernmentsfocusistosolvethedeeperproblemsthataredetrimentalto thecountryseconomicdevelopment.Thegovernmenthasintroducedtwoeconomicgrowthmechanismscoveringthe governmentspolicyintentions:theSevenPointEconomicAgendaandVision2020.Thesearebothongoingplans,but the2009budgetspecifiedprojectstowardachievingthesegoals. TheSevenPointEconomicAgendacoverskeyinfrastructuregoals,suchasimprovingpowerandenergysupply,boosting foodsecurityandagriculture,wealthcreationandemploymentopportunities,improvingthemasstransportationsystem, reforminglandownership,strengtheningsecurityandraisingthequalityoftheeducationsystem.
USDepartmentofState,BureauofAfricanAffairs,April2009
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Foritslongtermstrategy,NigeriasgovernmentdevelopedtheVision2020plan.Thekeygoalisthatby2020Nigeriawill beoneofthe20largesteconomiesintheworld,abletoconsolidateitsleadershiproleinAfricaandestablishitselfasa significantplayerintheglobaleconomicandpoliticalarena.Thegovernmenthassetupvariouscommitteesunderone frameworkforthedevelopmentandimplementationoftheVision2020plan.Toachieveitsvision,thegovernmenthas come up with indicative parameters, which are listed in the table below and serve as an overall framework for the developmentofvariousindustries. Exhibit7:NigeriasVision2020goals
Sector Policy Macroeconomy Infrastructure Education
2020target By2020thecountrywillbepeaceful,harmoniousandastabledemocracy. Asound,stableandgloballycompetitiveeconomywithaGDPofnotlessthan$900bnandaper capitaincomeofnotlessthan$4,000perannum. Adequateinfrastructureservicesthatsupportthefullmobilizationofalleconomicsectors. ModernandvibranteducationsystemthatprovidesforeveryNigeriantheopportunityandfacility to achieve his maximum potential and provides the country with adequate and competent manpower. Ahealthsectorthatsupportsandsustainsalifeexpectancyofnotlessthan70yearsandreduces to the barest minimum the burden of infectious diseases such as malaria, HIV/AIDS and other debilitatingdiseases. A modern technologically enabled agricultural sector that fully exploits the vast agricultural resources of the country, ensures national food security and contributes significantly to foreign exchangeearnings. AvibrantandgloballycompetitivemanufacturingsectorthatcontributessignificantlytoGDPwith amanufacturingvalueaddedofnotlessthan40%.
Health
Agriculture
Manufacturing
Source:Vision2020website,June2009
Theintroductionofdemocraticrulein1999,progressacrossitsstrategicgoalsandastableforeignpolicyhaveallhelped to improve investor confidence in Nigeria, which in turn has led to a sizable rise in foreign direct investment. The newfoundstabilityalsohasmadeNigeriaintoaviableoilandgasproducer,whichnowaccountsforaconsiderableshare ofUSoilimports. Nigeria has also made substantial progress by becoming a member of a number of international organizations. These includetheUnitedNationsandmanyofitsrelatedagencies,theInternationalMonetaryFund(IMF),theWorldBankthe InternationalBankforReconstructionandDevelopment(IBRD),theAfricanDevelopmentBank(AfDB),theOrganizationof Petroleum Exporting Countries (OPEC), the World Trade Organization (WTO) and the Economic Community of West African States (ECOWAS). Other organizations include the African Union (AU), the Maritime Organization of West and Central Africa (MOWCA) and several other West African bodies, the Commonwealth of Nations, the Nonaligned Movement(NAM),theNewPartnershipforAfricasDevelopment(NEPAD)andtheOrganizationoftheIslamicConference (OIC). TopositionitselfasakeyregionalplayerwithinAfrica,NigeriahelpedcreateECOWAS,whichwasestablishedinLagosin 1975.Theorganizationseekstoharmonizetradeandinvestmentpracticesforits15WestAfricanmembercountriesand
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ultimately to achieve a full customs union. It aims to promote economic integration in specific areas such as energy, agriculture,transport,commerceandtelecommunications. 1.1.2EconomicoverviewofNigeria Nigerias economy experienced significant progress over the past five years, just before the 2009 slump in the global economy. In dollar terms, the countrys nominal GDP grew at a 16% CAGR during the 20012009 period, one of the highestgrowthratesinAfrica.InrealGDPterms,measuredinlocalcurrency,theexpansionwasasolid8.94%CAGRover thesameperiod,whichmakesNigeriathefastestgrowingeconomyamongthecountriesinExhibit8. Exhibit8:RealGDPCAGRin20012009inlocalcurrenciesinselectAfricancountries
Source:EconomistIntelligenceUnit,2010
Nigerias GDP growth is highly correlated with developments in the oil sector. A sharp increase in international crude pricesin2003resultedina10.4%peakforannualrealGDPgrowth.Between2000and2005thecountryseconomic growthcontinuedtobedrivenbysurgingoilpricesandrapidgrowthintheagriculturalsector.AccordingtotheNBSs statistical fact sheet on Nigerian economic and social development of December 2007, oil and mineral products represented94.9%ofexportrevenuein2007.
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Exhibit9:RealGDPpercapitaandrealGDPgrowthinNigeria,20012009(US$)

$2,500
25%
$2,000
Real GDP per capita (US$)
20% Real GDP per capita

Real GDP growth
$1,500
15%
$1,000
10%
$500
5%
Real GDP growth
$0 2001 2002 2003 2004 2005 2006 2007 2008 2009
0%
Source:CentralBankofNigeria;EconomistIntelligenceUnit,2010
Inspiteofitsimpressiveoverallgrowth,Nigeriastillfacesthechallengeoflowpercapitaincome.AccordingtoEconomist IntelligenceUnitfiguresbasedonCBNdata(seeExhibit10),NigeriasrealGDPpercapitain2009exceeded$2,200,placing itbehinditsNorthernAfricanneighbors,suchasTunisia,AlgeriaandEgypt,butaheadofmanyothercountriesinSub SaharanAfrica. Exhibit10:RealorPPPadjustedGDPpercapitainselectedAfricancountries,2009(US$)
South Africa Tunisia Algeria Egypt Morocco Nigeria Cameroon Senegal Cote d'Ivoire Kenya Ghana $0 $2,000 $4,000 $6,000 $8,000 $10,000
Purchasing power adjusted GDP per capita (US$)
Source:EconomistIntelligenceUnit,2010
Intermsofinflation,thegovernmentalsomanagedtomakesubstantialprogress.Thecountryfulfilleditsobligations,and thesharpdeclineinNigeriasexternaldebthelpeddrivedowninflation.Theconsumerpriceindex(CPI)peakedat17.9% in2005buthassincedroppedsignificantly. ThevalueoftheNigeriancurrency,thenaira,wasworthanaverageofN129perUSdollarin2006,comparedwithN131 perdollarin2005.Thenairacontinuedtoappreciateagainstthedollaruntilthelasttwomonthsof2008,whenitsvalue fellby20%.Thiswasmainlydrivenbyaslowdownintheworldeconomyandasharpdeclineinoilpricesduring2008.
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AdditionalfactorswereinternationalconcernaboutstabilityandsecurityintheNigerDeltaregionasresultofmilitant activitysince2006.ByJanuary2010,however,theexchangeratehadclimbedbacktoaboutN1522perdollar. Goingforward,themainchallengethatNigeriafacesisthesignificantdeficienciesininfrastructure.Overthepast10years, the government has made substantial investments in various sectors, but room for improvement remains. President YarAduaplanstoincreasinglyrelyonpublicprivatepartnershipinitiativestoaddresstheseissues.Thegovernmenthopes thatprivatizationwillimproveplanningandmanagementandincreasefinancialinvestmentacrossthecountry. TheeconomicreformsoutlinedintheSevenPointeconomicagendaareslowlybutsurelybeingimplemented.Inorder tofaceashrinkingbudgetin2009,thegovernmentintroducedplanstocutexpenditureswithoutcompromisingplanned infrastructurerelatedprojects.Thegovernmentisalsotakingtoughmeasuressuchasderegulatingdomesticfuelprices, whichmeansthatfuelsubsidieswillcease. 1.1.3SociodemographicoverviewofNigeria Withmorethan150minhabitants,NigeriahasthelargestpopulationinAfrica;itaccountsfor47%ofWestAfricastotal population3andistheeighthmostpopulouscountryintheworld. Nigeriahasexperiencedoneofthehighestratesofpopulationgrowthoverthelast10years.However,theUNDPexpects thecountryspopulationgrowthratetodeclineslightly,from2.8%inthe19752005periodto2.2%fortheperiod2005 2015.TheUN4projectsapopulationof210mby2025and289mby2050,whichwouldmakeitthesixthmostpopulous countryintheworld. Exhibit11:TotalpopulationinNigeria,20012009
160 140
Population (millions)
120 100 80 60 40 20 0 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source:WorldBank,2009;PyramidResearch,2009
Nigeriaspopulationisrelativelyyoung.Asof2005,42%ofthecountryspopulationwas014yearsofage,while55%of thepopulationwasinthe1565yearoldbracketandonly3%overtheageof65. AccordingtoPyramidResearchestimatesandofficialfigures,Nigeriasworkingpopulationmakesuproughly39%ofall inhabitants.TheNationalBureauofStatisticssaystheworkingpopulationgrewfrom44.9min2002to53.98min2007.
2 3
EIU,January2010 WorldBank,March2009 4 United Nations, Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat. World Population Prospects:the2008Revision2009, 5 CIAWorldFactbook,2009.
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Withsuchalargeandyoungpopulation,curbingunemploymentisaconsiderablechallenge.AccordingtotheNBS,the nationalunemploymentratereached14.6%in2007. Exhibit12:WorkingpopulationasproportionoftotalpopulationinNigeria,20012009

Total working population 60
Working population / total population 40% 35%
Working population (millions)
50 40 30 20 10 0 2001 2002 2003 2004 2005 2006 2007 2008 2009
Percentage working
30% 25% 20% 15% 10% 5% 0%
Source:NBS,2009;PyramidResearch,2009
Withrespecttogender,officialestimatessuggestarelativelyevendistributionofthepopulation.Accordingtothecensus carriedoutin2006andpublishedbytheNationalBureauofStatistics6inNovember2007,thebreakdownofpopulation bygenderwas71.7mmales(51.2%)and68.3m(48.8%)females. Exhibit13:PopulationbreakdownbygenderinNigeria,2006
Female 48.8%
Male 51.2%
Source:NBS,2007
Asforthegeographicaldistributionofthepopulation,theKanoandLagosareasarethelargest.The2006censusshows thatKano,withapopulationofalmost9.4mor6.4%ofthetotal,wasthemostpopulousamongthe36statesofNigeria, followedLagoswith6%.AlthoughLagosisthesmalleststateinNigeria3,577squarekilometersithasthesecond largestpopulationandhencethehighestpopulationdensityinNigeria.Abuja,whichbecamethecapitalin1991,replacing Lagos,hasonly1%ofthecountryspopulation.Nigeriaspopulationdensityisroughly140peoplepersquarekilometer accordingtotheUN.Overall,ithasbeenestimatedthatupto64%ofNigeriansliveinruralareas,althoughruralurban
NBS:NigerianStatisticalFactSheetonEconomicandSocialDevelopment,2007.
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migration is underway. Rural areas face significant infrastructure gaps. For example, the World Health Organization7 estimatesthatin2006,safedrinkingwaterwasavailableto65%ofurbandwellersbutonly30%ofruralinhabitants. Exhibit14:PopulationdistributionbystateinNigeria,2006
Abuja 1.0%
Katsina 3.9%
Rivers 3.5% Oyo 3.8% Kaduna 4.1% Lagos 6.1% Kano 6.4% Bauchi 3.2%
Others 65.1%
Jigawa 2.9%
Source:NBS,2007
Nigeria has one of the mostethnicallydiverse populations in the world. There is an abundant variety of customs and traditionsaswellas500indigenouslanguagesamongthemorethan250differentethnicgroupsinNigeria.There arealsotwomainreligions,IslamandChristianity,representing75mand65mrespectively;otherfaithsincludeworshipof local indigenous gods and animism. The three largest ethnic groups are the Hausa, Yoruba and Igbo, which together accountforabout70%ofthepopulation.Ofthese,thelargestaretheHausa,whoarepredominantlyMuslimsfromthe northernpartofNigeria.Yorubapeoplearepredominantinthesouthwest.Igbos,predominantinthesoutheast,are mostlyChristiansofvariousdenominations.MostofNigeriaspopulationscommonlycommunicateinEnglish,althoughit iscommontofindpeoplewhohaveknowledgeoftwoormoreNigerianlocallanguagesanddialects.Hausa,Yoruba,Igbo andFulaniarethemostwidelyusedNigerianlanguages.
7 World Health Organization: Population with sustainable access to improved drinking water sources; available at http://data.un.org/Data.aspx?d=WHO&f=inID%3ARF02
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1.2KeyeventsinNigeriasmobiletelecommunicationsmarket
TheNigerianmobilemarkethasboomedinthepasteightyears,supportedbyasuccessfulliberalizationprogramaswell aspositivepoliticalandeconomicenvironment.ThefirstsetofGSMlicenseswasissuedin2001.Atpresent,therearefive activeGSMoperators(MTN,Zain,Glo,MtelandnewentrantEtisalat)aswellasamultitudeofsmallerCDMAoperators. ThetopmobileGSMoperators,MTN,GloMobileandZain,accountforover85%ofmobilesubscriptionsinthecountry. TheliberalizationofNigeriastelecommunicationsindustrystartedintheearly1990sandacceleratedin2000,afterthe electionofademocraticgovernment.Sincethentherehasbeenaninfluxofforeigndirectinvestment,especiallyinthe mobile services segment. Growth in the fixed segment has been sluggish due to inadequate infrastructure and investment, prompting a significant fixedmobile substitution effect and turning mobile technology into the dominant meansofcommunicationinNigeria.Inordertostimulategrowthinthefixedsector,thegovernmentinitiallysteppedin, invitingbidstoprivatizethefixedincumbent,Nitel,butthesaleoftheincumbenthasnotbeencompletedsofar.The Internetsegmenthasalsopostedgrowth,withInternetuserpenetrationincreasingfrom0%in2001to4%in2009.Thisis mainlyduetogrowthinthenumberofInternetserviceprovidersandcybercafes,mostlyinurbanareas. Givenitssizeandrateofgrowth,NigeriaisoneofthemostattractivemarketsintheAfrica.In2008,thecountrybecame thebiggestmobilemarketinAfricaintermsofsubscriptions,whichin2008exceeded63m,surpassingSouthAfrica,and reached73min2009.However,giventhecountryslowerpurchasingpower,NigeriastilllagsSouthAfricaasthesecond largestAfricanmarketintermsofmobileservicerevenue,generating$6.6bnin2009(seeExhibit15). Exhibit15:Sizeofthemobilemarket,nominalGDPpercapitaandmobileservicerevenueCAGR,inselect Africanmarkets,20032009
80%
Mobile service revenue CAGR 2003-2009
70% 60% 50% 40% 30% 20% 10% 0% $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000
Ghana $1,093 Nigeria $6,580 Senegal $716 Algeria $3,101
Cameroon Kenya $826 Egypt $1,086 $4,708 Cote d'Ivoire $1,148
Tunisia $1,395 Morocco $3,016
South Africa $10,008
GDP per capita (US$)
Note:BubblesizerepresentsmobileservicemarketrevenueinmillionsofUSdollars. Source:PyramidResearch,2010;EIU,2010
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1.2.1HistoryofthetelecommunicationsindustryinNigeria In1985,thegovernmentembarkedonajourneytoderegulatethewholeeconomy,includingthetelecommunications sector.Aspartoftheprogram,theindependentnationalregulator,theNigerianCommunicationsCommission(NCC),was formedin1992.TheNCCisthebodythatsupervisestheactivitiesofoperatorsandotherstakeholdersintheNigerian telecommunicationsindustry.FollowingtheestablishmentoftheNCC,alaw,Decree75,wasenactedtoallowprivate companiestoparticipateinthetelecomsectoraswellashelpdevelopandinvestinthecountrysinfrastructure. Exhibit16:NCCobjectivesandregulations
Thecommissionsresponsibilityistopromotecompetitionamongserviceprovidersintheindustryaswellasensuretheprovisionof adequate telecommunications services throughout the country. The vision of the NCC is to act as an information rich environment, whoseindustryregulationactivitiescanbecomparablegloballytootherworldclassregulatoryorganizations.Itsmissionistosupporta marketdriventelecommunicationsindustryandpromoteuniversalaccess. UpontheestablishmentoftheNCC,itsobjectivesweredeterminedasfollows: To promote the implementation of the national communications or telecommunications policy, this may be modified and amendedfromtimetotime. To establish a regulatory framework for the Nigerian communications industry and create an effective, impartial and independentregulatoryauthority. Topromotetheprovisionofmodern,universal,efficient,reliable,affordableandeasilyaccessiblecommunicationsservices andthewidestcoveragethroughoutNigeria. To encourage local and foreign investments in the Nigerian communications industry and the introduction of innovative servicesandpracticesintheindustryinaccordancewithinternationalbestpracticesandtrends. To ensure fair competition in all sectors of the Nigerian communications industry and also encourage participation of Nigeriansintheownership,controlandmanagementofcommunicationscompaniesandorganizations. ToencouragethedevelopmentofacommunicationsmanufacturingandsupplysectorwithintheNigerianeconomyandalso encourageeffectiveresearchanddevelopmenteffortsbyallcommunicationsindustrypractitioners. ToprotecttherightsandinterestofserviceprovidersandconsumerswithinNigeria. Toensurethattheneedsofthedisabledandelderlypersonsaretakenintoconsiderationintheprovisionofcommunications services. Toensureanefficientmanagement,includingplanning,coordination,allocation,assignment,registration,monitoringanduse ofscarcenationalresourcesinthecommunicationssubsector,includingbutnotlimitedtofrequencyspectrum,numbersand electronic addresses, and also promote and safeguard national interests, safety and security in the use of the said scarce nationalresources CurrentregulationsimplementedbytheNCCinclude: Typeapprovalregulations Numberingregulations Telecommunicationsnetworksinterconnectionregulations Competitionpracticesregulations Qualityofservicesregulations Universalaccessanduniversalserviceregulations Consumerprotectionregulations DeploymentofWiFi Frequencyspectrum(feesandpricing) Nigeriancommunications(enforcementprocess)

Source:NigerianCommunicationsCommissionwebsite,2009
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1.3KeyactivitiesoftheNigerianCommunicationsCommission(NCC)
The NCC began licensing network operators in 1996. However, due to political setbacks caused by the acting military government at the time, the markets potential was not exploited and it continued to suffer from underinvestment. Duringthesameyear,NitelwasbroughtunderthesupervisionoftheNCC,andasubsidiary,Mtel,wascreatedtomanage thecompanysmobileservicesandnetwork. Anewtelecompolicywasintroducedin2000thatcommencedfullliberalizationoftheindustry.InFebruary2001,the NCC awarded digital mobile licenses in the GSM900 and GSM1800 bands for an initial period of 15 years to four companies:MTN,CommunicationsInvestmentLimited(CIL),EconetWireless(formerlyVMobile,CeltelandnowZain) and Mobile Telecommunications Limited (Mtel Ltd). Following CILs inability to pay the full sum of $285m, it had its licensedrevoked. MTNandZainlaunchedserviceinMayandAugust2001,respectively,andhavesincedeployedtheirnetworksacross Nigerias36states.InSeptember2002,GloMobilealsoreceivedadigitalmobileGSMlicensetoprovideserviceinallparts ofthecountry.NationalcarrierlicenseswereissuedtoGloMobileandNigerianTelecommunications(Nitel)inSeptember andNovemberof2002,respectively.Inthesameyear,bothcompanieswerealsoissuedinternationalgatewaylicenses for20years,until2022,alongwithPrestCable&SatelliteTVSystems. MTS First Wireless acquired a national longdistance operator license in 2002, followed by six other companies in the 20042006period.InSeptember2008,GatewayTelecomIntegratedServicesbecamethelatestcompanytoacquirea licenseinthiscategory.Alllicensesarefora20yearperiod. InOctober2003,anewNigerianCommunicationsCommissionActwaspassed,replacingtheNigerianCommunications CommissionActof1992.Thenewactgivestheregulatormoreindependenceandpowertoregulatetheindustry. InFebruary2006,theNCCintroducedunifiedaccessservicelicenseswithasingleconcessioncoveringtheprovisionof fixed,mobileandanyothertelecommunicationsservicesforaperiodof10years.Itwasgrantedto13companiesintotal, includingtwomajorGSMoperators,MTNandZain.TheearliestoperativedateforthelicenseswasJuly2006. Thisunifiedlicensereplacedallexistinglicenses,includingthe15yeardigitalmobilelicensesgrantedtoGSMoperatorsin February2001.OtherrecipientswereCDMAoperators(formerlyknownasprivatetelecomoperators,orPTOs)suchas Starcomms,MultiLinksandIntercellular.Thelicensescost$2.11meachandcoveraperiodof10years.Theintroduction ofunifiedaccessservicelicenseswasamajorchangeinthemarket,sinceitofficiallyendedtheexclusivityperiodofthe GSM operators in the provision of mobile telecommunications services. In July 2007, Visafone was granted a similar licenseandwentontojointhecountrystoptierCDMAoperators.CDMAoperatorscannowextendtheirreachbeyond their former geographical limits and compete in both fixed and mobile markets. As a result, CDMA operators are dominatingthefixedmarketandhaveextendedtheirservicesintomobilemarkets,competingfreelyandaggressively withestablishedGSMbasedoperators. InJanuary2007,theMubadalaDevelopmentCompany,abusinessdevelopmentandinvestmentcompanybasedinAbu Dhabi,wasissuedalicensefortheprovisionofmobile,fixedandbroadbandservices.EtisalatjoinedMubadaladuringthe sameyearasitsoperationalpartnerinNigeria,andtheduolaunchedmobileGSMserviceinOctober2008. In March 2007, the NCC awarded four UMTS licenses in the 2GHz band. Only four operators bid for these licenses, including three mobile operators MTN Nigeria, Glo Mobile, Zain (Celtel Nigeria) and one longdistance fixed operator,AlheriEngineering(asubsidiaryoftheDangoteGroup).Allfourbiddingcompaniesreceiveda10MHzblockeach at a cost of $150m for each concession. To date, all licensed operators except Alheri Engineering have launched 3G servicesinNigeria.
30
Exhibit17:NCCheadquartersinAbuja
Source:NCC
Plans toprivatize the fixed incumbentNiteland its mobile arm Mobile Telecommunications Limited(Mtel) have been underway since 2002. The incumbent operator was eventually privatized in 2006, when Transnational Corporation of Nigeria(Transcorp)purchasedamajoritystakeinthecompanyfor$500m,buttheacquisitiondidnotimproveNitels positioninthemarket.ItscontinueddeclinepromptedtheregulatortothreatentoannulthepartialsaletoTranscorpon multipleoccasions,referringtothelackofinvestmentstoupgradetheoperatorsnetwork.However,inFebruary2008, TranscorpreachedanagreementwiththegovernmenttodivestamajoritystakeinNitel/Mteltoathirdpartyinvestorby mid2009. Multiple international operators, including Vodafone, Glo Mobile, Telenor, France Telecom and Telkom SA, were said to have expressed interest; however, charges of corruption and mismanagement against Transcorp officials promptedthegovernmenttofinallyannulthesaleandretrievedownershipoftheincumbentfromTranscorpinJune 2009.ThegovernmenthassinceannouncedalternativewaystorestructureandreorganizeNitelbybreakingitupand sellingthepartsasseparateentities,inordertobeabletorecognizemorevaluefromeachdivisionandattractmore buyers. In2009,theNCCalsoannouncedplanstoregisterallGSMenabledSIMcards:startinginthefirstquarterof2010,all unregisteredSIMcardswillbedisconnected.TheNCChasalsoestablishedacommitteetoimplementmobilenumber portability(MNP)formobilenetworksinNigeria,butnoofficialdateorspecificplanshavebeencommunicatedsofar. Morerecently,afterreceiving41applicationsforWiMAXspectruminthe2.3GHzband,theNCCawardedlicensesona useitorloseitbasistoMultiLinks,MobitelNigeriaandSpectranetatacostofN1.368bn(US$9.4m)foreach20MHz slot.However,thelicensingwascanceledinordertoaccommodatenewparametersfortheevaluationprocess,andnew licensingroundisexpectedtotakeplaceshortly. GSMoperatorsMTNandZainhavealsoappliedtotheCentralBankofNigeria(CBN)formbankinglicenses,withtheaim beingtoexpandintomobilebankingservices.Bothoperatorsbelievethattheservicewilladdvaluetotheirsubscribers andplantotargetboththebankedandunbankedpopulations.
31
Exhibit18:MilestonesinlicensingandconcessionsawardedbytheNCC,20002009
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
February: Newtelecom policywas Digital mobile enacted. licenses were December: awardedto Auctionsfor MTN,Mtel GSM andEconet licenses. Wireless (later Vmobile, Celteland nowZain).
June: Telecommun Firstnational icationsAct longdistance2003was licensewas enacted. offeredto MTSFirst Wireless. September: FourthGSM licenseand national carrier license awardedto GloMobile. November: Nitels national carrierand international gateway license became operative.
October/ November: February: January: September: May: November: Twonational NCC Anational Gateway NCCawarded Three longdistance introduced carrier Telecoms licensesin national operator unified licensewas Integrated the2.3GHz longdistance licenses access awardedto Services bandtofour operator became licenses. PrestCable& national operators, licenses operative. Thesewere SatelliteTV longdistance but became grantedto13 Systems license discussions operative. companiesin became arestill total, operative. ongoingto March: including finalizethe December: NCCissued MTN,Zain, 3GUMTS issue October: Alloperators MultiLinks licensesto Etisalat had and introduced MTN,Zain, launched Starcomms. GloMobile services persecond Theearliest andAlheri billing. operative Engineering dateforthe licenseswas July: July2006. NCCawarded fixed July: wireless Transcorp licenses buys75% stakeinNitel
Source:NCC;PyramidResearch,2009
32
Exhibit19:Keyactivitiesandmilestonesbymobileoperator,20012009
Year
2001
NA NA NA
February:Wasawarded digitalmobileGSMlicenseby theNCCatacostof$285m. May:Launchedcommercial servicesonMay16,2001,in PortHarcourt,Lagosand Abuja. February:Awardeddigital mobileGSMlicensebythe NCCatacostof$285m. August:Launched commercialservices. February:Awardeddigital mobileGSMlicensebythe NCCatacostof$285m. MtelmergedwithNitel.
NA
2002
NA NA
NA
September:GloMobilewas awardeddigitalmobile licenseatacostof$200mas partofitsmultiplelicenses (nationalcarrierservices, mobileservices,long distancecommunications andfixedwirelessservices). Alsowasissuedinternational gatewayandnationalcarrier licensealongsideNitel. Firstattempttoprivatize Nitel/Mtel,butthe preferredbidder,UK basedInvestment InternationalLimited, failedtopayforthe51% stake.
NA
NA
2003
December:Thirdoperatorto introducepersecondbilling.
November:Introduced persecondbilling. December:Vodacomwon courtcaseoveracquisition ofEconetWireless. August:Launched commercialservicesover 2.5Gnetwork. Becamefirstoperatorto introducepersecondbilling.
April:Appointmentof Pentascopetomanage Nitel/Mtel. December:Mtelrolledout GSMservicestothecapital citiesofall36states.Also introducedpersecond billing.
NA
NA
NA
2004
NA
April:Econetrebrandedto VeeNetworks(wastrading asVMobile)after acquisitionofacontrolling stakebyVodacom.
GloMobileintroducesGPRS withWAP.Injustnine monthsofservice,Glo Mobilebecamethefastest growingmobileoperator, with1msubscribersacross 60municipalities. August:Announcedplansto investinfiberoptic submarinecable.
June:Secondprivatization attemptcommenced.
NA
NA
NA
Source:PyramidResearch;operators
33
Exhibit19:Keyactivitiesandmilestonesbymobileoperator,20012009(Contd)
Year
2005
NA NA NA
September:Rolledout GPRSservices. September:Rolledout GPRS/GSMservices.
Pentascopecontactwas cancelled. May:Mtelssubscriber totalpeakedat1.2mand itsmarketshareat8%.
NA
2006
NA NA
NA
May:CeltelInternational acquiredmajoritystake (65%)inVeeMobile. September:Rebrandedto Celtel. Majoritystake(51%)in Nitelwassoldto Transcorp. January:Wasissueda unifiedaccesslicensebythe NCC(GSM900/1800MHz bands)atapriceof$400m. September:Etisalat acquired40%ofMubadala Development.
March:Launchedfixed wirelessservicesbasedon CDMAand3GEVDOmobile broadbanddataservice. May:Awardedunified licensebytheNCC.
NA
2007
NA
March/April:Wasawarded a3GUMTSlicensefora 10MHzblockinthe2GHz bandatacostof$150m. May:Firsttestcallfor3G completed. March/April:Was awarded3GUMTSlicense fora10MHzblockinthe 2GHzbandatacostof $150m. March/April:Wasawarded 3GUMTSlicensefora 10MHzblockinthe2GHz bandatacostof$150m.
Redefinedmobileandfixed voiceservice.Introduced freedomroamingtariffs.
June:Acquired Cellcom. August:Awarded unifiedaccesslicense (800MHzspectrum)by theNCC,whichallows ittoofferfixedand mobileservices.
2008
May:LaunchedDVBHTV service.
August:Celtelwas rebrandedasZain followingtheglobal acquisitionofCeltel InternationalbyMTC.
August:Hitthe20m subscribermark. September:Launched Internetpackagesover3G plusnetwork.
February:Transcorp sharesweresuspended fromtheNigerianStock Exchange(NSE).
March:Firstofficialcallon thenetwork. October:Launched commercialoperationsin Nigeria.
July:Starcommslistedon theNigerianstock exchange. November:Reachedthe 2msubscribersmark.
September:Crossed the1msubscribers landmarkaftersix monthsand2.5mafter 10months.
April:RaisedN15bnina privateplacement. February:Transcorp starteddivestingitsstake inNitel. June:Subscribershit1m marksevenmonthsafterit launchedoperations.
2009
June:LaunchedIPbased connectivity.
February:Zainlaunched 3GserviceinNigeria. April:Announcedplansto migratetoallIPnetwork. October:Signednetwork managementdealwith NokiaSiemensNetworks.
January:Reduced internationalcallratesby 70%. October:Announced expansionofitsnetwork coverageto86 predominantlyremote communities.
February:Introduced missedcallnotification serviceandcallwaiting.
February:Launched voiceSMSserviceand introducedfreelate nightcalls. July:AgreedwithNokia tointroducedualband mobileCDMA handsets.
Source:PyramidResearch;operators
34
1.4EvolutionofmobilesubscriptionsinNigeria
TheNigerianmobileservicesmarkethasincreasedatarapidpace,from422,000subscriptionsattheintroductionofGSM networksin2001to73mattheendof2009.Measuredintermsofthemobilepenetration,growthhasbeenequally exponential,fromjust0.33%ofthepopulationin2001to48.9%in2009.Intensecompetition,theproliferationofprepaid plans,lowcosthandsetsandtherapidexpansionofmobilenetworkstodifferentpartsofthecountryarethemaindrivers ofgrowthinmobilesubscriptions.TheexpansionofcoveragetounderservedareasbythesmallerCDMAoperatorshas alsoledtoincreasedcompetition,bringingoverallcommunicationpricesdown. Exhibit20:MobilesubscriptionsandmobilesubscriptionspenetrationofpopulationinNigeria,20012009
Mobile subscriptions 80 70 60 50 40 30 20 10 0 2001

Subscription penetration 50% 45%

Penetration of population
Mobile subscriptions (millions)
40% 35% 30% 25% 20% 15% 10% 5% 0% 2002 2003 2004 2005 2006 2007 2008 2009
SincetheinceptionofGSMtechnologyinNigeria,prepaidmobileserviceshavebeenthemostpopular.Overthepast eightyears,prepaidsubscriptionsaccountedforanaverageof99.6%oftotalsubscriptions,buttheratiofellto99.1%in 2009.Subscriptionsarewhollyoperatorbased,sincetherearenomobilevirtualnetworkoperators(MVNOs)inNigeria. Exhibit21:MobilesubscriptionsbreakdownbysubscriptiontypeinNigeria,20012009

100%
Percentagae of mobile subscribers
99% 98% 97% 96% 95% 94% 93% 92% 91% 90% 2001 2002 2003 2004 2005 2006 2007 2008 2009
Postpaid Prepaid
35
GSM technology remains the dominant platform in the mobile market, representing 90% of total subscriptions. Respectively,2G,2.5Gand3Gtechnologiesaccountedfor17%,75%and8%ofsubscriptionsatyearend2009.Pyramid Researchexpects2.5Gand3G+technology,includingCDMA2000,GPRS,EDGEandUMTS/HSPA,toplayanincreasingly importantroleinspreadingInternetaccesstothemillionsofNigerianswhoarecurrentlyunabletoobtainaccessthrough fixedline networks. The lack of a competing fixedline Internet offering in most regions of Nigeria has made mobile networkstheonlyInternetoptionforbothbusinessandresidentialcustomers.CDMAoperatorssuchasVisafonehave madeasuccessfulbusinessmodeloutofthiswithCDMAbasedtechnologies,andweexpectthemtostaystronginthis segment given their expansion plans. GSMbased operators such as MTN, Glo Mobile and Zain are also increasingly makinginroadsinthemobileInternetmarketwithUMTSbasedservice. KeymarketindicatorsshowarapiddeclineinARPSsince2001,reflectingstrongcompetitioninthemarket.MobileARPS fellfrom$48.21in2001to$11.26in2008andtoanestimated$8.07in2009,whileMOUfellfrom225to48inthesame period.TheentryofEtisalatin2008,theadditionofmarginalandlowerspendingsubscribersofprepaidsubscriptions, andincreasedcompetitionamongexistingGSMandCDMAbasedoperatorswillcontinuetodriveARPSdownward.To respondtofallingAPRS,mobileoperatorsarenowconcentratingontheprovisionofvalueaddedservices.Inamarket with as many mobile operators as Nigerias, retention is also increasingly important to mobile operators. Pyramid Researchestimatesthatannualchurnrateshavealreadysurpassed40%,aconsiderableincreasefromthe2%levelin 2001. Exhibit22:SnapshotofkeymarketindicatorsinNigeria,20012009
Subscriptionpenetrationofpopulation
2001
2002
2003
2004
2005
2006
2007
2008
2009
0.3%
1.2%
2.4%
7.2%
13.8% 20.9% 28.2% 43.1% 48.9%
Userpenetrationofpopulation
0.3%
1.1%
2.2%
6.5%
12.0% 17.4% 23.3% 34.5% 38.0%
Prepaidsubscriptionsaspercentageoftotal
99.9% 99.8% 99.6% 99.6% 99.5% 99.5% 99.5% 99.2% 99.1%
ARPS(US$)
$48.21 $47.56 $41.55 $29.94 $17.80 $13.65 $12.12 $11.26
$8.07
DataARPSaspercentageoftotalARPS
0.5%
0.7%
0.9%
1.1%
2.0%
3.0%
3.5%
5.7%
7.9%
Monthlyminutesofuse(MOU)
223
162
136
119
89
70
53
51
48
Annualchurnrate
2.0%
8.7%
18.5% 18.6% 26.8% 27.9% 48.4% 44.0% 41.8%
Note:MobilesubscriptionsrefertothenumberofSIMcardspresentinthemarket,whilemobileusersrefertothenumberofuniquemobileusersinthe country. Source:PyramidResearchMobileDataForecast,2010
NigeriaisoneofthemostcompetitivemarketsinAfrica,withfiveGSMmobileoperators.Thishasresultedinlowertariffs, awidevarietyofinnovativeservices,attractiveoffersandimprovementsinservicequalityinordertodifferentiateandset thebrandsaside.
36
Pyramid Research estimates that MTN remained the market leader at yearend 2009, with more than 42% of overall subscriptions, followed by Glo Mobile (23%) and Zain (21%). The key competitive strengths of each player can be summarizedasfollows: MTNhasmanagedtomaintainitspositionasthelargestoperatorintermsofsubscriptionsbyconstantly investinginaggressivenetworkrollouts.Ithasalsorecentlyintroducedvariousvalueaddedservices,such asmobileTV,MTNGoogle,VideoCam,MobileInternetandaSIMbackupservice. ZainovertookGloMobileasthesecondlargestplayerinthemobilemarketafteritsrebrandingexercisein 2008. One of the contributors to Zains success is the introduction of its ultralowcost handset project, whichmarketsphoneswithpricesaslowas$20intheNigerianmarket.Asaresult,itgainedmorethan 1m customers within nine months. Among other community initiatives, Zain also focuses on providing various valueadded services and offers onnet tariff discounts to the Nigerian police and military. However,from2Q2009onwards,ZainattractedlesssubscribersthanGloMobileanditfellbacktothe thirdpositionatyearend2009. GloMobilesmarketsharehasincreasedsignificantly,fromonly9.3%in2003to22.7%in2009.Thisisdue toitscompetitiveonnetworkrates.GloMobilefocusesontheprovisionofvariousinnovativepackages, bonusairtimeandlowroamingcharges.Theoperatoraimstoprovideaffordableservicestothemasses, whichitdemonstratedbybeingthefirstoperatortolaunchpersecondbillingfromtheonset,in2003.At itslaunch,theoperatoralsointroducedlowerdenominationscratchcardsandinnovativepackagesthat allowedlowincomeearnerstopayfortheirstarterphonepacksbyinstallments. InJune2009,Etisalatreachedthe1msubscriptionmark,lessthanoneyearafteritscommerciallaunch; byyearend2009theoperatorssubscriberbasereached2.3m.Inordertoattractsubscribersfromthe establishedmobileoperators,Etisalatfocusesonmarketing,valueaddedservicesandservicequalityas wellasondifferentiatingitsservices. Mtel is lagging due to a lack of infrastructure investment and the financial challenges that Nitel, its controllingcompany,faces.Mtelsmarketsharedroppedfrom10.7%in2001to0.4%in2009. In parallel, CDMA operators are gaining leverage in the Nigerian mobile market, with their combined market share increasing from just 1.1% in 2001 to 9.6% in 2008. Weestimate that the footprint of the CDMAoperatorscontinuedtogrowin2009,to10.4%.Giventheirlowercallratesandpartiallysubsidized handsets, companies like Visafone, Starcomms, MultiLinks and Zoom Mobile (previously Reltel) are emergingasasignificantforceinthemarket. o VisafonelaunchedserviceinMarch2008andbegantosellhandsetsatverylowprices,starting at just N2000 ($13.80). It is now the leading CDMA operator in terms of subscriptions. The operatorscustomerbasejumpedfromabout60,000subscribersinMarch2008toalmost2.2m attheendof2008,withthemajorityofitssubscriberspurchasinghandsetsforthefirsttime. o AnotherUASLholder,GiCellWireless,hasbeendeployingalowcostCDMA2000mobilenetwork acrossAdamawa,Borno,CrossRiver,KwaraandOyostates.Ithasalreadylaunchedservicesin Yola state. The operator received partial financial support ($5m) from the World Banks International Development Agency, local banks, corporate groups and individuals. GiCell is promising the cheapest communication rates in the country and targeting subscribers in un servedandlowpenetrationareas.
37
Exhibit23:MobileoperatormarketsharesinNigeria,2009
CDMA Operators 10.4% M-Tel 0.4%
Etisalat 3.2%
MTN Nigeria 42.3%
GloMobile 22.7%
Zain Nigeria 21.1%
Source:PyramidResearchMobileOperatorKPIForecasts,2010
Going forward, as operators continue to expand coverage in rural areas, market share positions will be affected by investmentsincapacity,marketingandadvertising.StronguptakeofmobileserviceinNigeriaoverthepasttwoyearshas putasignificantstrainontheoperatorsinfrastructure,resultinginmultipleserviceinterruptionsandpoorservicequality. Inresponse,operatorshaveinvestedtoupgradetheirnetworksandaddcapacity,settingthestageforanotherstrong periodofexpansionofthemarketintheyearstocome. The top three GSM mobile operators are expected to keep their grip on the mobile market but will face increasing competitionfromtheCDMAoperatorsandnewoperatorssuchasEtisalat.Competitionwillcontinuetodrivedownprices and operator margins, making mobile communications more affordable to a wider population, thereby increasing penetration.
38
2.TheimpactofthemobileservicesindustryonNigeriaseconomy
Inthischapter,PyramidResearchanalyzestheeconomicimpactofthemobileindustryinNigeriabylookingattheratioof mobile service revenues to GDP, capital investment and employment related to mobile operators as well as their contributionsintheformoflicensefeesandtaxation.Wealsoprovideasnapshotofinnovativeservicesintroducedby mobileoperatorsthatarehelpingtoreduceconnectivitygapsandopenupopportunitiesforthevalueaddedservices markettoflourishinthenextfewyears. Mobileserviceshavemultiplepositiveeffects,mostnotablyinemergingmarkets.Theireconomicbenefitsextendbeyond theinvestmentthatnetworkoperatorsallocatetolicensefees,taxesandnetworkequipment: Enduserspendmoneyonmobiletelecomservices. Telecom operator spending on marketing, distribution, maintenance, training, support and network enhancementshavesignificanteffects. Mobile operators create employment, both direct and indirectly, and invest in the development of the laborforce. Mobileserviceshaveawidereconomicimpact,sincetheyenableadifferentwayofconductingbusiness, reducingthetimeandcostoftransactions,improvingaccesstomarkets,commoditizinginformationand generallyallowingbusinessestooperatemoreefficiently.
2.1Relevanceofmobileservicesrevenuetogrossdomesticproduct
AcrossAfrica,duetothelimitedfixedlineandInternetpenetration,fixedtelecomservicerevenuetendstobeexceeded byitsmobilecounterpart.Mobileservicerevenueaccountsforthelionsshareoftotaltelecommunicationsrevenuein anygivenAfricanmarket. Exhibit24:FixedandmobileservicerevenuesinNigeria,20012009
$7
Service revenue (US$ billions)
$6 $5 $4 $3 $2 $1 $0 2001 2002 2003 2004 2005 2006 2007 2008 2009
Fixed revenue Mobile revenue
Source:PyramidResearchMobileDemandandFixedCommunicationsForecasts,2010
PyramidResearchestimatesthatmobileservicesrevenueinasetofeightkeyAfricancountriesonaverageaccountedfor 76% of total telecommunications revenue in 2009. In some countries where fixed infrastructure is limited, the figure exceeded80%,suchasinKenya,wheremobileservicesrevenueaccountedfor89%oftotaltelecomrevenue.
39
Exhibit25:FixedandmobiletelecomservicesrevenueinselectAfricancountries,2009
Fixed South Africa Nigeria Egypt Morocco Cote d'Ivoire Kenya Cameroon Senegal Botswana $0

Mobile
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
Service revenue (US$ billions)
Note:RevenuecalculatedonthebasisofARPS. Source:PyramidResearchFixedandMobileForecast,2010
Mobileservicesinparticularcontributeasignificantamounttotheeconomiesofcountrieswheretheyoperate.Pyramid Researchestimatesthatmobileservicerevenuealonecontributedanaverageof4.2%tothegrossdomesticproductin10 Africanmarketsin2009.Insomeinstancestheratiowasmuchhigher,suchasinGhana(7.0%),theDemocraticRepublic ofCongo(6.1%),Senegal(5.8%)andCotedIvoire(5.1%). Exhibit26:MobileservicerevenueasapercentageofGDPinselectAfricanmarkets,2009
Ghana DRC Senegal Cote d'Ivoire Nigeria Cameroon Tanzania South Africa Kenya Botswana Algeria 0% 1% 2% 3% 4% 5% 6% 7%
Mobile services revenue as percentage of GDP

Source:PyramidResearchMobileDataForecast,2010;EIU,2010
40
2.2MobileservicesrevenueandNigeriaseconomy
For the sizable Nigerian economy, the telecom services market has become a key pillar of growth. Pyramid Research estimatesthattotalservicerevenuegeneratedbymobileoperatorsinNigeriahasincreasedsignificantly,from$135min 2001toroughly$7.0bnin2008.Weestimatethatmobileservicerevenuein2009fell6%inUS$terms,toUS$6.6bn. Mobileserviceshaveclearlybeenaheadoffixedsince2003,whenmobileservicerevenueexceededfixedrevenueforthe firsttime.Themobilemarkethasgrowntorepresentmorethan80%oftheoveralltelecomservicesmarketinNigeria.We estimate mobile service revenue has grown from representing 1.2% of GDP in 2001 to roughly 4.2% of the countrys economyin2009.Thisputsthemobilesectoratroughlythelevelofthemanufacturingsectorbutabovetransportation, thefinancesectorandgovernmentservices.ThetelecomsectorscontributiontoGDPhaswitnessedthefastestgrowth duringthe20002009period. Exhibit27:MobileservicesrevenuecontributiontoGDPinNigeria,20012009
$7 $6
4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009
Revenue (US$ billions)
Total mobile service revenue Revenue as percentage of GDP
$5 $4 $3 $2 $1 $0
Source:PyramidResearchMobileDataForecast,2010;EIU2010
InadditiontothedirecteffectontheeconomymeasuredasacontributiontothecountrysGDP,mobileserviceshavean indirect impact by enabling efficiencies in adjacent industries. Empirical studies, conducted as early as in 1970s, have shown that access to telecommunications services has a positive impact on the economy of the recipients countries. Waverman, Meschi and Fuss,8 after analyzing the impact of mobile telephony on GDP between 1980 and 2003 in 92 developedanddevelopingcountries,concludedthatmobiletelephonyplaysasvitalaroleasfixedtelephonyhasplayedin theWesternworldinthe1970sand1980s.Theeconomicimpactofmobiletelephonyistwiceasgreatindeveloping countriesasitisindevelopedcountries.Inaddition,theyalsobelievethata10%increaseinmobilepenetrationofthe populationpositivelyimpactsGDPgrowthby0.59%inemergingmarkets.Morerecentstudies,suchasthoseconducted byDeloitte9in2007orbyKathuria,UppalandMamaboutIndiain2009,10estimatethata10%increaseinmobileservices penetrationleadstoGDPgrowthof1.21.4%.
Africa:TheImpactofTelecomonEconomicGrowthinDevelopingCountries,MovingthedebateforwardinTheVodafonePolicyPaperSeries, Number3,March2005 GSMA&Deloitte,2007,GlobalMobileTaxReview20062007 10 India:TheImpactofMobilePhones,MovingthedebateforwardinTheVodafonePolicyPaperSeries,Number9,January2009

9
41
Exhibit28:MobilepenetrationofpopulationandGDPpercapitainselectAMEcountries,2009
120%
Botswana
Mobile penetration of population
100%
Tunisia Morocco Ghana Algeria
South Africa
80%
60%
Cote d'Ivoire Senegal Kenya Uganda Nigeria
40%
20%
DRC
0% $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000
GDP per capita

Source:PyramidResearchMobileDataForecast,2009;EIU2009
ThecomparisonintheexhibitaboveofnominalGDPpercapitawithmobilepenetrationratesin12AfricanandMiddle Eastcountriesshowsahighcorrelationbetweenthetwovariables.Althoughincomelevelsareimportantindetermining mobile penetration, there are other variables notably the level of competition: in Burkina Faso there are just two operationalnetworks,whileinGhanatherearefive,soontobesix.Thisaffectsthemarketinseveralways,mainlyin pricing:perminuteratesinGhanaareaboutathirdofthoseinBurkinaFaso. Competitionalsodrivescoverageandcapacityinvestments,whicharemarkedlybetterinGhana,wherehigherquality servicesareofferedtoalargerportionofthepopulation.Andstrongercompetitiongivesoperatorsincentivetotarget lowerspendinggroups.Forexample,inGhana,marketleaderMTNoffersthelowesttopupamount,$0.07,whereasin BurkinaFaso,thelowesttopupamountofferedbythelargestoperator,Zain,is$0.45. Thedegreeofcompetitionisnot,however,basedsolelyonthenumberofoperatorsforinstance,inTanzaniathereare sixoperationalnetworksbutonlythreethatcompetenationally.Otherfactorsalsoaffectpenetration.Politicalinstability lowersoverallpenetrationinanumberofways,andexplainswhytheDRCspenetrationrateissolowdespitethefact thattherearefivelivenetworksthere.Finally,incomedistributioncanalsoskewadoption;anextremecaseisEquatorial Guinea,whichhasaGDPpercapitaof$19,200andamobilepenetrationrateofjust53%duetotheconcentrationofoil wealth.Poland,whichhasaGDP/capitaofaround$12,000,hasapenetrationrateof117%,asacomparison.Another considerationistheavailabilityandaffordabilityoffixedlines,publicphoneboxesinparticular,aswellasthesizeofthe informaleconomy,whichcanaddasignificantpercentageontoGDPpercapitalevels.
42
2.3Telecomlicensingfees,taxationandNigeriaseconomy
Licensingfeesareoneofthemostdirectwaysinwhichmobileoperatorscontributetowardtheeconomyoftheirhost countries. In Nigeria, since the introduction of GSM in 2001, the government has received more than $2.5bn from spectrumlicensingfees.In2007alone,theNigerianfederalgovernmentreceivedatotalofmorethan$1bnfromthesale oflicensesasshowninthenextexhibit. Exhibit29:LicensingfeescontributiontotheeconomyinNigeria,20012007
2001
2002
2006
2007
TheNCCawardeddigital mobilelicensesinthe GSM900andGSM1800 bandstofourcompanies: MTN Communications InvestmentLimited(CIL), EconetWireless(now Zain) MTelLtd,whichasa subsidiaryof governmentowned incumbentNitelhadthe GSMspectrumreserved Theoperatorswere requiredtopayanon refundablefeeof$20m beforetheauction. FollowingtheCILsinability topaythefullsumof US$285m,ithadits licensedremoved.
TheNCCawardedthe fourthGSMlicenseto: Glomobile(Globacom)as partofitsmultiplelicenses (nationalCarrierservices, mobileservices,long distancecommunication andfixedwirelessservices) forafeeofUS$400m.
TheNCCawardedunified licensesforUS$2.11meach tofourCDMAoperators (privatetelecom operators,akaPTOs): MultiLinks Starcomms Intercellular Gicell Wireless.
InJanuary,theNCC awardeda$400mlicense forprovisionofmobile, fixedandbroadband servicestoEmerging MarketTelecommunication Limited(MubadalaUnited ArabEmirates),now operatingunderthe Etisalatbrand. InMarch,afteratender,a qualificationprocessand paymentofUS$15mtothe regulator,theNCCawarded (3G)spectrumlicenses. EachworthUS$150m,the licenseswenttothree mobileoperators: MTNNigeria, Globacom CeltelNigeria(nowZain) Alheri Engineering,a longdistancefixed operator(partof DangoteGroup).
Source:NCCwebsite2009;PyramidResearch,2009
Importdutiesandtaxesfromthetelecommunicationsindustryhavealsocontributedsubstantialamountsofrevenueto thefederalgovernment.Asanexample,MTNslicensestipulatesthatitpays2.5%ofitsassessednetannualrevenue.The operatoralsoimplementedapolicytospend1%ofitsannualaftertaxprofitsoncorporatesocialresponsibilityviaits MTNFoundation,establishedin2005tofinanceinitiativesineducation,economicempowermentandhealthissues. Africanmobileserviceproviderspayaconsiderableamountofmoneyintaxesandleviestotheirrespectivegovernments. Forinstance,in2006,mobileoperatorsinSouthAfricaandNigeriapaidatotalof$2bnand$1.7bn,respectively,intaxes.11 This accounted for 22% and 35% of operators revenues. In addition to income and revenue taxes, mobile operators generallypayotherformsoftaxes,whichcanbeleviedonairtime,networkequipment,handsetsandsoon.
11
GSMA,TaxationofmobileservicesinsubSaharanAfrica,May2008
43
Exhibit30:Totaltaxespaidbymobileoperatorsandtheircontributionasapercentageoftotaltaxreceiptsin selectAfricancountries,2006
22% 2,000 35%
Estimated total taxes paid (US$m)
1,500
1,000
500 35% 34% 0 Uganda

40%
39%
Tanzania
Cameroon
Kenya
Nigeria
South Africa
Note:Totaltaxisconstitutedofconsumertax,inputtax,importduties,employmenttaxesandcorporatetax Source:GSMA;FrontierEconomics,2008
2.4Employmentanddistributionnetworksofmobileoperators
Mobile operators contribute to the economy by creating workplaces and jobs that rely on the distribution of mobile technologyandservices.Thiscontributionalsotakestheshapeofemploymentbeyondthetelecomoperatorranks,by enhancingentrepreneurship,productivityandothercommercialskills.Theuseofmobilephonesenablesprofessionaland economicagentstomultitaskandcarryoutvariousactivitiessimultaneously. Intotal,accordingtoaspeechTelecommunicationsasCatalystforModernIndustrializedNigeria12byMr.Ndukwe, executivevicechairmanofNCC,telecomoperatorsemployedaround8,000peopledirectlyandaround3mindirectlyin 2008.Althoughdirectemploymentiseasiertoquantify,indirectemploymenthasawiderandmoreprofoundimpact. Thereareseveralgroups,whichcanbedividedintotwosubgroups,thatearntheirlivingthankstomobileservices: The top category of indirect employment encompasses equipment sales, infrastructure deployment, advertising, marketing and public relations as well as security workers involved in the protection of basestations.Reportedly,in2008Zainemployedasmanyas8,000securityguards. Atthebaseofthepyramid,therearemobileserviceresellers,rechargecarddistributors,retailers,phone boothoperatorsaswellasstreetvendors.Thesocalledminicallcentersconsistofsimplyoneorafew mobilephonesandairtimeboughtinbulkfromtheoperator.Callcenteroperatorsallowotherpeopleto usethephoneforafeeandquiteoftenwilltakeamessage,alsoforafee.
12
TelecommunicationsasCatalystforModernIndustrializedNigeriabyErnestC.A.Ndukwe,ExecutiveViceChairmanNigerianCommunications Commission,availableat:http://www.ncc.gov.ng/index10.htm
44
Exhibit31:EmploymentrelatedtomobilesectorinNigeria,2008
MTN Nigeria is a good example of how mobile operators spur indirect employment. Theoperator has reorganized its distributionnetwork,bringingdownthenumberofappointeddistributorsfrom202in2007to111in2008.Ontopof that,thereisasecondandthirdleveltothedistributionchannel,amountingtoaround5,700contractorsandmorethan 30,000identifiedinformaldistributionpointsaswellasprobablyseveralhundredidentifiedpointsthatarecurrentlybeing incorporatedintoMTNrecords.13Manyofthesepeopleareinvolvedinsellingprepaidscratchcards(seeExhibit32). Exhibit32:Streethawkersellingprepaidscratchcards,Nigeria
Source:NCC
ItiscommoninNigeriatoseepeoplesellingscratchcardsamongthecarstrappedinatrafficjamorpositionedonstreet cornersunderanoperatorlogobrandedumbrella,sellingairtimevouchers.Airtimeformobileoperators,includingMTN andGloisavailableviaumbrellastandsamongotherpointsofsale(seeExhibit33).
13
http://www.mtn.com/AboutMTNGroup/GroupFootprint/WestAndCentralAfrica/WestAndCentralAfrica_Nigeria.aspx
45
Exhibit33:MTNandGlopointsofsale,Nigeria
Source:NCC
2.5Investmentininfrastructurebymobileoperators
With every network rollout and upgrade, GSM operators bring money and employment opportunities to the market. AccordingtoMTN,operatorsinNigeriahaveinvestedinbuildingthreenetworks:acoretelecommunicationnetwork,a transmission network and a power supply network. This effort is a result of Nigerias underdeveloped infrastructure. Nigerianoperatorshavetonotonlybudgetforbuildingthetransmissionbackboneandinfrastructurebutalsoforpower generators,bringinginskilledICTemployeesandtransportation. Since the introduction of GSM services in Nigeria, mobile operators together have invested several billion dollars in infrastructuredeployments,networkrollouts,upgradesandexpansions.Tosupportthemobileinfrastructure,operators havealsoembarkedonbuildingbackbonenetworks.Theseconsistpredominantlyoffiberopticcables,basestationsand satelliteconnections,transmittingtrafficbetweencitiesandtoothercountries.MTNsfamousYellowBahnfiberoptic cable,forexample,ismorethan5,500km(3,400miles)long. PyramidResearchestimatesthatcapitalinvestmentsinmobilenetworksandoperationshaveaccountedfor80%oftotal telecommunicationsforeigncapitalinvestments(atotalofmorethan$12bnbythemiddleof2008)sincetheNigerian governmentsuccessfullyliberalizedtheindustryin2001.AsofMarch2010,theNCCreported$18bnintelecomsector capex,$16bnofwhichisinvestedbymobileoperators.
46
Exhibit34:PrivateinvestmentbytelecomoperatorsinNigeria,20012008

Note:2008figuredoesnotreflectthefullyear. Source:NCC
Alookataspecificoperatorillustratesthemagnitudeoftelecomplayersroleintheoverallinfrastructureandoperational investmentinNigeria.Oftheexistingmobileoperators,MTNhasinvestedthemostinNigeria. Aftertheinitialnetworkrollout,whichtookthelionsshareofitsrevenuein2004,MTNclaimstohaveallocatedmore than 30% of its revenue to capex. During this time, MTN has focused its investment on building up the transmission networktosubstituteforthelackofestablishedtelecominfrastructure.This,however,wasnotenough,anditsnetwork could not cope with the rapidly increasing number of customers, resulting in the NCC fining the operator $20m and banningadvertising. Exhibit35:MTNNigeriacapitalexpenditures,20032009
$4.5
Revenue, capex (US$ billions)
60% 50%
Percentage of revenue
$4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 2003 2004 2005 2006 2007 2008 2009 Capex
40% 30% 20% 10% 0%
Revenue
Capex as percentage of revenue
Source:PyramidResearch;MTNannualreports
47
In2008,MTNincreaseditsnumberofbasetransceiverstations(BTS)by1,560,toreach4,776;in2009additional1,220 BTSwerebuilt,reachingatotalofalmost6,000.Inaddition,MTNNigeriahasprioritizedtherolloutof3Gsites,and5513G siteswereoperationalin2008.MTNisalsobuildingmetropolitanfiberringsaroundimportantcommercialcitiessuchas Lagos,Abuja,Ibadan,PortHarcourt,Kano,AbaandWarri.Additionally,MTNNigeriastotalcapexfor2009was$1.2bn anditestimatesitstotalinvestmentinnetworkimprovementin2010toberoughly$0.8bn. ZainNigeriaisalsoinvestingasignificantamountofresourcesinitsnetwork.Theoperatorhasmorethan4,000base stationsandhascontractedNokiaSiemensNetworkstorolloutitsfiberopticbackbone,whichwillsoonreach4,000km. New network rollouts require multimilliondollar budgets. For example, in November 2008, Etisalat Nigeria awarded AlcatelLucenta multimillioneurocontract for the deployment of itsnewmobilecellularnetwork in the country ona turnkey basis. Alcatel Lucents radio access technology can accommodate a variety of standards, such as GSM/GPRS/EDGE/EDGE+andWCDMA/HSPA/HSPA+andinduecourseLTE.AlcatelLucentwillalsoprovideEtisalat with network deployment and integration services as well as related infrastructure, such as towers, masts and power systems. EtisalatNigeriaChiefExecutiveStevenEvans hasconfirmedthatthejunioroperatorscapexplansarenolessextensive thanthatoftheotheroperators,anditwillinvest$2bntobuildnetworkinfrastructureinNigeriaoverthenextthree years. MobileoperatorshavealsobegunsharingBTSsites,especiallywiththesmallerCMDAoperators.MTN,14forinstance,has reportedthatitsharesabout350siteswithotherproviders. Exhibit36:Asnapshotofacelltower,Nigeria
Source:NCC
DuringanopenhearinginApril2009,Nigerianoperatorsdeclaredthat$10bninfurtherinvestmentisneededfornetwork upgradesandexpansionoverthenext10years.
14
http://www.mtn.com/AboutMTNGroup/GroupFootprint/WestAndCentralAfrica/WestAndCentralAfrica_Nigeria.aspx
48
2.6Introductionofnewtechnologiesbymobileoperators
Newtechnology,researchprojectsandinitiativesbringsignificantrevenueandanemploymentboosttoNigeria.Sofar, mostNigerianmobileoperators,suchasMTN,ZainandGlo,haveundergoneatechnologicalevolutionfrom2Gto2.5G andeven3G. Exhibit37:OverviewofmobilenetworktechnologiesavailableinNigeria
2G
2.5G
3G
The main secondgeneration (2G) technology is the GSM standard, usually operating in the 900Mh and 1800MHz bands. It enables voice and basic data communications, including WAP (Wireless Application Protocol).
Networks using 2G can be upgraded to 2.5G technologies that support higher transmission speeds up to 115Kbps through the implementation of GPRS (General Packet Radio Services), EDGE (Enhanced Data Rates for Global Evolution) or an even higherbandwidth version of GPRS with transmission speeds of up to 384Kbps.
Thirdgeneration (3G) technology enables Internet access Mobile TV Video calls Other forms of content and valueadded services. The HSPA (High Speed Packet Access) standard supports data transmission up to 14.4Mbps downlink and 5.8Mbps uplink. The UMTS (Universal Mobile Telecommunications System) standard in conjunction with HSPA enables data transfers up to 21Mbps.
Followingitslaterentryin2003,GloMobilestartedoperatingona2.5GnetworkandbroughttoNigeriathebenefitsof valueadded services: Multimedia Messaging Services (MMS), Glo Mobile Internet, Glo Fleet Manager and Glo Mobile Office.GloFleetManagerisavehicletrackingapplicationthatgivesthesubscribertheabilitytotrackandtraceequipped vehicles. This is an early implementation of an M2M (machinetomachine) service. Glo was also the first operator to launchmobileaccesstotheInternet,withother3Glicenseesreplicatingthemovesoonthereafter.MTNlaunchedan HSDPAenabled3.5GnetworkinJune2008,whileZainlaunchedits3Gserviceinearly2009. TheintroductionofBlackBerryhandsetsisanotherstepinthetransitiontonextgenerationservices.TheBlackBerrywas launchedinNigeriabyGlobacomin2006,andMTNfollowedsuitinMarch2007.TheBlackBerryplatformisapowerful toolforbusinesspeopleacrossNigeria,giventhepatchyfixedlineandInternetpenetrationinthecountry.InMay2009, ZaincontributedtofurtherpopularizingthedevicebyintroducingprepaidBlackBerryservice.
49
Exhibit38:PosteradvertisingBlackBerryhandsetsinaNigerianairport
InNigeria,andattheoverallAfricanlevel,themostimmediatewaveofinnovationwillcomeintheformofconnectivity forthegrowingpoolsoflaptopandsmartphoneusers.Inaddition,mobilebroadbandhaspositiveeffectsonsocieties through the development of human capital. After analyzing developments in Rwanda and South Africa, for instance, equipment manufacturer Ericsson maintains that the rollout of Internet services has positive effects on three broad aspectsofsociety:development,resourcemanagementandnetworking.15(SeeExhibit40).Additionalbenefitsofmobile broadbandcanbeseeninthecaseoftheGramjyotiprojectinIndia,whichshowshow3GInternetaccesscanhavea beneficialimpactonthedevelopmentofaruralpopulation(SeecasestudyGramjyotiLightoftheVillage). Exhibit39:EffectsofInternetaccessacrossthreebroadaspectsofsociety:Development,resourcemanagement andnetworking
Source:Ericsson,February2009
15
EricssonWhitepaper,Acceleratingglobaldevelopmentwithmobilebroadband,February2009
50
PyramidResearchprojectsthatmobilebroadband(definedasmobileaccesstotheInternetviadatacardsandmodems) penetrationintheAMEregionwillgrowmorethanfourthfoldbetween2009and2014,from0.7%ofthepopulationto 2.9%in2014(SeeExhibit40). Exhibit40:Projectedmobilebroadbandaccountpenetrationofthepopulation,globallyandinAfricaandthe MiddleEast,2009and2014
7%
Subscriber penetration of population
6% 5% 4% 3% 2% 1% 0% 2009 2014
Globally Africa & Middle East
Note:Mobilebroadbandreferstocomputeraccesstomobilenetworksthroughdatacardsorembeddedmodems. Source:PyramidResearchMobileForecasts,2010
51
CASESTUDY:GramjyotiLightoftheVillage pilotprogrambroughtInternetaccesstoa remoteareaofIndia

TheGramjyotiprojectwasimplementedinlate2007byapartnershipbetweenEricsson India, Apollo Hospitals, Hand in Hand (a local NGO), Edurite, One97, CNN and the Cartoon Network. A twomonth pilot, it aimed to bring the benefits of mobile broadband to rural areas. The project targeted 18 villages and 15 towns close to Chennai,inIndiassouthernstateTamilNadu. Itprovided: Healthcare:AppoloHospitalsprovidedthetelemedicineservices. Education:Edurite Technologies providedelearningapplications in schools in selectedvillages. Governance:LocalNGOHandinHandprovidedthreecitizencenters. Agriculture news and information: One97 Communications provided a voice portal. Entertainment: Turner Broadband Systems aired information and entertainmentservices. Exhibit41:GramjyotisInternetaccesssites
Source:GSMA,2008
The benefits of mobile broadband access were immense for recipient communities. People who usually do not have access to healthcare could take advantage of the Gramjyoti vans, which were equipped with broadband access. The van followed a regularroutetoenablethewholecommunitytogainaccesstotelemedicineviavideo conferencing. DoctorslocatedinaChennaihosptal70kmawaycouldholdsurgeryappointmentsand advisepatientsonmedicaltreatements.ParamedicswhorunECGtests,measureblood pressure and administer injections visited in the telemedicine vans. In a twomonth period, 200 patients were treated and the majority given medication; more serious caseswerereferredtothehospitals.
52
Exhibit42:Gramjyotistelemedicineprovision
Source:GSMA,2008
Intermsofeducation,studentslookedforwardtocomingtolessonsandwereableto takeadvantageoftheWebbasedtrainingtools,sessionsbetweenschoolsandteachers in Ericssons office in Chennai. The interactive approach worked well with students partcipating willingly. In fact, it worked so well that the principal postponed exams to enablemoremobileeducationsessions. Community members also benefited, for example by being able to fill in the forms onlineinsteadofhavingtotraveltobigcities. AportalwascreatedinthelocalTamillanguagewiththeassistanceofOne97,withthe latest agricultural prices, weather reports and other information helpful to farmers. Childrenwerealsoconsidered;eachnightacartooonwasshownintheGramyjotivan thanks to the Cartoon Network. The project ended when the licensing agreement expired. Thebenefitsareclearlyvisible,evenfromsuchashorttermproject: Connectivitysavestimeandmoneyduetoreducingunnecesarytravel People are able to get information on topics such as crop farming via the Internet Endusersreactwelltothedeliveryofinformationinalocallanguage
53
3.TheimpactofmobileservicesonoverallNigeriansociety
Inthischapter,PyramidResearchanalyzestherolemobileservicesplayinsocialtransformationinNigeriabybringing connectivity to remote areas and to lowerincome strata. In less than a decade, mobile technologies have enabled networkaccessforalargeshareofthecountryspopulation,thankstotheinherentabilityofthesetechnologiestoreach remoteandsparselypopulatedareasbothfasterandmorecosteffectivelythanfixedinfrastructure.
3.1Mobileservicesandmarketplayersstrategiesinenablingconnectivity
Across Africa and the Middle East, mobile services are already reaching a considerable share of the population, far surpassingtheavailabilityoffixedtechnologies.Thelackofsupportinginfrastructure,suchasanelectricalbackbone,isa challengeformobileoperatorsacrossmostAfricancountriesastheycontinuetorolloutnetworks,butweexpectplayers willcontinuetoenlargetheirfootprintsinthenextfewyears,resultinginanevenmorepronouncedsubstitutionoffixed lineservices.PyramidResearchestimatesthatatyearend2009,fixedvoicetelephonypenetrationacrosstheAMEregion stoodat23%ofhouseholds,andweprojectthenumberoffixedvoicelineswilldeclineataCAGRof1.3%toarriveata 21%householdpenetrationrateby2014.Also,weforecastthatmobilesubscriptionsacrosstheAMEregionwillgrowata CAGRof6.5%between2009and2014toreachmorethan1bnsubscriptionsbyyearend2014,equivalentto76%ofthe population. Exhibit43:ForecastofmobilesubscriptionpenetrationofpopulationinAfricaandtheMiddleEast,2008and 2014
80%
70% 60% 50% 40% 30% 20% 10% 0% 2009 2014
InNigeria,asintherestoftheAMEregion,penetrationbymobileservicesisalreadyconsiderablyhigherthanthatbyfixed services.CopperbasedtelephonyservicesprovidedbyincumbentNitelhavewitnessedasteepdeclineoverthepastfew years,reaching39,000subscriptionsatyearend2009,from541,000in2001. Incontrast,fixedwireless(FWA)linesarehelpingtokeeptheoverallfixedsubscriptionbaserelativelysteady.FWAhas increasedfrom60,000accesslinesin2001to1.3min2009.Atthesametime,thenumberofmobilesubscriptionsin Nigeriagrewexponentially,from422,000in2001to73min2009.
54
Exhibit44:MobileandfixedlinepenetrationofpopulationinNigeria,20012009
50%
Fixed telephony subscriber lines Mobile telephony subscriber lines
45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source:PyramidResearchForecast,2010
SincetheintroductionofGSMservicesin2002,thepopularityofmobileserviceshasbeentheresultofacombinationof affordablerates,qualityofserviceandwiderreachwhencomparedwithfixedalternatives.In2001,beforetheadventof mobiletechnologyinNigeria,incumbentNitelhad711,250lines,ofwhich408,558wereactiveandtheremaining302,692 wereinactive.Thisresultedinanaverageofonetelephonelineforaround300people.Almost10mpeoplewerewaiting tobeconnected,withthewaitingperiodrangingfromseveralmonthstoseveralyears.Inaddition,fixedcommunication wasexpensive.Before2001,theofficialsetupcostofatelephonelinefromNitelwasaboutN60,000($600).Fixedcalling rateswerealsohigh;reducedchargestoEurope,theAmericasandtheCaribbeanwereN165($1.48)perminute,while callstootherAfricancountrieswereN112.50($1.00)perminute.Ontopofthat,therewasaninstallationfee;inAugust 1999,thegovernmentorderedareductionoftheinstallationfeeto$217(N20,000)and,inearly2000,furtherloweredit to$162(N15,000). Mobileservicesfacedchallengesin2001buthavesincegrownatarapidpace.Inearly2001,theNigerianmarkethad roughly30,000mobilecellulartelephonesthatwerenotworkingproperly.SIMcardpriceshavealsocomealongway fromthebeginningofthemobileerainNigeria:fromaround$300(N33,000)in2001tolessthan$2today.Alookat mobileoperatorsadvertisedratesattheirlaunchtimein2001revealsjusthowmuchthecostofmobilecommunications hasfallen.Atthetimeofitslaunch,August7,2001,EconetWireless(nowZain)wasreportedlychargingN32($0.29)per minuteforairtimeduringthepeakperiod(7amto7pm)andN19($0.17)perminutefortheoffpeakperiod(7pmto7am). InternationalcallratesrangedfromN125($1.12)toN145($1.30)perminutedependingonthezone.Businesspartners (corporateclients)paidaconnectionfeeofN11,000($99.00)andN4,000($35.96)foraSIMcard.Subscribersalsopaida monthlyrentalfeeofN4,000($35.96).Similarly,MTN,whichlaunchedwithin24hoursofEconetWireless,onAugust8, 2001,offeredratesofN30($0.27)perminuteduringthepeakperiodandN20($0.18)perminutefortheoffpeakperiod. ConsideringthatnominalGDPpercapitawas$381atthattime,amobilephonewasclearlyastretchfortheaverage Nigerian. Changesinpackagesandplansalsosignificantlyspurredadoptionofmobileservices.InSeptember2001,EconetWireless launcheditsprepaidservice,knownasBuddie,andonthedayofitsintroductionitsoldmorethan30,000.TheBuddie starterpackcostN30,000($269.70)andconsistedofaSIMcard,aphoneandfreeairtimeworthN6,000($53.94).Econet also initiated airtime recharge cards in three different denominations N1,000 ($9.00) , N2000 ($17.98) and N5,000 ($44.95)withairtimewindows(theperiodwhenthecardisactive)of10,20and60days,respectively.MTNfollowed suitandlunchedMTNPayAsYouGoinNovember2001withfourdenominationcardsN750($6.74),N1,500($13.48)
55
N3,000($26.97),andN6,000($53.94)cardsgivingaccessforfive,15,30and60days,respectively.Sincelate2004,the competitionbetweenVMobile(nowZain),MTN,GlobacomandMtelhasbeenthedrivingforcebehindtariffreductions andexpandedaccesstomobileservices. Thecostofacquiringamobilehandsetisanotherareawheremarketplayershavemadealotofprogress.Backintheearly 2000s,onlyafewNigerianscouldaffordtoownapersonalmobilephone.Inruralareas,thegovernmentandprivate playersestablishedcallingcenterstoallowthepublictorentairtime(seeExhibit45). Exhibit45:NigeriansusingcallingcentersandvisitingGSMvillage
Source:NCC
Mobilephoneswereconsideredaluxuryitem.EightyearsaftertheintroductionofGSMservicesinthemarket,most Nigeriansnowhavemorethanonemobilesubscription,owingtostarterpackpricereductionsaswellasagreatervariety ofaffordablehandsets.Initiativestofurtherreducethecostofhandsetsareunderwayacrossdevelopingmarkets. Exhibit46:Sampleprogramstoreduceacquisitioncostsofmobilephones
Program Ultralowcosthandset
Country Nigeria
Details PartnershipbetweenZainandZTEtocirculatelowcost($10) handsets. Enablesaccesstomobiletelephonyserviceswithouttheneedof owningamobilephoneandaSIMcard. PartnershipbetweenZTEandSafaricomtoprovidesolar poweredhandsets,bypassingissueswiththelackofavailability ofapowersource.
Sharedcommunityphone
SouthAfrica
Solarpower

Kenya
Source:Operators;PyramidResearch,2009
56
AccordingtotheWorldBank,1654%ofNigeriaspopulationcurrentlylivesonlessthan$1aday;henceinitiativestargeting accessbarriersareofutmostrelevanceinthecountry.Tworecentinitiativesstandout: ZainsultralowcosthandsetinitiativeinNigeriaallowssubscriberstoacquireasub$20handset. MovirtusMXShareapplicationallowssubscriberstoacquireaphonenumberandcommunicatewithout theneedtoownapersonalhandset.
16
WorldBankNigeriaCountryBrief;lastupdatedMarch2009
57
CASESTUDY:Mobilephonesforallultralow costhandsetsbyZainandZTE
PartofZainsregionwideultralowcosthandset(ULCH)program,thisinitiativeisaimed atmakingGSMphonesmoreaffordabletolowincomestrataofNigeriansociety,thus empoweringthepeopleatthebaseoftheincomepyramid(thoselivingon$12aday). InMarch2008,Celtel(nowZain)Nigeriaintroducedasub$20handsetintheNigerian market. Exhibit47:ExampleofultralowcosthandsetprovidedbyZain
Source:Zain,June2009
ZTEbrandedphonesweresoldtoretailersandconsumersforN2,600,bundled withaZainSIMcardandN50airtime. An additional N200 worth of airtime was credited to the subscriber upon activation,raisingthecombinedvalueofairtimetoN250perhandset.
Local media reported that the ULCH initiative was met with enthusiasm by Nigerians. SomeevenbroughtgiftstoretailersasthanksfortheabilitytobuytheZainbundle. Atyearend2008,Zainannouncedthatmorethan1mhandsetshadbeensold.
58
CASESTUDY:Amobilenumberforall
Inlate2009,MovirtutestedMXShare(virtualmobiletelephonysystem)incooperation withAfricanmobileoperators. Movirtu is a nonprofit organization aimed at alleviating poverty and bringing mobile connectivity to people at the bottom of the income pyramid those livingonlessthan$2aday. Movirtudevelopedatechnologyenablingaccesstomobiletelephonyservices withoutowningamobilephoneandaSIMcard. A piece of hardware (see Exhibit) is installed at the core of the operators network,whichenablesaSharePaidaccount. Exhibit48:MKADIserviceserver
Source:Pictureusedwithpermission.Copyright2009MovirtuLimited.Allrightsreserved
ThereisnoneedforaSIMcardandhandset: Theusergetsaphonenumberandacardwithlogindetails. Theusercanlogintoanymobilephoneorstreetphone. Oncetheactivitiesarefinished,itisbilledtotheprepaidaccount. Thepersonallowingsomeonetousethephonereceivesathankyounotewith areward,beitairtimecreditorabonus. Theideabehindtheprojectisthat: Everyoneneedstocommunicate,andpeoplelivingattheedgeofthepoverty linearespendingasubstantialamountoftheirincomeonmobileservices. Despite the ULCH initiatives, for some people a mobile handset is still unattainable either because of the cost or other constraint, such as fear of beingrobbed. People are already sharing phones with family or using community phones, althoughlettingsomeoneusetheirownSIMcardisunpopularduetothefear ofdismantlingandbreakingthehandset.
59
ThesecondhandphonesimportedtoAfricahaveearnedabadreputationand arehighlyunpopular. Lastbutnotleast,operatorswouldliketotapintothemarketofpeoplewho aresharingphonesbutarenotaccountedforasindividualusers.
AsMovirtuCEONigelWallersaid,theuserwillhaveallthebenefitsofmobileownership withoutactuallyhavingtophysicallypossessadevice: Prepaidbalance Missedcalls Dialednumbers Phonebook Inboundcalls Outboundcalls SMS o Mobilemoney Exhibit49:Snapshotoftheapplicationscreen,andapersonenablingaccesstothe sharedphonewhowillalsobenefit.
Source:Pictureusedwithpermission.Copyright2009MovirtuLimited.Allrightsreserved.
60
3.2Nigerianendusersperspectiveontheoverallimpactofmobileservices
InordertoanalyzetheinfluenceofmobileservicesonNigeriansociety,PyramidResearchcarriedoutasurveyof1,500 Nigerian end users. The survey covered people of different age brackets and sections of the country (see: Annex: Methodologyofendusersurvey). Exhibit50:BreakdownofmobilephoneuseamongNigeriasmobileserviceusersbyagegroup,2009
100% 90%
80% 70% 60% 50% 40% 30% 20% 10% 0%

Age 16-25 Age 26-35 Age 36-45 Age 46-69
Personal communications
Personal and work-related communications Other
*Otherreferstoreligiousactivities Note:n=1,500. Source:PyramidResearchsurveyof1,500mobileserviceusersinNigeria,2009
Intervieweesusemobileservicespredominantlyforamixofpersonalandworkrelatedcommunications,suggestingthey seevalueinmobileservicesacrossavarietyofactivities.Theagesegmentthatstatedusingmobileserviceforpersonal communicationmostfrequently(80%ofthetime)istheyoungestsegmentofthesample,those1625yearsold. Mobileservicesareanintrinsicpartoftheintervieweeslives,withthemajorityusingmobilecommunicationsfrequently throughouttheday.Morethan90%ofrespondentsusetheirmobilephoneseveraltimesaday,withrespondentsinthe 3645agebracketusingthephonemostregularly.
61
Exhibit51:FrequencyofmobilephoneuseamongNigeriasmobileservicesusersbyagegroup,2009
100% 98%
Every few weeks
96% 94% 92% 90% 88% 86% 84% 82% 80% Age 16-25 Age 26-35 Age 36-45 Age 46-69 Several times per day About once per day 3-5 days per week 1-2 days per week
Note:n=1,500. Source:PyramidResearchsurveyof1,500mobileserviceusersinNigeria,2009
Mobileservicesarehighlyvalued.Ofallinterviewees,95%saidmobileserviceshavehelpedtoimprovetheirdailylives. Thispositiveperceptionofmobileservicesiscommonacrossincomestrata,agegroupsandgenders. Exhibit52:ImpactofmobilephoneuseonintervieweeslivesamongNigeriasmobileservicesusersbysocio economicgroup,2009
100% 90% Having a mobile phone has dramatically improved all aspects of my life Having a mobile phone has improved most aspects of my life Having a mobile phone has made some of my daily tasks easier Neutral
80% 70% 60% 50% 40% 30% 20% 10% 0% AB C1C2 DE
Having a mobile phone has negatively impacted my life
Note:n=1,500. Note:AB=highersocioeconomicgroup;C1C2=middleclass;DE=lowincomeearners. Source:PyramidResearchsurveyof1,500mobileserviceusersinNigeria,2009
The majority of interviewees (84%) also recognize that using mobile services has resulted in financial benefits. The proportionofpeoplewhobenefitedfrombothsavingsincurredacrossactivitiesandfromadditionalincomeasaresultof beingconnectedisslightlymorepronouncedinthemetropolitanandsoutheastareasofthecountry.
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Exhibit53:FinancialbenefitsofmobilephoneuseamongNigeriasmobileservicesusersbylocation,2009

100% 90% 80% Benefited from both savings and additional income Benefited from additional income
70% 60% 50% 40% 30% 20% 10% 0% Metropolitan South East North
Benefited from savings in telecom and other activities/products No financial benefit
Note:n=1,500. Metropolitan:Abuja,Lukbe,Lagos,Ikorodu South:Ibadan,Maniya,Akure,Ikere North:Kano,Jogana,Kaduna,Rido,JosandBukuru East:Aba,Osisiome,EnuguandEmene. Source:PyramidResearchsurveyof1,500mobileserviceusersinNigeria,2009
Amongthe interviewees who declared seeing apositive financial impact through theuse of mobilephones,the most frequentlystatedreasonwastheabilitytoreducetheiroverallexpenses.Eliminatingunnecessarytravelbyusingamobile phonesavesNigerianstimeandmoney.Insteadofundertakingunnecessaryjourneys,peoplemakephonecallstoobtain theneededmarketandfinancialinformation.Thelowercostofmobilecommunicationscomparedwithfixedtelephonyis oftenheldupasoneofthemainfinancialgains,especiallyinareasoutsideLagos. Exhibit54:TypesoffinancialbenefitderivedfrommobilephoneuseamongNigeriasmobileservicesusers, 2009
Bonus recharge card Better able to find jobs Make and receive payments Better access to financial information Increased ability to sell Better access to market information Communicate with clients Time savings in travel Lower cost than alternative comms Lower travel or entertainment expenses 0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Distribution of responses
Note:Multipleanswerswereaccepted;n=4,588. Source:PyramidResearchsurveyof1,500mobileserviceusersinNigeria,2009
A closer look at the financial benefits derived from the use of mobile phones in different age brackets demonstrates aspectsthataremorevaluabletoparticularagegroups: Inthe1625agebracket,savingsintheareasofsocialandentertainmentexpensesarethemostvalued.
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Among respondents 2635 and 3645 years old, the ability to communicate with clients is seen as the mainfactorproducingfinancialbenefitsfromusingamobilephone.Inaddition,respondentsseemobile serviceasalowcostalternativeamongcommunicationsservices. The older segment of the population in our sample (those 4669 years old) also values the ability to communicatewithclientsandpointedoutthattimesavingsinoveralltravelandtransportationareakey gainofusingamobilephone.
Exhibit55:TypeoffinancialbenefitsderivedfrommobilephoneuseamongNigeriasmobileservicesusersby agegroup,2009
Age 46-69 Age 26-35 Bonus recharge card
Age 36-45 Age 16-25
Increased ability to sell
Better ability to find jobs
Communicate with clients
Better access to market information
Make and receive payments
Better access to financial information
Time savings in travel
Lower cost than alternative comms
Lower travel or entertainment expenses
0%
10%
20% Distribution of responses
30%
40%
50%
WhenNigerianenduserswereaskedaboutthetypesofactivitiesforwhichtheyusemobilecommunications,accessto entertainment and information is the most frequent response, followed by workrelated activities in the older age brackets. More than 40% of the respondents in the 1625 age bracket claimed use of mobile communications for educationrelatedactivities,whileuseinhealthrelatedactivitiesislowestacrossallagegroups.
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Exhibit56:Specificactivitiesperformedonhandsetsbymobileserviceusers,byagegroup,2009
Age 46-69 Financial services Age 26-35
Age 36-45 Age 16-25
Education
Transportation & logistics
Emergency or other health services
Entertainment & information
Work-related
0%
20%
40% Distribution of responses
60%
80%
100%
3.3Theimpactofmobileservicesinbreachingtheurbanruraldivide
InNigeria,asinotheremergingmarkets,aconnectivityandinfrastructuredivideremainsbetweenurbanandruralareas. Ruralregionslagintermsofelectricity,potablewater,roadsandfixedlinecommunications.AccordingtotheWorldBank, roughly61%ofAfricaspopulationlivesinruralandsemiruralareas,makingitasizableaddressablemarketformobile services. Exhibit57:Ruralpopulationasaproportionoftotalpopulationglobally,2007
70%
Percentage of total population
60% 50% 40% 30% 20% 10% 0% More developed markets World Less developed markets Africa
Source:UnitedNations,WorldUrbanization,2007revision
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EasternAfricancountries,suchasUgandaandKenya,havesomeofthelowestratesofurbanizationintheworld.They also lack vital amenities, such as schools, hospitals and banks as well as access to ICT services and equipment. Approximately52%ofNigeriaspopulationslightlymorethantheglobalaveragelivesinnonurbanareas. Exhibit58:RuralpopulationasaproportionoftotalpopulationinselectAfricancountries,2007
Uganda Kenya Tanzania Senegal Nigeria Ghana Cameroon Botswana Liberia South Africa 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Rural as percentage of total population

Source:UnitedNations,WorldUrbanization,2007revision
Giventheparticularchallengesofdeployingtelecomnetworksinremoteareas,whereinhabitantstendtohavelowerper capita incomes and therefore are particularly sensitive to prices, mobile operators are collaborating with local governments and international institutions to bridge connectivity gaps. Infrastructure sharing and universal service initiativesarehelpingtheseefforts. PyramidResearchhasidentifiedamultitudeofinitiativesaroundtheworldthatleveragemobileservicestobringsocial changeandtoenrichtherecipientsociety.Theseareoftensponsoredbyinternationalorganizations,NGOsandspecific fundsorcharities. Exhibit59:Sampleofruralconnectivityprojectsleveragingmobiletechnology
Program
Country
Details Connecting18ruralvillagestohighspeedInternetservicesand introducingmobilebroadbandservices.
GramjyotiRuralBroadband India Project 10African countries SixAfrican countries
MillenniumVillages
Connectingruralvillagestomobilebroadbandandconnectivity.
VillagePhone
Providingloanstovillagersandbuildingasustainablebusinessmodel.
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CASESTUDY:MillenniumVillages
The Millennium Village project is run by UNDP, the Earth Institute and Millennium Promise. The objective of the Millennium Village Project is to bring mobile communications and Internet services to more than 0.5m people in select villagesin10countriesinsubSaharanAfrica. This initiative stems from the Millennium Development Goals, which were agreeduponbytheUNin2000andrevisitedagainin2005. o In2005,attheWorldSummit,leadersofUnitedNationsmemberstates rededicated themselves to achieving the Millennium Development Goals,whileleadersattheG8SummitinGleneaglesagreedtodouble aidtoAfricato$50bnperyearby2010(approximately$70perAfrican peryear)andtocanceldebtsforthepoorestcountries. Special focus was assigned to subSaharan Africa, addressing issues such as poverty (including extreme poverty), high illiteracy levels, shortage of educational health facilities aswell as widespread disease (includingHIVandAIDS).
Exhibit60:MillenniumVillagesacrossAfrica,2009
Source:MillenniumVillages,2009
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CASESTUDY:VillagePhoneUganda
InNovember2003,theGrameenFoundation,MTNUgandaandagroupofmicrofinance institutionslaunchedVillagePhoneUganda.

VillagePhoneisamobilepayphoneserviceenabling: o Ruralconnectivity o Promoting entrepreneurship skills and microloans to unbankable individuals TheGrameenFoundationisanorganizationsupportingmicrofinancemostlyin developingcountries.ItdevelopedandpioneeredVillagePhoneinBangladesh (itsinitiativeextendedtosixsubSaharancountries).
Exhibit61:VillagePhonekitandVillagePhoneoperator
Source:GrameenFoundation,2009
TheGrameenFoundationactedasanequitypartnerprovidingbusinesssupportandthe technology(asof2007,MTNfullyownstheproject). MTNprovides: o Thecommunicationsinfrastructure o Airtime o Customersupportviaatollfreenumber. Themicrofinanceinstitutions(MFIs)havethefollowingroles: o IdentifytheVillagePhoneoperators(VPOs), o ProvideloanstoMTNVillagePhoneoperators,alongwithtrainingand businessskillsdevelopment, o Assist the operator with its business, including marketing, call recordingandtechnicalassistance.
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Exhibit62:MTNUgandaVillagePhoneBusinessmodelandpartners
Micro finance institutions
MTNVillage Phone
Business advice Lowinterest rateloans
Village Phone operators
Airtime distribution End customer

Source:MTNUganda;PyramidResearch
TheprogramtargetsruralandsemiruralareasoutsideKampala.Inordertoensurethe feasibility of the business venture, there are quotas on how many VPOs are in a two milesradius.ThepotentialVillagePhoneoperators o Approachoneofthemicrofinanceinstitutions o Completeanapplication o ProvidestheMFIwithsecurityguaranteethattheywillpaybackloan. Ifapproved,theoperatorreceivestheirVillagePhonekitincludingahandset,charging solution,anantenna,asignpost,businesscardsandaSIMpackincludingUSh100,000of prepaid airtime (around $50), which costs only USh60,000 ($29). A potential VPO can purchaseaphonefromtheMFIeitherincashorthroughaloansystem.However,for manyruralinhabitants,owningapersonalmobilephoneisoutofreach.
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Exhibit63:VillagePhoneoperatorstraining
The initial goal of the Ugandan initiative was to establish 5,000 new mobile phone businessesinfiveyears.Theexecutionoftheprogramhasexceededtheexpectationsin the space of three years. Within three years, the MTN Village Phone program established6,700newbusinesses,withagrowthrateofmorethan150businessesper month.Currently,thereare16,397totalactiveVillagePhoneoperators. Theimpactontheruralcommunityhasbeenunimaginable.TheVillagePhoneoperators sell five times more airtime than is used by a typical urban customer on his mobile phone.ThepeoplewhobenefitthemostaretheVPOs,whoareabletoeducatetheir children, access private healthcare and grow or expand their businesses. This, in turn, benefits a wider group of people by creating more jobs within the community. The mobiletechnologyalsoprovidesalinkbetweenregionalentrepreneursandtheirclients, bringing more business to small enterprises. According to MTN Uganda estimates, for eachsharedphonethereareabout500unconnectedpeoplewhouseit. In the beginning, the Village Phone was directed at women but is now also aimed at men.Mobiletelephonyalsobringsthebenefitsofmobilebanking;thevillagerscansend and receive money, as well as get information. Recently Google, Grameen and MTN launchedfreeSMSservicesdirectedatVPOsthatprovidethemwithinformationabout healthcare, agriculture and weather (see: Case Study: Grameen helps deliver market informationtoUgandasfarmers).
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3.4AdoptionanduseofmobileservicesinruralandurbanenvironmentsinNigeria
MobileservicesarehavingapositiveinfluenceonthedaytodayactivitiesofruralarearesidentsinNigeria.Thechief benefit of mobile communications is the ability to contact neighboring locations more easily. Rural inhabitants appreciationofkeepingintouchwithfamilyandfriends(93%and85%ofthesample,respectively)ishigherthanthatof urbanpeople(90%and77%).Theruralresident,throughaquickphonecall,isabletogaininformation.Correspondingly, 20%ofruralrespondentsclaimtousemobileservicesfororganizingsocialevents,whereas12%ofthemoptforfinding news, weather and other information tasks that previously often required a lengthy and costly journey. Instead, informationcanbeobtainedthroughasimplephonecallorSMSmessage. Exhibit64:UseofmobilephoneforsocialpurposesamongNigeriasmobileservicesusersbyurbanization,2009
Rural Finding local information (timetables, opening times, etc.) Urban
Finding news, weather, sports information
Organizing social events
Keeping in touch with family
Keeping in touch with friends
0%
20%
40%
60%
80%
100%
Amongourintervieweesinruralareas,themostcommonuseofmobileservicesisforbusinesscommunications(41%of respondents),whichisdirectlylinkedtotheirabilitytosellproducts(36%).Duetoincreasedmobileuse,interviewees claimthatrelationshipswithcustomersarealsoimproving(33%).Thebenefitofsavingtimeandloweringtravelrelated expenses is of particular importance to villagers. Time that is not spent on traveling can be allocated to work, thus increasingprofits.
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Exhibit65:UseofmobilephonesforworkpurposesamongNigeriasmobileservicesusersbyurbanization,2009
Rural Mobile as modem for PC Internet access Email access Personal organiser (calendar, alarms, contacts) Save time and increase productivity Accessing information Improve customer service, relationships Increase ability to sell by speaking to potential clients Speaking to colleagues 0% 10% 20% 30% 40% 50%
Urban
Pyramid Research identified a notable disparity between mobile users in rural and urban areas in the access to both Internetservicesandequipment.Thelackofinfrastructure,togetherwithlimitedcomputerliteracy,inruralareasmakes thisparticularlychallenging. Exhibit66:ICTpenetrationamongNigeriasmobileservicesusersbyurbanization,2009
40% 35%
Urban Rural
30% 25% 20% 15% 10% 5% 0% Internet Desktop PC Laptop
Increasingthepenetrationofmobilephonesinruralareasisanareaoffocusformobileoperators.Forinstance,inSouth Africa, as part of its license (reviewed in 1993), Vodacom was required to provide affordable mobile connectivity to underserved areas. Even though it started off as a government initiative, it quickly became a very profitable venture, generatingmorethan50%ofnetworktrafficin2004fromthe4,400franchisedcommunityphoneshops.Intotal,22,000 communityphoneshopswereestablished,asrequiredbythelicense.
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Exhibit67:Communityphoneshop,SouthAfrica
Source:Vodacom
SimilarprojectshavebeenlaunchedinNigeriasincethestartoftheGSMrevolution:MTelsOrangeTrainCampaign, MTNs Rural Telephony Project (together with Growing Businesses Foundation), Zains ROSE (Rolling Out Services Everywhere)projectandGloMobilesWeLiveWhereYouLivearealltargetingremotelocations. In addition, there is an overarching Rural Telephone Project in Nigeria that was launched in the early days of mobile telephony.Withmobilepenetrationatabout2%in2003,theRuralTelephoneProjectwasawaytoprovideconnectivity forruralandsemiruralNigeria,targetingmostlyvillagesandpopulationclustersontheoutskirtsofmajortowns.Thegoal oftheprogramistoprovideasustainablemodelforcommunicationsinlowincomeareasbyempoweringwomenfrom thesecommunitiesthroughabusinessmodelthatadjuststotheirneeds.Onceenrolledintheprogram,thesephone ladiesareprovidedwiththenecessarytoolsandfinancingtorunapublictelephonebusinessintheircommunity.
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CASESTUDY:RuralTelephoneProjectinNigeria bringscommunicationstolowincomesegments throughasustainablebusinessmodel

The program is a cooperation between the Growing Businesses Foundation (GBF), a Nigerian NGO, MTN Foundation (MTNF), which is the CSR arm of MTN Nigeria, the International Finance Corporation (IFC) and a group of small communal microfinance institutions(MFIs). Exhibit68:Ruraltelephonyprogrampartnersandtheirrole,2004June2009

Source:PyramidResearch,June2009
Through its local contacts, GBF selects local MFIs in targeted regions of the countryandbringstheminasprogrampartners. TheseMFIs,suchasLAPO,arealreadyestablishedinthelocalcommunitiesand supportavarietyofprojectswiththeaimofempoweringlocalindividuals. The core business of MFIs is to administer shortterm microloans to its members,payableusuallywithin68months. In the case of the Rural Telephony Project, the MFIs present the program to selectandprovenmembersofthecooperative,recommendthesemembersto GBF and administer a loan to cover the cost of the startup package, which is providedbyMTNF.TheseloansrangebetweenN14,200andN21,400($95and $140), depending on optional material in the package, payable over a six monthperiod,andcarrya15%annualinterestrate. The startup packages include a Nokia phone, an MTN SIM card, an optional antennatoboostthewirelesssignal,asolarcharger,subsidizedMTNairtime, promotional material and an MTN Booster Card an MTN product that allowed for preferential communication rates but which was taken off the marketinearly2009.Thepromotionalmaterialincludesatable,anumbrella, chairs,bannersshowcasingcallrates,ahatandaTshirt.
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Exhibit69:RuralTelephonyProjectstartuppackageandaphoneladyontheoutskirts ofSuleja,acityof105,000inhabitantsnorthofAbuja
Once the beneficiaries are selected, GBF trains them for a week in basic accounting principles,customerserviceandtheuseofGSMtechnology.Afterlaunch,GBFandlocal MFIscarryonmonitoringandprovidingsupporttothebeneficiariesforaperiodofone year. Todate,theprogramhasbenefited1,500PhoneLadiesinruralandsemiruralNigeria. These beneficiaries operate in 21 of the countrys 36 states. Success stories of the program abound, with beneficiaries testifying to a significant and muchneeded improvementintheirlivingstandards.SincemostMFIsfocustheireffortsonthemost deprived and most desperate elements of society, most of the beneficiaries are local womenwithlimitedresourcesandafamilytosupport. Exhibit70:TestimonialofaRuralTelephoneProjectbeneficiary
After the death of her husband seven years ago, Fumilayo found herself in charge of fouryoung children.Withthe assistance of the Suleja branch of LAPO,a microfinance institution,Fumilayowasabletogetamicroloanandopenasmallphotographyshop.In 2007, with her elder son pursuing higher education and the rest of her children in school,FumilayoturnedonceagaintoLAPOandwasintroducedtotheRuralTelephone Project. Today, Fumilayo has two successful businesses employing three people and
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supportingherfamilyoffive.FumilayoalsoexpandedherRuralTelephonebusinessinto a fullblown business center for the community, providing Internet access, photocopying,emailandfaxingservices. Results vary depending on the location of the beneficiaries. Increasing mobile penetration, lower call rates, affordable handsets, competition from other entrepreneurial members of the community and competing programs from CDMA operators, namely Visafone, have somewhat crowded the market space in semirural areasandhaveleadtorelativelylowerrevenueforprogrambeneficiaries.Preliminary interviewshaveshownthatinsemiruralareas,itisthebeneficiarieswhoareestablished inhightrafficareasonamainroadorinthevillagemarketwhobenefitthemost fromtheprogram.Thisshowsamovefromtheuseofruraltelephonyonaneedbasis (lackofpersonalaccesstomobilephone)toapreferentialbasis(useofphoneatones convenience). Thesechangesinmarketdynamicshavealsobroughtnewbenefitstothecommunity. Increasingmobilepenetrationhascreatedaneedforrechargecards.Inmostsemirural areas,PhoneLadiesarewitnessinganupsurgeinrevenuefromairtime,whichtheysay ismorethancompensatingforthefallinrevenuefromphonecalls. Anewstageoftheprogramcreatesfurtheropportunities: Bythebeginningof2009,theMTNFoundationBoardapprovedincreasingthe scopeandreachoftheRuralTelephoneProject. The new funding from MTNF will allow the project to target 3,000 new beneficiaries in 30 different states. This new stage falls well within MTNFs strategytorealignitseffortswiththecorebusinessofMTNNigeria,saysWale Goodluck,corporateservicesexecutiveatMTNNigeria. This stage introduces a new structure for the project, which will help take it a step further toward sustainability, says Ndidi Nnoli Edozien, founder and CEO of GBF. The new organizational structure for the project will see the introduction of State Coordinators,previousPhoneLadiesnominatedbytheMFIsandscreenedbyGBFand theIFC. ThesenewStateCoordinatorswillgraduallytakeontheresponsibilityofcoordinating, training and evaluating the beneficiaries. The coordinators will also be provided with laptopsandMTNdatacards,sponsoredbyMTNFinordertobeabletosendmonthly reports.WithmanyofitspreviousresponsibilitiesdelegatedtoStateCoordinators,GBF will be able to focus its efforts on impact assessment and project documentation. In additiontothenewlaptopsanddatacardsprovidedtotheStateCoordinators,MTNF willgivethebeneficiariesaccesstoamorecompetitivetariffplan,whichwillhelpthe beneficiaries in semiurban areas compete with offers from CDMA operators and improve their level of profitability in light of decreasing gross income. MTNF is also workingcloselywithMTNinordertointroducenewvalueaddedservices.
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MillenniumVillage:Pampaida,Nigeria
The Nigerian part of the Africawide Millennium Villages initiative is taking place in Pampaida,avillageof5,000people. TheMillenniumVillageprojectisrunbyUNDP,theEarthInstitute,Millennium PromiseandthegovernmentsofKadunaandOndostatewiththeinvolvement ofZainandEricsson. Thetotalplannedprojectexpenditureis$7m. Pampaida has grown to become a benchmark for how to pursue rural developmentinNigeriaandbeyond. The project was expanded in May 2009 to three new villages, covering the wholeofSaulawaDistrictandreachingmorethan22,000people. Exhibit71:NewmobiletowerinPampaida,Nigeria

OnMay21,2009,thePampaidaMillenniumVillagelaunchedanewbasestation,which willprovidemobilecommunicationstothisruralNigeriancommunitythankstoZainand Ericssonspartnership.ThemobiletechnologywillhelpincreasePampaidasagricultural productivity,whichisthemainsourceofincomeinthisregion,thusreducingpoverty. Additionally, it will enable access to healthcare, education and infrastructure. The PampaidaICTCenterbenefitsfromboththefixedwirelessInternetterminalsprovided byEricssonandthefreepowergeneratedfromthebasestation.Ontopofthat,Ericsson donated10handsetswithZainsSIMcardsandoneyearsworthofphonecallsamong the lines free of charge. Zain will provide a tollfree number and establish emergency numberstoimproveaccesstohealthcareandemergencyservices,especiallytoconnect patientswithondutymedicalpersonnel,whileSonyEricssonhasprovidedhandsetsto communityhealthworkers.
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Sincethelaunchoftheprogramlessthanthreeyearsago,Pampaidahasundergonean outstanding, by African standards, infrastructural makeover. The following developments were made: A 12km road, electrification project, local resource center (ICT center), cereal bank, health clinic, school kitchen, market stalls, junior secondary school (see Exhibit) and Zains GSM base station. In addition, in order to provide safe drinkingwater22boreholesweredrilledintacticallocationswithinPampaida. Exhibit72:Transformationoftheschoolfacility:ontheleftbeforetheMillennium Village,ontherightafter
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4.Theimpactofmobileservicesbyverticalsector
Mobileservicesareaffectingoperationsandenduseraccesstoinformationindifferentverticals.Inthissection,Pyramid Researchtakesacloserlookatdevelopmentsintheeducation,health,extractionandagriculturalareas,becauseoftheir relevancetooverallsocietyandtheirrolewithintheNigerianeconomy.
4.1Theimpactofmobileservicesontheeducationsector
Mobile technology and connectivity are bringing significant benefits to education globally. Most significantly, mobile servicesarehelpingtoimprovecommunicationbetweenteachers,classmatesandcolleagues.Acrossalllevelsandage groups, mobile phones are allowing instant access and sharing of timecritical information; this also applies to communicationbetweenteachersandparents,ultimatelybenefitingstudents. Mobileconnectivityisalsohelpingtochangethewayeducationisbeingconducted.Manystudentsindistancelearning programsandonlineuniversitiesaccesseducationalinformationandprogramsfromthecomfortoftheirhomethanksto mobile broadband access. Even students who visit a classroom and interact directly with a teacher identify mobile technologyasavaluabletoolintheirlearningactivities.Bothstudentsandteachersseeitasanattractivecomplementto inclass education. Input collected from students by Learning2Go, the largest collaborative mobile learning project for pupilsintheUK,identifiesawiderangeofperceivedbenefitsandusageformobileeducationapplications. Exhibit73:SelfperceivedusesandbenefitsofmlearningbyLearning2Goprojectlearners
Source:Learning2Go,2009
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Exhibit73:SelfperceivedusesandbenefitsofmlearningbyLearning2Goprojectlearners(Contd)
Source:Learning2Go,2009
In emerging markets, 2.5G+ networks including EDGE, GPRS, HSPA and UMTS are becoming essential for connectivityingeneral,giventhelackoffixedinfrastructure.Thesenetworksareallowinggovernments,NGOsandschool bodiestointroduceInternetconnectivitytostudents.Additionally,amultitudeofeducationfocusedapplicationsarealso makingtheirwayontostudentsandteachershandsets.Theseapplicationsprovideavarietyofservicesand,depending onfunctionality,havedifferentnetworkrequirements. Exhibit74:Sampleprogramsleveragingmobiletechnologyandconnectivityinemergingmarkets
Project
Country
Details Dr.MathleveragesMXit,amobilesocialnetworking tool,toprovidemathtutoringandeducation. Theprogramallowsteacherstodownloadvideosto supporttheircourses. Reading,spellingandgrammaractivitiesdownloadedto mobilephones. Amobileeducationprogramforremoteteachingand learninginruralcommunities. Helpsimprovestudentsmathskillsthroughmobile accesstoasocialnetworkingtool.
Dr.Math
SouthAfrica
ElimukwaTeknolojia LongmanLadybirdMobile Reading SNDTWomensUniversity KNect

Tanzania Nigeria India NorthCarolina,US
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4.1.1ExamplesfromabroadofleveragingmobiletechnologyintheeducationsectorTanzaniaandSouth Africa Inmarketswithhigh2.5+Gpenetrationrates,dataheavyapplicationscanbeprovidedthroughmobilenetworks.InSouth Africa,Dr.Math,amathtutoringandteachingprogram,leveragesasocialnetworkingprogram.2.5G+networksarealso beingusedtointroducemediacontenttotheclassroom.Mediacontentisaveryappealingtoolforstudents.InTanzania, an extensive partnership of organizations is helping to introduce locally tailored media content to classrooms with impressive results. However, such applications are hard to replicate in markets with low 2.5G + penetration. In many emergingmarkets,SMSisbeingusedasatooltointroducetwowaycommunicationandinteraction.
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CASESTUDY:Mobiletechnologybrings interactiveeducationtoschoolsinTanzania
ElimukwaTeknolojia(educationthroughtechnology)waslaunchedinTanzaniain2007. The program is a partnership between the International Youth Foundation (IYF),theMinistryofEducationandVocationalTraining(MoEVT),theForumfor African Women Educationalists (FAWE), Nokia Corporation and the Pearson Foundation. The program is supported by a $2m grant by the USAgency for International Development(USAID). The program leverages mobile technology in order to bring interactive, multimediaeducationprogramstoteachersandstudentsbetweentheagesof 10and12. Theinitiativewasinitiallylaunchedin2003inthePhilippinesasText2Teach, whereithasgrowntoreach203schools,1,000teachersandalmostamillion students. o The program provides a package that includes a mobile phone, a prepaidSIMcard,a29inchcolorTV,aTVrackandteachersguide. o NokiaN958GBmobilephones,suppliedbyNokia,areusedtoaccessa library of more than 387 interactive educational videos in math, scienceandEnglish. Exhibit75:ClassroomusingBridgeITvideotoassistinschoolteaching
Source:InternationalYouthFoundation(IYF),2009
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In Tanzania, the technology that was used in the Philippines had to be readjusted to account for the lack of widely available satellite technology to transmit thevideos and setupboxestostorethevideos.Instead,3Gtechnologyisdeployed(2.5Gtechnologyis used in areas where there is no 3G) to transfer videos. The videos are stored on the Vodacomofficesserver.Inaddition,Vodacomprovidesfreebroadbandaccessforvideo downloads and technical assistance. The teachers can also send SMS queries to the helpline,whichprovidesassistancetothem. In the classroom, the Nokia N95 with 8GB acts as a downloading and storage device, each phone connected to the TV. The short videos, between five and sevenminutes long, are deployed as part of a lesson, introducing a more interactive approach to schooling. The teachers can also download lesson plans as well as receive training on howtomakethebestuseofavailablematerial. Someofthecontentwasalreadydevelopedandusedinothercountries,whilesomeof it was adjusted to fit local culture and dubbed in Swahili. In cooperation with the Ministry of Education, new math and science videos were also developed in line with thecurriculumrequirements.Inparticular,videosonsubjectmattersthattheteachers are not comfortable teaching, such as reproductive health and AIDS/HIV, were developed,foratotalof95localvideos. Currently, the program operates in 150 schools in seven regions, benefiting around 25,000 students. Since the implementation of the program, schools are reporting an increaseinattendancelevels.Oneschoolsheadteacherstatedthatattendancelevels havegoneup8089%.
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CASESTUDY:Dr.Mathleveragesamobilesocial networkinSouthAfrica
TheMerakaInstituteinSouthAfricalaunchedDr.Math,amathematicseducationand tutoringprograminJanuary2007. Dr.MathprovidesmathematicssolutionstopupilsfromGrade3toGrade12 withaninstantonlinetutor. The application uses MXit, the hugely popular mobile social network, as a platform. MXit is a mobile instant messaging platform used by an estimated 810m childreninSouthAfrica. TheideabehindtheDr.MathmodelisthatthereisaDr.Mathbuddyonyour contactlist,andstudentscanaskquestionsonline. Tutors and teachers make themselves available at certain times of the day (between2pmand8pm)toanswerquestions. Tutors, otherwise known as Dr. Math, are students from the University of Pretorias Engineering, Built Environment and Information Technology Department,whoarerequiredtocomplete40hoursofcommunityserviceas partoftheircourse. Dr.Mathinducesapromptonlinewhentutorsareavailable,andstudentsthen sendquestions. Studentscansendinqueriesontheirwayhome,onthebus,etc. Thesystemcanhandlesome50enquiriesanhour. In addition, there are competitions when tutors are not available multiplicationtests,etc.andthereisahighestscoreranking. Exhibit76:StudentsusingtheDr.Mathapplication
Source:GalloImages,2009
Theuserbasehasgrownviawordofmouthtomorethan5,500users. The Dr. Math application will be rolled out across the country in conjunction withtheMinistryofEducation.
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Dr.MathtakesadvantageofthepervasiveuseofmobilephonesandMXitandusesitas acommunicationtoolinSouthAfricanschools.Dr.Mathhaschangedthewayteaching andlearningisperceived.Oneruralschoolteacher,whowasveryskepticalinitially,said I teach the kids math, the kids teach me technology. This is extremely important because students consider learning more of a team effort, not just oneway teaching. Thestudentsareveryopentousingmobilephones,andtheteachersalsoappreciateit. Morethan5,500usersbenefitfromtheapplication.Scalinguptheprogramcouldprove difficultsinceitreliesontutorstoanswerthequestions.Arecentpartnershipwiththe MinistryofEducationwillhelprollouttheprogramacrossthecountry.
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4.1.2MobileservicesandtheeducationsectorwithinNigeria MobileservicescanhelpnarrowthesignificanteducationalgapthatstillremainsinNigeria.AccordingtoUNESCOInstitute for Statistics database, Nigerias adult literacy rate17 of 72% exceeds SubSaharan Africas average of 62%; and ranks betterthansomeNorthernAfricancountriessuchasMoroccoandEgypt.However,thereisavisiblegenderinequalityas 80%ofmenand64%ofwomenareliterate. Exhibit77:Adultliteracyrate(15andover)inselectAMEcountries,2000200718
South Africa Tunisia Kenya Algeria Cameroon Nigeria Avg. Sub-Saharan Africa Egypt Ghana Morocco 0% 15% 30% 45% 60% 75% 90%
Percentage of population

Source:UNESCOInstituteforStatistics,EFAGlobalMonitoringReport2010,statisticalannex
InPyramidResearchssurveyofmobileusersinNigeria,29%ofintervieweesclaimtohaveusedtheirmobilephonefor educationrelated activities. The most common use is for communicating with teachers and colleagues, of those who reportmobilephoneuseforeducationalpurpose73%reportstodoso,equivalentto29%oftotalsample. Exhibit78:UseofmobiletechnologyforeducationamongNigeriasmobileservicesusers,2009
Using dictionary
Using specific programs (math calculations)
Browsing Internet for information with mobile phone/PC
Communicating with teachers and colleagues
0%
5%
10%
15%
20%
25%
30%

Note:Multipleanswerswereaccepted;n=589. Source:PyramidResearchsurveyof1,500mobileserviceusersinNigeria,2009
17 18
Numberofliteratepersonsaged15andabove,expressedasapercentageofthetotalpopulationinthatagegroup. Dataareforthemostrecentyearavailableduringtheperiodspecified
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Around3%oftheintervieweesclaimedtousemobileInternet,andaverysmallpercentageofrespondents,0.5%,also indicatedthattheyusetheirphonestoaccessadictionary.Thisisinlinewiththecountrysoveralllowpenetrationof smartphones,whichareneededinordertoaccessInternetbasedapplications. Theuseofmobiletechnologyforeducationalpurposesismuchhigherinurbanareasthaninruralareas.Browsingfor information,forexample,istwiceashighinurbanareasthaninruralareas.Thisreflectsthedifferencesinavailabilityof highcapacitynetworksandthelowadoptionof2.5G+capablephonesinruralareas. Exhibit79:FrequencyofmobileuseforeducationamongNigeriasmobileservicesusers,2009

A few times/month A few times/day Using dictionary Browsing Internet for information with mobile phone/PC Using specific programs (math calculations) Communicating with teachers and colleagues
A few times/week Several times/day
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Distribution of responses

Oursurveyalsoindicatesthatamongthosewhousetheirmobilephonesforeducationalpurposes,atleast46%dosoona dailybasis.TheprevalenceofSMSuseintheyouthsegmentinNigeriamakestheplatformidealforreachingawiderbase of students and teachers. As 3G coverage extends, mobile data networks will play an even greater role in Nigerias educational services. 2.5G+ networks can also bring handsetbased interactivity and multimedia experience. Longman NigeriaPlcsLadybirdMobileReadingprogram,forexample,capitalizesonGPRSnetworkstoofferreading,spellingand grammaractivitiestobedownloadedbyelementaryschoolstudents.
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CASESTUDY:LongmanNigeriaintroducesMobile ReadingtoNigeria
Longman Nigeria PLC, a subsidiary of Pearson Education Limited, introduced the LadybirdMobileReadingprograminJuly2009. TheprogramwaslaunchedasapilotinsevenschoolsinLagosState. ThecontentisbasedontheLadybirdKeywordsReadingbooks. Theprogramtargetsstudents59yearsold. Students download reading, spelling and grammar activities to their parents mobilephones. Studentcompletetheactivitiesathomeanddiscussthemwiththeirteachers inclass. The activities last five minutes each, and students can download up to five sessionsperweek. Longman partnered with Mobile Xcetera Limited, a Nigerian mobile content provider,todeliverthecontent. The application is WAPbased and requires a GPRS or 3G handset and an Internetconnection. Exhibit80:SampleLadybirdKeywordsReadingbooks
Source:theweeweb.co.uk,2009
Longmanbelievesthattheprogramallowsstudentstogetaheadstartintheirlearning andisagreattoolforparentstogetinvolvedintheirkidseducation,byassistinginthe completionofdownloaded tasks. Longman is waiting forthe results from trial schools andisplanningtorollouttheprogramnationwide.
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4.2Theimpactofmobiletechnologiesonhealthservices
Mobiletechnologyhasthepotentialtobeatransformationaltoolforthehealthsector.Newandinnovativeapplications areemergingtoimprovethewayhealthcareisadministeredandmanaged.Themostcommonuseofmobiletechnology in the health sector is to provide access to emergency services and to increase awareness about the treatment and preventionofrapidlyspreadingdiseases,suchasHIV. Indevelopedcountries,theagingofthepopulationhascreatedagrowingneedforhealthcareandemergencyresponse applications for the elderly, and many of these are leveraging mobile technology. Products such as the Philips Lifeline medicalalertallowagingindividualsandthosewithlimitedmobilitytohaveaccesstoemergencyserviceswithatouchof abutton.Thesecommunicatorsarecarriedontheneck,wristorpocketoftheindividualandconnecttoafixedormobile network in order to notify emergency services personnel about lifethreatening situations. Once notified, emergency servicespersonneldecidewhattheappropriatecourseofactionwillbe. Exhibit81:EmergencypersonalcommunicatorproductlinebyPhilips

Source:Philips.com,2009
Inemergingmarkets,healthrelatedcommunicationsneedsaredrivenbydifferentrealities.Lackoffixedinfrastructure generallymeansthataccesstoamobilenetworkistheonlyconnectionmanycommunitieshavetoemergencyandfirst responseservices.Mobileandsatellitecommunicationsinfrastructurearealsomoresuitablevehiclesforconnectingto emergency response than fixed infrastructure, in cases of natural disasters. The redundancies many mobile operators buildintotheirwirelessnetworksarehelpingovercomethechokepointsanddisruptionsthatfixednetworksexperience indisasterareas. Mobiletechnologyisbecominganimportanttoolforepidemicanddisastermonitoring,aswellaspreventivecampaigns. NGOsworkinginisolatedregionsofAfrica,AsiaandtheAmazonareusingmobilenetworksandsatellitecommunications tomonitorthespreadofpandemicsandviruses.Weathermonitoringstationsequippedwithmobilecommunicationsor installedinmobileoperatorbasetowers,suchasZainsinitiativeinEastAfrica,arehelpingprovideanadvancewarning systemandthenecessarydataforearlypreventativeaction. Mobilecommunicationsisalsoprovingcrucialinthecollectionanddisseminationofhealthrelatedinformationforboth educational and emergency situations. A Nokia pilot project in Brazil helps NGOs and health organizations to better collect,communicateandstorefielddatausingsmartphoneswithInternetconnectivity.Implementationmodelswithlow
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technologyrequirementsarealsobeingputtouse.Tofightthespreadofmalaria,SMSbasedmodelsofdistributionof bed nets are being applied in many African countries through partnership programs with UNICEF, other international organizations,localNGOsandmobileoperators. 4.2.1ExamplesfromabroadofleveragingmobiletechnologyinhealthcareSouthAfricaandUganda FightingAIDS/HIVinAfricaisatoppriorityforinternationalorganizationsandlocalgovernments.Thecontinenthasthe highestlevelofHIVinfections,whichisperceivedtobeoneofthemaininhibitorsforgrowthanddevelopment.The2008 UNAIDSreportontheglobalAIDSpandemicstatesthatinthecountriesmostaffected,HIVhasloweredlifeexpectancy by20years,slowedeconomicgrowthanddeepenedhouseholdpoverty.19 Exhibit82:UNAIDSmapofHIVinfectionsacrosstheglobe,2007
Source:UNAIDSReportonGlobalAIDSPandemic,2008
Overthepastfewyears,amultitudeofinitiativesleveragingmobileserviceshasemergedtoaddressHIV/AIDS.Although someoftheseinitiativesfocusonprevention,othersassistintreatment.Themajorityoftheseprojectsarebasedona multiprongedapproach,combiningeducationwithotherelementssuchasantiviraltreatment,counseling,orphancare, etc.
19
UNAIDS,2008
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Exhibit83:SampleofAIDS/HIVinitiativesleveragingmobiletechnologiesinAfrica
Programandpartners
Country
Details Financescostofpreventionandcareworkforlocal communities,CSOs,youthgroups,organizationsof peoplelivingwithAIDSandorphancare Financetreatmentandtraining SocialcentersforHIVinfectedchildrenandHIVorphans withoutsupport Socialsupportprogramsforchildrenwhostayintheir community
MulticountryHIV/AIDSProgramfor Africa(MAP) Multicountry WorldBank
SOSChildrensVillage
Multicountry:Africaand EasternEurope
ProjectMasiluleke PopTech,frogdesign,iTeach,the PraekeltFoundation,MTNSouth Africa,NokiaSiemensNetworks (NSN)andtheNationalGeographic Society TextToChange AIDSInformationCenter Uganda\Others MyQuestion,MyAnswer OneWorldUKandpartners
SouthAfrica
EducationandadvertisementforAIDSsupporthelpline throughSMS Remindersforantiviraltreatmentsessions
Uganda
EducationthroughSMSbasedinteractivequizzes Remindersforantiviraltreatmentsessions CounselingandeducationthroughSMSandvoice interactions AwarenessandeducationthroughanSMSbased competition
Nigeria
ProjectMasilulekeinSouthAfricausesCallMeBackSMStoadvertiseanHIV/AIDShelpline.TextToChange(TTC)in UgandadevelopedanSMSbasedquizthataimstoeducateparticipantsaboutbasicfactsrelatedtoHIV/AIDS.
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CASESTUDY:ProjectMasiluleketargetsHIVin SouthAfrica
PopTech, frog design, iTeach, the Praekelt Foundation, MTN South Africa, Nokia Siemens Networks (NSN) and the National Geographic Society launched project MasilulekeinSouthAfricaasatwoyearpilotinOctober2008. Project Masiluleke, which means lending a helping hand in Zulu, aims to increaseawarenessofHIVandAIDSamongSouthAfricans. Theprogramalreadyhastwocomponentsinoperation: 1. AdvertisementsfortheNationalAIDSHelplineembeddedinPleaseCall Me(PCM)messages. 2. TxtAlert,whichtargetsantiretroviral(ARV)therapypatientsandaimsto improvetheirattendanceatthesessions: ItsendsPCMbasedreminderstoARVpatientstoattendaclinicor takemedicine. Ifpatientscannotattendtheappointment,theycansimplysendan SMSandtheappointmentcanberescheduled. Exhibit84:PleaseCallMeHIVmessage
Source:PopTech,June2009
In South Africa, Please Call Me is a service that mobile operators offer to subscribers who wish to request a call from another individual. Every PCM message contains the words "please call me," the phone number of the sender and space for an additional 120characters,whichisusuallyusedtoembedanadvertisement.Theserviceisusually freeandfinancedbytheadvertisement. Broadcast either in Englishor in local languages, Project Masilulekehelpline messages are different every week. These messages act as personalized billboards and have proventobeeffective. Approximately 1m AIDS helpline advertisements are embedded in PCM messages per day. Within the first three weeks of the pilot, incoming calls to the National AIDS
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Helpline quadrupled, from 1,000 to 4,000 calls. The project is estimated to have generatedover1,400,000callssinceitwasstarted. ResultsforTxtAlerthavealsobeenencouraging,withattendancelevelsinparticipating hospitals reaching 95100% in two years, compared with a 10% average attendance nationwide. Lookingahead,ProjectMasilulekeplanstocreatevirtualcallcenterswith5,000trained HIV patients volunteering as virtual operators. These virtual operators will be handpickedformthepoolofcurrentpatientswhohavemadesignificantprogress. Awaiting governmental approval, the organization also plans to introduce a lowcost diagnostic tool for athome HIV testing, with mobile counseling support. Marcha Neethling of the Praekelt Foundation says that the athome testing kit would make a huge difference, since only about 5% of South Africans have been tested for HIV. The distributed diagnostics kit analogous to a pregnancy test would provide a free, private and reliable way foranyone to take the critical first step of finding out status, withqualityinformationprovidedviaamobilehandset. Project Masiluleke also aims to increase its coverage to other African markets where MTN is present, looking at Uganda, Ghana, Tanzania andCameroon aspossible target markets. In the absence of reliable call center support, Project organizers are consideringaUSSDbasedservicetotransferinformationtopeopleandtellthemwhere tofindthenearesttestingcenter.
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CASESTUDY:TextToChangetargetsHIVin Uganda
Text To Change (TTC) launched a pilot AIDS/HIV education program in Uganda in partnership with the AIDS Information Centre Uganda and other partners in February 2008. The program deployed an SMSbased interactive quiz in conjunction with a rewards system, aiming to raise awareness of HIV/AIDS and improve participationandattendanceatHIVcounselingandservicecenters. 1. Participants received an interactive text message with a multiple choice quizontheirmobilephones. 2. If they provided the correct answer, they received free HIV testing and counseling,andwereenteredinadrawingforaprize. 3. WinnersoftheHIVquizwereinvitedtotheprizegivingceremonyinApril 2008,wheretheyreceivednewmobilephones. ThepilottargetedZainssubscribersfromtheGreatMbarararegion. ThepilotlasteduntilApril8,2008,andtheprogramwasexpandedin2009. Exhibit85:TextToChangeusers
Source:TextToChange,Flickr,2009
Theprogramprovedsuccessful:outofthetargetgroupof15,000mobileusers,2,610 people or 17.4% responded. During the trial periods six weeks, 255 participants (183 malesand72females)cametoHIVtestingandcounselingservices,a40%increaseover previousattendancelevels.
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Exhibit86:TextToChangewinners
Source:TextToChange,Flickr,2009
In 2009, TTC launched a new program that was carried out in January 2009 in Arua, Uganda.Theprogramwastobescaledupnationwide.ExpansiontootherEastAfrican countriesKenyaandNamibiaatfirstbeganinmid2009. ThesuccessoftheUgandaninitiativehasledtotheTTCmobileplatformbeingusedby the UNs Department of Economic and Social Affairs (UNDESA) and the Ugandan MinistryofHealthtolaunchTexting4Health. Exhibit87:Texting4Healthinitiative
Source:OfficeforECOSOCSupportandCoordination,DepartmentofEconomicandSocialAffairs,United Nations,2009
LaunchedinUgandainJuly2009,Texting4HealthwillalsobeintroducedinGhana.The program runs for 10 days and distributes information to participants via the following multioptionalquestions,usingtextmessages. Question1:Childrenunderfiveandpregnantwomenaremostvulnerableto malaria? Question2:InfectedpregnantwomencannotpassHIVtotheirbabyduring pregnancy? Question3:Whenyourchildhasdiarrhea,youshouldgivethechildmoreto drinkthanusualandfeedthechild?
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4.2.2MobileservicesandthehealthsectorwithinNigeria PyramidResearchssurveyofmobileusersinNigeriafoundthat20%ofrespondentsusetheirmobilephonesforhealth relatedneeds.Withinthegroupthatusesmobiletechnologyforhealthservices,themostcommonactivityistomake calls in emergency situations by either reaching out to friends or family or by calling emergency services. A small percentageofrespondentsindicatedthattheyreceivehealthmonitoringassistanceorpublichealthalertsontheirmobile phones,suggestingthereisroomforfurtherinformationservicesrelatedtohealth. Exhibit89:UseofmobilehealthservicesamongmobileserviceusersinNigeria,2009
Menstrual cycle Receipt of public health alerts Health monitoring Medical reminders Communicating with hospital/clinic Communicating with doctor/nurse Calling emergency services Calling friends or family in emergencies 0%
5% 10% Distribution of responses
15%
20%
Overall,oursampleshowedamarkeddifferencebetweenfemaleandmaleusersintheiruseofmobiletechnologiesfor healthrelatedpurposes,withadoptionamongfemales7%higher.Incertaincases,suchasmobilecallstoadoctoror nurse, uptake among female interviewees was 11% higher. A look at healthrelated usage by age group, meanwhile, showsthehighestuptakeofmobileservicesforhealthrelatedpurposeswithintheoldestgroup,those4969yearsold, andthelowestuseamongtheyoungestgroup,1625yearolds. Ingeneral,mobileusersinurbanareasaremorepronetorelyontheirmobilephoneforhealthrelatedactivitiesand information.
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Exhibit90:UseofmobilehealthservicesamongNigeriasmobileserviceusersbyurbanization,2009

Menstrual cycle Receipt of public health alerts (blood pressure) Health monitoring (blood pressure) Medical reminders Communicating with hospital/clinic Communicating with doctor/nurse Calling emergency services Calling friends or family in emergencies 0% 5% 10% 15%
Rural Urban
20%
TheNigeriangovernmentisincreasinglyinvolvedininitiativestoinformandrespondtomajorillnesssuchasmalaria,TB, cancerandmostproactivelyHIV/AIDS.AccordingtotheJointUnitedNationsProgrammeonHIV/AIDS(UNAIDS)reporton GlobalAIDSPandemic,publishedin2008,therewere23.2mHIVinfectedchildren,menandwomeninNigeriain2007, representing 1.42.2% of the countrys total population. The United Nations Special Session (UNGASS) Nigeria Report, publishedin2007,putstheratioat4.5%for2005,whichiscomparabletoestimatesmadebylocalNGOsinvolvedin variousAIDS/HIVprojects. EffortstodealwiththeAIDS/HIVissuesinNigeriahaveintensifiedinrecentyears,ledbyaconsortiumofgovernment entitiesandNGOsimplementingprogramsfocusedoneducation,preventionandtreatment.Oneoftheseinitiativesis LearningAboutLiving(LAL).ThispartnershipaimstocreatecontentaccessibleonandofftheInternetthatisincorporated intheNigerianFamilyLifeandHIV/AIDSEducation(FLHE)curriculum,anintegralpartoftheprograminNigerianschools. LALbanksonotherICTinitiativessuchasOneLaptopperChild,ClassmatePCandgovernmentcomputerprograms. LAL brings together an extensive group of partners: OneWorld UK, Butterfly Works, Action Health Incorporated, the NigeriaEducationResearchandDevelopmentCouncil(NERDC),EducationasaVaccineAgainstAIDS(EVA),GirlsPower Initiative (GPI), the Nigerian Ministry of Health and the Nigerian Ministry of Education. Funding for the program is providedthroughgrantsfromOxfam,Novib(Netherlands),theJohnDandCatherineTMacArthurFoundation,Butterfly WorksandFinalistITGroup.OnecomponentoftheLALprogramisMyQuestion,MyAnswer.Thisprogramwassetupas a partnership between OneWorld UK, EVA and the Nigerian National Agency for the Control of AIDS (NACA), with contributionsfromprivatemobileoperatorsMTNandZain.
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CASESTUDY:MyQuestion,MyAnsweran HIV/AIDScounselingandeducationprogramin Nigeria

OneWorld UK, Education as a Vaccine against AIDS (EVA) and other Nigerian NGOs launchedMyQuestion,MyAnswer,anHIVcounselingandeducationprogram,in2007. OneWorld UK is an international NGO that leverages innovation and user generatedplatformstopromotesocialdevelopment. EVAisaNigerianyouthfocusedAIDS/HIVcounselingandeducationNGO.The organizationwasfoundedin2000. The program aims to build a direct link with the population through mobile technology.Theprogramhastwocomponents: o My Question is an HIV counseling and education service that allows individuals to ask AIDSrelated questions by sending a free SMS to a shortcode(38120),callingatollfreephonenumber(080271907802)or emailingthroughtheLearningAboutLivingwebsite.Thesequestionsare thenansweredbytrainedcounselorsworkingforEVAandotherNGOs. o MY Answer is a monthly competition that engages young people by askinganAIDS/HIVrelatedquestions,whichisthenansweredthrougha mobilephoneorSMS.
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Exhibit91:MyQuestion,MyAnswersthreeinterfaces
Internet
Voice
SMS
Source:OneWorldUK,2009
OneWorld UK acts as the platform partner, providing the technology for the SMS and Webcomponentsaswellastechnicalsupport. EVAandthreeotherNigerianNGOsareimplementationpartnersinchargeof: o Trainingcounselors o Staffing o Developingthedatabaseofanswers o AnsweringtelephoneandSMSinquiries o MarshalingresourceswithinNigeria o Coordinatingwiththegovernment o Marketingtheservice. Additionally,theprogramattractscontributionsfrommobileoperators: o MTNprovidesmonthlyairtimeprizesfortheMyAnswercompetition. o Zaincontributes: FreeofchargevoicelinesforEVAcounselors. A subsidy on the cost of SMS messages originating from subscribersonitsnetwork,reversechargedtotheprogramatN5 permessageasopposedtotheprevalentrateofN15chargedby otheroperators. For the SMS component, the program commercially engaged the services of VAS2NET,aVASservicesprovider.VAS2NETsservicescomprise: o AdedicatedshortcodenumberfortheSMSenquiries
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o o
ApackageofbulkSMSmessages Abillingplatformconnectingtothemobileoperatorsforthereversebilling usedbytheorganization.
Grantssecuredin2008byOneWorldUKfromtheMcArthurFoundationandOxfamwill covertheprogramsbasiccostsuntil2012. Exhibit92:EVAstaffmonitoringSMSandWebbasedquestions
By most standards, the program has been successful. One World and EVA state that therewere60,000inquiriesbetweentheprogramslaunchinOctober2007andJanuary 2009, three times the original target,andthat the number of inquiries has shot up to 88,500bytheendofMay2009. Kemi Akinfaderin, EVAs executive director, says the anonymity offered by mobile technologyhasproventobeamajorfactorinthesuccessoftheprogram.Despitethe effort to market the service through mass media such as radio, billboards and newspapers,thelimitedresourcesoftheprogrammeantthatwordofmouthhasbeen themostefficientwayinspreadingawarenessandparticipationinprogramsofar.EVA saysmostwomenreportthattheyheardabouttheprogramfromtheirpeers. However, EVA and its partners are looking at increasing their marketing capacity, especiallyamongwomen.Atpresent,EVAreportsthat75%ofrequestswereoriginated by men and that a push for more funding is required in order to expand marketing activities. Movingforward,theprogrampartnersarelookingatanewphase.CapitalizingonanE1 line providedby Zain, which allows for 30voice lines and twodata lines, the National AgencyfortheControlofAIDS(NACA)isplanningtoestablishanationalcallcenterto be staffed by counselors and managed by NACA. Effiong Eno, deputy head for public private partnerships at NACA, says the call center will increase call capacity from the current 5,00010,000 calls per month to 15,00030,000 calls per month after implementation.
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4.3Theimpactofmobileservicesondigitalizationandproductivityofenterprises
Mobilecommunicationsplayawiderangeofrolesinanenterpriseenvironment,withvaryingeffectsonproductivityand processes. The flexibiltity of mobile communications makes them a relevant tool for personnel at all levels of an organization.The2009KellyGlobalWorkforceIndex,asurveyof100,000individualsacross34countries,conductedby KellyServices,aglobalworkforceservicesprovider,indicatesthat84%ofallintervieweesseetheintroductionofmobile technologyasmakingtheirproductivityeitherslightlybetterormuchbetter. Exhibit93:Perceptionofhowtechnologiessuchasmobilephones,PDAsandlaptopsaffectproductivity

Source:KellyServices,2009
In large organizations, the impact of mobile communications is widespread. Mobile access makes collaboration and interaction with colleagues and clients seamless. Timesensitive information can be shared instantanously. Mobile communicationandconnectivitycanalsoimproveefficiencyandgeneratetimesavings.Checkingemailsonthemove, callingaclientwhiletravelingandaccessingmarketinformationinstantlyaretasksthatareeasilyconductedovermobile phonesduringtraditionallyunproductivetimes,suchascommutes. Anothercontributionofmobiletechnologyandconnectivityisthefreeingeffectithashadonwork.Telecommutingand workingfromremotelocationsisbecomingincreasinglyattractiveoptionsamongemployers,enablingthemtomaintain inputqualitywhileimprovingthework/lifebalanceofemployees. Morerecently,telemetryandM2Mservicesarebroadeningtheimpactofmobileservices,particularlywithincompanies withlargefleetsorthoseprovidingutilityservices(electricity,water,etc.).TheapplicationofM2Mtechnologyishelping companiesinmanyindustriesreducedatacollectionandmonitoringcosts.Utilitycompaniesarealsofittinghousehold electricityandgasmeterswithsensorsthatmonitorandreportusageonaregularbasis.Oilandgascompaniesarefitting theirpipelineswithsensorstodetectleakage.PyramidResearchestimatesthatM2MrelatedSIMcardscontributedabout 18%oftotalenterprisemobilesubscriptionsintheUKin2008.
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4.3.1Examplesfromabroadofleveragingmobiletechnologyinthedigitalizationandproductivityofenterprises theUSandSenegal Enterprisesinemergingmarketstendtobelessstructuredanddigitalizedthanthoseindevelopedcountries.Thereisalso a greater proportion of individuals working in laborintensive occupations, particularly in agriculture. In Senegal, for example,mobiletechnologyisusedtoprovideaccesstomarketinformationinordertohelpfarmers,fishermanandall typesofothersmallentrepreneursmakebetterdecisionsonwhere,whenandhowtoallocateresources.Indeveloped markets,mobilenetworksaregaininggroundthankstocorporationsmovingtoprovideconnectedlaptopstomoreof theiremployees. Exhibit94:Sampleofmobileapplicationsenablingproductivity
Programbenefit Accesstomarketinformation Improveefficiencyandsavetime Abilitytospeaktocolleaguesand customers Smartmetering
Project/company ProjectManobi(Senegal) Intel (US) FCMBNigeria EDFEnergy (Europe)
Details Providesmarketinformationforfishermenandfarmers. Provideslaptoptoemployeesforconnectivityonthemove. Subsidizedmobilecommunications. Gasandelectricitymeterssendingrealtimeupdatesof consumptionandcost.
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CASESTUDY:MobilitypaysforIntel
In2003,Intelconductedastudytofindoutabouttheeffectsofintroducingmobilityto itsownworkforce. Intellookedathowwirelesstechnologywashelpingasampleofitsemployees savemoneyandimproveproductivity. Itequipped100ofitsemployeeswithmobilelaptops.Theseemployeeswere spreadoutinfourcategories: o Project/programandpeoplemanagement o Technicalsupport o Design,engineeringandprogramming o Generalofficeandbusinesssupport Theresultsshowedsignificantimprovementsinproductivityandupto5%time savings(whichtranslatedinto100hoursperyearperemployee)because: o Worklocationbecamemoreflexible. o Employeesbeganslicingtime. o Employees started distributing work time around personal and other professionalobligations(timeshifting). Exhibit95:Flexibilityofworklocationasaresultofincreasedmobility
Source:Intel,2009
After its internal assessment, Intel started issuing its workforce with mobile network capablelaptops,movingawayfromthegeneral20/80laptoptodesktopratiothatwas standardinmostcompaniesatthattime.
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CASESTUDY:SMSbasedmarketinformationin Senegalboostsproductivity
Manobi,aprivatemobilevalueaddedservicesproviderbasedinFrance,launchedXam Mars,anSMSbasedmarketinformationprogram,inSenegalin2001.
TheXamMarsserviceinformsfarmersinrealtimeaboutthecurrentpricesof theirproductsontheprincipalmarketsviaSMS. The main objective of the project was to grant access to lastminute market prices, weather reports and other information services via SMS and WAP (WirelessApplicationProtocol).
Exhibit96:ManobiXamMarsserviceadvertisement
Source:Manobi,2009
In2003theprogramwasextendedtotargetfishermen,offeringmarketprices, weatherforecastsandgeolocalizationforemergencyrescues. The program is a partnership between the Manobi Development Foundation, local fishermens unions, Alcatel, Sonatel (France Telecom) and the Canadian InternationalDevelopmentResearchCentre(IDRC). To support the program, Sonatel installed base stations near the beach in Kayar,extendingmobilephonecoveragetoupto14kmoffshore. Theserviceusesdatacollectorsinthemarketsforconstantpriceupdates.
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Exhibit97:ManobiSMSMarsenablesaccesstothelatestmarketdatabecauseofits networkofdatacollectors
Source:infoDev
The fishermanfocused service started as a pilot, with mobile phones enabled to log departuresandestimatedtimesofreturntomonitorthesafereturnofboatsfromthe sea. Combined with realtime weather reports, this improved the safety of the fishermenanimprovedtheircommercialresponsiveness. TodaytheXamMarsservicehasalmost40,000subscribers,anditappearstohavehad adeepimpactonSenegalesefishermen,manyofwhomviewtheserviceasapowerful toolforbothproductivityandsafety. Manobi is looking to expand its geolocalization tool: the company has already developedageographicalinformationsystemforlargemultinationalsoutsideSenegal, andisfurtherdevelopingthegeolocalizationtool.
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4.3.2MobileservicesandthedigitalizationandproductivityofenterprisesinNigeria PyramidResearchssurveyofmobileusersinNigeriashowsthatasmanyas54%ofintervieweesusetheirmobilephone forworkrelatedpurposes. Among those who use mobile technology for work purposes, the biggest benefit identified by interviewees is the increased ability to speak to colleagues. This benefit is proving essential for timesensitive sharing of information and remotecollaboration.Anenhancedabilitytosellandimprovementstocustomerservicewerealsoidentifiedasimportant benefitsbythesurveysinterviewees. Itisworthnotingthoughtthatamongtheyoungestgroupofinterviewees,thoseaged1624,theleadingworkrelated benefit of mobile communications after the ability to speak to colleagues was access to information. This reflects the increasingtechsavvyofyoungadults,whocraverelevantandtimelyinformation. Exhibit98:UsesofmobilephoneforworkrelatedpurposesamongNigeriasmobileserviceusers,2009
Mobile as modem for PC internet access E-mail access Personal organiser time/ date/ calendar/ alarm/ contacts Save time and increase productivity Accessing information Improve customer service/ relationships Increase ability to sell by speaking to potential clients Speaking to colleagues
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%

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Dailyuseofmobilephonesforworkrelatedactivitiesiscommon.OfthoseNigerianswhousetheirmobilephonesto speaktocolleagues,66%dosoonadailybasis.Asimilarfrequencyofuseisnotedamongthosewhousetheirphonesto speaktopotentialclients. Exhibit99:FrequencyofworkrelateduseofmobilephonesamongNigeriasmobileserviceusers,2009
A few times/month A few times/day Mobile as modem for PC Internet access Personal organizer: calendar, alarm, contacts Email access Saving time and increasing productivity Accessing information Improving customer service/relationships Increasing ability to sell by speaking to potential clients Speaking to colleagues 0% 20% 40%
60%
80%
100%
Due the lack of reliable fixed communications infrastructure, mobile telephony is a necessity for Nigerias economic entities,bothlargeandsmall.MostlargecompaniesinNigeriasponsororsubsidizethecostofmobilecommunicationsfor theiremployees.Forthelargercompanies,postpaidcontractsarethenorm,whilesmallercompaniespaybytoppingup employeesprepaidphones.ThelevelofcorporatesponsorshipofmobilecommunicationsforemployeesinNigeriavaries betweenindustriesandcompanies.FCMB,oneofNigeriasleadingbanks,sponsorsthecommunicationscostsof10%of itsemployeesforuptoN1,500(US$10)permonth.Incontrast,oneofNigeriasleadingcompaniesintheextraction,oil andgassectorsponsorsthecostofmobilecommunicationsforathirdofitsemployeesthroughpostpaidcontractsforup toN45,000(about$3,000)permonth.Thisisinlinewiththehighermobilityandneedforcoordinationbetweendifferent locationsthatcharacterizethissector.
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CASESTUDY:FirstCityMonumentBankfinds mobiletechnologyindispensable
First City Monument Bank (FCMB) is one of the leading commercial banks in Nigeria, withafocusoncorporateandinvestmentbanking. Thebankhas149branchesand3,000staff. Tokeepitsbranchesconnected,FCMBreliesmainlyonfiberopticnetworksand VSATsatellitenetworks.EachlocationalsohasalocalPBX. Recently,FCMBstarteddeployingaVOIPsysteminitsbranches. The bank is equipped with over 2,000desktop computers and more than 1,000 laptopcomputers. FCMBsponsorsabout300postpaidsubscriptionsforitsdifferentemployeesvia contracts with Globacom and Zain. Many of these subscriptions are for BlackBerrys, which are highly valued for their email access capabilities. The subscriptionscostN10,000($67)orN15,000.Billingfortheselinesisdirectedto thebank,whichisresponsibleforchargingemployeesforexcessusage. FCMBbelievesmobileconnectivityisessentialtoitsstaff,andwhileitrecognizesthat mobilephonesarecommonlyusedforpersonalcommunications,equippingemployees with mobile access allows the bank to keep its staff connected with current and potentialclients. Exhibit100:Usagedistributionbytypeofactivity
Typeofusage Personaluse Speakingtocolleagues
Percentageoftotalusage 40% 10%
Increased ability to speak to potential clients and 25% improvecustomerrelationshipsandservice Emailaccess Personalorganizer Other
10% 6% 9%
Source:FCMBestimates,2009
Looking forward, Mr. Olayinka Oni, FCMBs vice president and head of IT, expects mobilecommunicationstoplayagreaterroleinhelpingimproveefficiencyandreduce travelrelated costs. Mr. Oni also sees mobile broadband as a service of increasing interest.
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4.4Theimpactofmobileservicesonfinancialsector
Mobile financial services take a variety of shapes and serve three main purposes: mobile payments, mobile money transfersandmobilebanking.Dependingontheenvironment,theseservicescanbechampionedbyfinancialinstitutions, mobilenetworkoperatorsorthirdparties,suchasplatformdevelopers,moneytransfercompaniesorNGOs. Exhibit101:Overviewofmobilefinancialservices
Source:PyramidResearch,MobileFinancialServicesinAfrica:TheBusinessCaseforOperatorsandBanks
The platforms that these services use also vary depending on the target audience. While WAP and Javabased applicationsofferthebestinterfaces,SMSandUSSDbasedservicesaremoresuccessfulinreachingouttothemasses. Theunderlyingreasonisthecompatibilityofthetechnologyplatformwiththecapabilitiesofhandsetsusedinthetarget market. All phones, including the ultralowcost variety, have SMS and USSD capabilities; Java and WAP, however, are limitedtomidrangeandhighendhandsets.AlookatmobilefinancialserviceofferingsinSouthAfricarevealsavarietyof technology platforms. This variety showcases the different needs and characteristics of the target markets that these serviceprovidersaregoingafter. Exhibit102:Technologyplatformsofmobilefinancialserviceprovidersinvariousmarkets
Serviceprovider MoneyBoxAfrica MoneyTextMe FNBBanking ABSA Wizzit MTNBanking StandardBankofSouthAfrica ANZ UBAMobile
Country Nigeria Multicountry SouthAfrica SouthAfrica SouthAfrica SouthAfrica SouthAfrica Australia Nigeria
SMS
USSD
WIG
WAP
Java
Source:Serviceproviders;PyramidResearch,2009
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Despitethegrowinginterestinmobilefinancialservices,someserioushurdlesstillinhibitdevelopment.Inadditionto securityconcerns,regulationisthemaininhibitorofthespreadofmobilefinancialservices.Newinitiativesdrivenbypan regionaloperatorstodeploystandardizedservicesacrosstheirAfricanfootprintsarefacingseriouslimitationsfromboth telecommunications and financial regulatory authorities. Panregional operators Zain and MTN have already invested muchtimeandeffortinAfricaandtheMiddleEasttodevelopsuchapplications;however,servicedeploymentisstillslow andnowherenearcoveringtheirtotalfootprints. The prevalence of mobile technology has made mobile phones and networks a natural platform for addressing the shortcomingsoftraditionalbankinginAfricaandotheremergingmarkets.Financialinstitutionstraditionaldistribution channels,basedonbranchandATMbanking,areprovingtobeinadequateforrespondingtotheneedsofthelargebase oflowincomeindividualsandagentsoftheinformaleconomy.ResearchconductedbyFinancialSectorDeepeningTrust, anonprofitorganizationinKenya,showsthatthebreakeventransactioncostsoffinancialtransactionsrangesfrom$0.07 atapointofsale(suchasaretailstore)toabout$1atabranch,makingitimpracticaltodeploybranchesandATMsfor lowvaluetransactions Exhibit103:Breakevencostbytypeoffinancialtransaction
$1.00 $0.90
Bank transaction cost
$0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 Branch Phone (IVR) ATM Point of sale
Source:FinancialSectorDeepeningTrust,Kenya
4.4.1Examplesofleveragingmobiletechnologyinthefinancialsector:AustraliaandKenya Whiletherearemajordifferencesinfinancialservicesneedsbetweendevelopedandemergingmarkets,thestructureof keybusinessmodelsisrelativelysimilar.Mobilefinancialmodelsrelyonbanksusingmobileplatformsasadifferentiating factor to appeal to existing clients, such as in the case of Australian bank ANZs mbanking offering. An alternative approachpursuedmainlybymobileoperatorsistoleveragetheirexistingsubscriberbasestoreachunbankedcustomers, asexemplifiedbySafaricomMPESAserviceinKenya.
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CASESTUDY:AustralianbankANZoffersWAP andJavabasedmbankingservice
ANZlaunchedaWAPandJavabasedmbankingserviceforitsregisteredInternetand phonebankingusersinAustraliainFebruary2008. ANZisaninternationalbankwithoperationsinAustralia,NewZealandand26 othermarketsintheAsiaPacificregion. ThembankingservicewasthefirstofitskindtobedeployedinAustraliaand allowsANZcustomersto 1. Checkaccountbalance 2. View10mostrecenttransactions 3. Scheduleandreceiveaccountalerts 4. TransfermoneybetweentheirANZaccounts 5. Transfermoneyintosomeoneelsesaccount 6. Accessdetailsforupto10differentANZaccounts The application requires a JAVA and GPRSenabled phone. To download the application: 1. CustomerslogontotheANZwebsiteandrequesttheapplicationdownload 2. Anactivationcodeisprovidedtothecustomer. 3. AnSMSissenttothecustomerwithadownloadlink. 4. Customersclickonthelinkanddownloadtheapplication. 5. Customersentertheactivationcode. 6. Customerschoseanewmbankingcodetoreplacetheactivationcode. 7. Once the application is downloaded and the account activated, users can accessandnavigatethembankingmenuthroughtheapplicationicon. In addition to the password authentication process, ANZ implemented Secure Sockets Layer(SSL)encryption.Thebankalsolimitedtransactionstoasingleregisteredhandset peraccount.
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Exhibit104:ANZmbankingmenu
Source:ANZAustralia,2009
Within a couple weeks of launching the service, ANZ reported over 1,000 registered users for its mbanking service. The bank indicates that this uptake is significantgiven thelackofadvertizingandpromotionaroundtheservice. Looking forward, ANZ expects to register a more significant proportion of its 1.4m Internetbankingusers.
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CASESTUDY:SafaricomKenyatargetsthe bottomoftheincomepyramidwithMPESA mobilebanking

SafaricomKenyalaunchedMPESA,anSMSbasedmobilepaymentservicein2007. Owned by Vodafone UK, Safaricom Kenya is the leading mobile operator in Kenya,with15.1mofthecountrys18.8mmobilesubscribersatyearend2009. MPESAs main services are airtime topups and domestic money transfers to anymobilesubscriberonanynetwork. Onceregisteredforfree,subscriberswillhavetoswaptheirSIMcardforanew MPESASIMcard.TheywillthenreceiveanIDcard. Todepositmoney,usersmustfollowthefollowingsteps: 1. ThesendergoestoanMPESAagentandpurchasesMPESAvalue. 2. TheagententersthetransactionintotheMPESAsystemwithanSMS. 3. ThesenderandtheagentreceiveanSMSconfirmingthetransferwitha PIN. 4. ThecustomerselectsSendMoneyfromtheMPESAmenuandenters therecipientsnumberandthePIN. Towithdrawmoney, 1. TherecipientgoestoanMPESAagent,presentsaphonenumberandan ID. 2. TherecipientselectsWithdrawMoneyfromthemenu. 3. Therecipiententerstheagentsnumber,theamountandthePIN. 4. ThesenderandtheagentreceiveanSMSconfirmingthetransfer. 5. Theagentdisbursesthecash. Exhibit105:MPesaoperatingmodel
Source:Safaricom,2009
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Uptake of Safaricoms MPESA service beat most expectations. Sixteen months after launch,nearly3.3musersor30%oftheoperatorssubscriberswereregisteredwiththe service. By June 2008, MPESA was adding 10,000 subscribers per month and transferring $100m per month. Additionally, the MPESA agent network expanded dramatically,reachingabout3,500bythebeginningofthefourthquarterof2008.
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4.4.2MobileservicesandthefinancialsectorwithinNigeria AmongNigerianmobileendusersinterviewedbyPyramidResearch,20%ofrespondentsusemobileplatformstoaccess financialinformationandactivities.Themajorityoftheseindividuals,15%ofthetotal,usetheirmobilephonestoaccess informationabouttheirexistingbankaccount.Another12%useairtimeasameanstodistributewealthbyforwarding credittofriendsandfamily. Exhibit106:Useofmobiletechnologyforfinancialpurposesamongruralandurbanmobileserviceusersin Nigeria,2009

20%
Urban
Rural
15%
10%
5%
0% Check/Access bank account Issue/Receive money Share airtime with SMS/Internet balance transfers friends and colleague update
Foralmostallthemobileapplicationsrelatedtofinancialactivitiesthatweanalyzed,usewithinurbanareasishigherthan thatinruralareas,exceptformoneytransfers,whereuptakeisalmostthesameinthetwoenvironments,at5%. Generally,fullfledgedmobilefinancialservicesinNigeriaarestillintheearlystages.Despiteapopulationof140min2008 andanofficialworkforceofalmost60m,Nigeriahadanestimated18mbankaccountsin2008merely13accountsper 100people.Overall,the4,500commercialbranchesinoperationinNigeria(2007)translateintoratioof3.2branchesper 100,000residents,comparedwithaworldwidemedianof8.5branchesper100,000inhabitants,accordingtoWorldBank statistics. After a consolidation and reform period in 2005 and 2006, Nigerian banks have emerged as sound and competitive financialinstitutions.Thebanksretailfootprintistheresultofanincreasinglycompetitiveenvironmentthatdemandeda strongerfocusoncommercialbankingandlessrelianceongovernmentdeposits.Whiletheincreasedefficiencyofthese banks have allowed them to better address the needs of corporations and highend consumers, the vast majority of Nigeriansarestillunbankedorunderbanked.
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Exhibit107:Financialinstitutionscompeteoverprimerealestateandadvertisingspaceinurbancommercial centersinNigeria
In June2009,Mr.Aigboje AigImoukhuede, CEO ofAccessBank Nigeria, said that80% of total deposits in Nigeriaare generatedbyfewerthan5%ofallbankaccounts,andthathisbankspriorityistomanageitsbalancesheetandleverage informationtechnologiesinsteadofcontinuingtoexpanditsnetworkofphysicalbranches.Thisillustratesthatthemost prominent of the supply side barriers to increased adoption of banking services is the distribution channel. Financial institutions reach out to their customers mainly through costly branches and ATM locations, which require heavy investmentsthatneedtobejustified. Many ofNigeriasbanks, including GTBank,ZenithBankand UBA,have already rolled out mobile banking services to capitalizeontheefficiencyofmobiletelephonyasakeydistributionchannelfortimesensitiveinformation.However,the maintargetaudienceoftheseofferingsisexistingbankaccountholders,andofferingsfortheunbankedremainscarce. Thiscreatesopportunitiesforthedevelopmentofspecificmoneytransferapplicationsinthenearfuture.
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Exhibit108:UBAoffersaddedvaluetoitscustomersthroughitsUMobileservice
Source:ZenithBank,2009
Emergingserviceofferingsbasedoninnovativebusinessmodelsanddrivenbymobileoperatorsandthirdparties,suchas MoneyBox,canproveefficientinaddressingtheneedsofthelowerincomestrata.Afirststepistotargettheunder banked, providing cheaper money transfers and other complementary financial services; subsequent services would expandtotheunbanked,providingcompletebankingandsavingssystems.
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CASESTUDY:MoneyBoxAfricapromotesm bankingservicesinNigeria
MoneyBoxAfricareceivedalicenseinFebruary2008fromtheCentralBankofNigeria (CBN)tolaunchacomprehensivembankingplatform. The company was setup to deploy a mobile commerce application to allow users to virtually store and move money, make payments over distance and enableahostoftransactionsallwiththeuseofmobilephones. MoneyBoxAfricaisajointventurebetweenICSL(aninvestmentandfinancial institution), Salt and Einstein Ltd (a business logic company) and MISS Ltd (a mobiletechnologycompany). Thecompanyaimsnotonlytousemobiletechnologytodeliveritsservicesbut alsotoadoptthesamebusinessmodelthathelpedmobileoperatorssucceed inlowincomeandgrowthmarkets.Thatmeanscombiningasystemof: 1. Prepaidscratchcards 2. AnSMSbasedplatform 3. Adistributionsystemofumbrellavendors. 4. Customerservice24/7 5. Strongsecuritymeasures MoneyBoxAfricaexpectstolaunchtwodifferentproductsin2010: 6. QuickSave: Aservicebasedonscratchcards. Theabilityofenduserstostoremoneyontheirphonesinsteadof carryingloadsofcashwiththem. 7. Thestoredvaluecanthenbetransferredfromthephone: Toabankaccount Toarelative WithdrawnatalatertimefromaMoneyBoxAfricaagent. 8. AccountsontheStreets(AOTS): Aserviceallowingmerchantstoopenmobilebankaccounts. These accounts can be linked to regular bank accounts through a networkoftrainedMoneyBoxAfricaagentsandpartners. For its platform, MoneyBox Africa chose paybox solutions AG of Germany, whichhassincebeenacquiredbySybase.
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Exhibit109:MoneyBoxAfricaQuickSaveservice
Purchasecredit
Loadcredit
Cashoutcredit
Source:MoneyBoxAfrica,2009
Quick Save was developed to provide a banking service for Nigerias street merchants and other participants in the informal economy, who generate amounts of cash regularlybutdonotwishtointeractwithabankforlackofidentification,lackofbank branches, a high frequency of deposits and withdrawals, or merely a lack of understandingortrustinthebankingsystem. Theservicecapitalizesonexistingculturalpracticesandcurrentneeds:
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o o
MobilephonetopupcardsareacommongiftinNigeriaandaninformal waytotransfermoneybetweenfriendsandrelatives. The widespread use of esusu agents, informal financial intermediaries helpingstreetmerchantsandfamiliessavemoneyandstoretheircashfor afee.
ThescratchcardprocessisalsoanintegralpartofMoneyBoxAfricassecondandmore ambitious product offering, Accounts On The Streets (AOTS). This service targets the unbankedandunderbanked,butitalsohasthepotentialtoappealtothebanked. Withanextensivenetworkofdealers,AOTSoffersaconvenientaccesspointtobanking services. The service also lowers the required threshold for customer identification by establishing a threetiered system of accounts for the unbanked, semibanked and banked. Exhibit110:MoneyBoxAfricasidentificationrequirementsforAccountsOnThe Streets
Customer segment Unbanked Semibanked
Maximumamountpertransaction Requirements perday N30,000perday N3,000pertransaction N10,000pertransaction N100,000perday N100,000pertransaction N1mperday Name,phonenumber,photograph, thumbprint Name,phonenumber,address,photo ID Name,phonenumber,address,photo ID,utilitybill,twoguarantors,two referencesalreadybankingwith partnerbank.
Banked
Source:PyramidResearch;MoneyBoxAfrica,2009
Moneybox Africa estimates that there are about 2.5m small street retailers in Lagos statealone,comparedwith200,000registeredsmallbusinesses.Thesesmallretailers, streethawkersandmomapopshops,saysDamienOguchi,theChiefFinanceOfficerof MoneyBoxAfrica,arethetruetargetaudienceandbeneficiariesofitsproducts. MoneyBox Africa expects the unbanked segment to contribute about 80% of its AOTS accounts,followedbythesemibankedcategorywitha15%shareandthebalancefrom highvolumebankedcustomers. Ayodeji Ige, MoneyBox Africas chief sales officer, says that the company expects a phasedlaunchwithafocusonLagos,where60%ofNigeriascommercialactivitiestake place. BenchmarkedagainstSafaricomssuccessfulMPESAmobilefinancialserviceinKenya, whichattracted3msubscriberswithinsixmonthsofservicelaunchin2008,MoneyBox Africa conservatively expects to win 10% of financial transactions in the informal economy for its Quick Save service and 1% of total mobile service users for its AOTS withinthefirstyear.
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4.5Theimpactofmobileservicesontheagriculturalandextractionsectors
Increasingratesofmobileservicepenetrationinurbanareasarepushingoperatorstotargetlowerincomecustomersand widen their network coverage beyond the population centers. The expanded coverage and commercial interest of operatorsinruralareasarebringingextensivebenefitstocompaniesinindustriessuchasextractionandagriculturethat operateinremotelocations. In developed and emerging markets alike, operators are now targeting these industries with M2M services. Remotely managedirrigationsystemsaremoreefficientandcosteffective.M2Minagriculturehelpsbothmanageandmonitor equipmentaswellaswholesystems. Exhibit111:Sampleinitiativesleveragingmobiletechnologyforagriculture
Project TheWomenofUgandaNetwork SMSSokoniProject TradeNetAfrica M2Mmanagedirrigation
Country Uganda Kenya 10Africancountries US
Details Accesstoinformationonmarketpricesthroughtext messages AgriculturalinformationthroughSMS,forafee AgriculturalinformationviaSMSandWAP Irrigationsystemscontrolledremotely,offering efficiency,lowercostsandimprovedproductivityand responsiveness
4.5.1ExamplesfromabroadofleveragingmobiletechnologyintheagriculturesectorUgandaandIndia In both developed and emerging markets, the ability to connect to markets and suppliers through mobile phones is helpingfarmersimprovetheirdecisionmakingprocess,savetimeandbenefitfinancially.Dependingontheavailabilityof highspeednetworksandtheneedsoflocalcommunities,marketinformationapplicationscanbebasedoneitherWAPor SMS. InUganda,forexample,theGrameenFoundationdevelopedacomprehensivesystemtohelpdelivermarketinformation tofarmers.InIndia,ajointventurebetweenOneWorld,BTplc,CiscoSystemsandlocalagriculturalestablishmentsand NGOsishelpingdelivermarketinformationtofarmers.
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CASESTUDY:Grameenhelpsdelivermarket informationtoUgandasfarmers
SinceJanuary2008,theGrameenFoundationhasbeentestingnewusesoftheVillage PhoneinfrastructureviasuchprogramsasApplicationLaboratory. OnJune29,2009,theGrameenFoundationannouncedthelaunchofagroup ofmobilephoneapplicationsdevelopedwithGoogleandMTNUgandainthe Application Lab, which leverages MTNs network of village phones and other operatorsofsharedphones(atotalof35,000publicphoneoperators)totest anddelivermobileinformationservicestoruralcommunities. InJuly2009,anSMSbasedservicewasdeployedincooperationwithGoogle. Inordertoimproveservicedeliveryandpenetration: 1. The suite of services leverages MTNs network of village phones and othersharedphoneoperators. 2. The Grameen Foundation trained and established a network of communityknowledgeworkers(CKWs)tobecomeknowledgehubs forsmallholderfarmersinUganda,givingthemadviceandinformation onhowtocarryouttheiractivities. AgrantfromtheBill&MelindaGatesFoundationhelpedfinancethehiringand trainingofthecommunityknowledgeworkers. A group of content developers were brought on board. For instance, the content for the Farmers Friend service was developed by the Busoga Rural OpenSourceDevelopmentInitiative(BRODSI). Exhibit112:Thecommunityknowledgeworkeratwork
AlltheservicesareSMSbasedanddesignedtoworkwithbasicmobilephonestoreach thebroadestpossibleaudience.ThenewservicesinUgandacanbeaccessedbyexisting village phone operators, who extend service to people without mobile phones. The customersendsinthequeryandtheanswerisreturnedlater.Currentlytheserviceis free,butthereareplanstointroduceminimalcharges.Eventhoughthestandardcostof anSMSmessageinUgandaisUsh220($0.10)theserviceswillbeofferedforhalfofthat.
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Exhibit113:SnapshotsofusersusingGoogleSMSapplications

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CASESTUDY:LifeLinesSoochnaSeSamadhanin IndiaprovidesguidancetoIndiasfarmers
TheLifeLinesprogramwaslaunchedinIndiain2006. The program is a joint venture between One World, British Telecom (BT) and Cisco. TheservicealsopartnerswiththeIndianSocietyofAgriBusinessProfessionals (ISAP), TARAhaat (an NGO focused on sustainable rural development), the DatamationFoundationandIRRAD(alsoaruraldevelopmentNGO). LifeLinesagricultureserviceprovidesadviceandguidancetofarmersthrough anagricultureadvisoryandlivelihoodinformationservice. LifeLines uses mobile telephony as the user interface, while an Internet and computerbased program provides answers; users also get help from various experts. Because of Indias high illiteracy rates, the information is provided as a voice recordinginalocallanguage. TheservicecostsRs5($0.10)perquery. The service is promoted through a network of field volunteers Ek Dunya fellows,alsocalledfieldcoordinatorswhofacilitatetheuseoftheLifeLines servicebyencouragingfarmerstouseit,explainingthewayservicesworksand assisting end users in the process of registering their queries via mobile phones. Exhibit114:Afieldcoordinatorinteractingwithafarmerandexplainingtheserviceto afarmerduringahomevisit
Source:OneWorldSouthAsia,2009
Thisishowitworks:Theuser(eitherfarmerorfieldworker)dialstheLifeLinesnumber, and the call reaches the interactive voice response system, where the question is registered. A query ID is attached and stored in the database server. The knowledge workerinchargeofansweringthequerylooksforananswerinthesystemsdatabaseof frequentlyaskedquestions(FAQs)andtheiranswers.TheFAQdatabasecontainsmore than 200,000 questions and answers and is constantly growing. If the solution to the callersproblemisalreadyavailableinthedatabase,theanswerisaddedtotheoriginal queryasavoiceclip;ifnot,theKnowledgeWorkerforwardstheinquirytotherelevant
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experts at the Indian Society of Agribusiness Professionals (ISAP) or other partnering institutions.Theanswerisusuallyavailabletofarmerswithin24hours.Theusercallsin, entersthequeryIDandobtainstherecordedanswer. Thesystemalsoallowsuserstosendphotographsofcropsorcattle,saywiththeir inquires. Exhibit115:FarmerscallingtheLifeLinesservice
Source:OneWorldSouthAsia,2009
Currentlytheservicecoversmorethan2,000villagesacross25districtsinfourstatesof India: Himachal Pradesh, Madhya Pradesh, Uttar Pradesh and Haryana. Over 100,000 farmershaveusedtheservicesofar,andmorethan450queriesarereceivedeveryday. LifeLines has proven to be beneficial to farmers by directly improving their crop yield and earning potential. An early sample study of farmers across three villages Mashobra,JhansiandNalagarhdiscoveredaconsistentincreaseinproductqualityand productivity,whichresultedinboostingfarmersprofitsby25150%.Inanothersurvey of 5,000 farmers who made use of the LifeLines service, 96% said they were satisfied and70%saidthattheyhadputintopracticethequeryanswerandthatithadprovedto beuseful. In June 2009, Tata Indicom, a telecom services provider in India, added the LifeLines service to its Sahayak valueadded service offers. Users can access the subscription basedserviceanynumberoftimesatanytimeduringtheday. Exhibit116:Sahayak,TataIndicomsmobilevalueaddedserviceforfarmers
Source:TataIndicom,2009
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4.5.2MobileservicesandtheagriculturesectorwithinNigeria PyramidResearchfoundintenseuseofmobileservicesamongusersinrurallocationsofNigeria.Despitetheshortageof mobilebased agriculture applications in Nigeria, farmers still use the mobile phone as a viable tool to increase productivity.Amongthe451intervieweesfromruralandfarmingcommunities,227respondents,or50%,indicatedthat theyusetheirmobilephonesforworkrelatedpurposes. Among those who use mobile technology for workrelated purposes in rural areas, the most common activity is to communicatewithcolleagues,followedbyinteractionswithexistingandprospectiveclients.Thismeansmobileservices leadtowidercollaborationandsharingofknowledgeamongpeopleworkingintheagriculturalsector.ThroughanSMS,a quickphonecalloracallmebackcall,thetradetakeslesstime.Inaddition,farmersareabletocommunicatebetter withtheirsuppliers.TheacquisitionofkeymaterialssuchasseedandfertilizerinNigeriaisacomplexprocessthatinvolves federal government agencies, state government bodies and independent elements. The improved access afforded by mobiletechnologyishelpingtoshortenthedistributioncycleandtostreamlinethelogisticsinvolvedintheprocess. Exhibit117:UseofmobiletechnologyinruralareasforproductivitypurposesamongNigeriasruralmobile serviceusers,2009
Tethering for PC Internet access Email access Personal organizer: calendar, contacts Saving time, increasing productivity Accessing information Improving customer service, relationships Speaking to potential clients Speaking to colleagues 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Distibution of responses

Themajority(86%)ofintervieweesinruralareasclaimedthattheyhadmadeaprofitbyusingmobiletelephony.Mobile phones helppeople residing far from citiesavoidunnecessary travel: farmers whocan access market informationcan better decide when to take their products to market, which market offers the best price and whom to sell to. Entrepreneurialfarmerscanmaximizeprofitsbyreachingoutdirectlytocustomers.
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Exhibit118:TypeoffinancialbenefitsderivedfrommobilephoneuseamongNigeriasruralmobileservice users,2009
Lower travel or entertainment expenses Lower cost than alternative comms Time savings in travel Communicate with clients Increased ability to sell Better access to market information Make and receive payments Better able to find jobs Better access to financial information Bonus recharge card 0% 10% 20% Distribution of responses

30%
40%
50%
Dr. Richardson Okechukwu, a scientist with the International Institute of Tropical Agriculture in Nigeria (IITA) and the coordinatoroftheNetworkofAgriculturalMarketInformationProvidersofNigeria(NAMIN),believesmobiletechnology isamajortoolforthedemocratizationofmarketinformationandforsecuringthelivelihoodoffarmers.Dr.Okechukwu statesthatthelackoftransparencyallowedthemiddlemantotakeadvantageandforcefarmerstoselltheirproductsat pricessubstantiallylowerthanmarketlevels,hencecontributingtothepovertyoffarmers.Dr.Okechukwusaysthemain impactofmobiletechnologyliesinallowingfarmerstomakeinformeddecisions. Askedwhatapplicationstheywouldliketoseeinthemobilemarketinthefutire,ruraluserseitherpointedatapplications thatusethemobilephoneasapaymenttoolorconveymoreinformationthatisrelevanttotheirdaytodayactivities. Mostfrequentlymentionedwereprogramsthatwouldenablethemtotransfermoneyovermobilephone.
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Exhibit119:PreferrednewapplicationsamongNigeriasruralmobileservicesusers,2009
Money transfers over mobile phone Education-related applications from government Ability to pay for transportation fees with my mobile phone Agriculture-related information Local information (weather, news) 0% 10% 20% 30% 40%

New initiatives led by Nigerias Ministry of Agriculture are looking into further streamlining the complex distribution structure for governmentsubsidized fertilizers, a lifeline for many farmers. These initiatives are looking at better identifyingthesefarmers,understandingtheirneedsandshorteningthedistributioncycles.Theuseofmobiletechnology by cassava growers to access market information is one example of such initiatives. The project used AgriBusiness InformationPointsandtradeagentstoprovidebetteraccesstothisinformation.
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CASESTUDY:Cassavagrowersreceiveamobile boost
The Integrated Cassava Project (ICP) is funded by the Federal Government of Nigeria, the Niger Delta Development Commission, Shell Petroleum Development Company of NigeriaandtheUSAgencyforInternationalDevelopment. The project aims to disseminate market information using the AgriBusiness InformationPoints(ABIPs)andtradeagents: ABIPsaremarketinformationcenters.Theirservicesinclude: Prices,volumesandoffers Tradeassistance Trainings Businesscentertypeservices Tools:InternetandonlinemarketplaceTradeNetAfrica Trade agents are microentrepreneurs serving local traders and producers.Theirservicesinclude: Prices,demandvolumesandoffers SMSAlerts Technicalmessages Tools:TradeNetAfricaandmobilephones Exhibit120:AmarketplaceinNigeriawithanAgriBusinessInformationPoint
Source:CassavaProject,2009
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4.6Theimpactofmobileservicesonthetransportandlogisticssector
Thetransportationandlogisticssectorshaveforalongtimebeenattheforefrontofimplementingnewtechnologies, includingmobileservices.Theimpactofmobileservicesintheseverticalscanbeseenfromtwodifferentangles:fromthe perspectiveofcompaniesprovidingtransportationservices,whichareinconstantsearchoftoolstomaketheiroperations moreefficiently,andfromtheperspectiveofendusers,whoevaluatetheconvenienceandcostoftransportationservices visvisdirectandindirectsubstitutes. With regard to companies providing transportation services, mobile coverage is proving particularly suitable for fleet management and route planning. Implementation of technological advances by transport and logistics companies can significantlyimprovethemanagementofinformation,stockandhumanresourcesinordertoadvanceproductivityand security,cutcostsandsavetime.Recently,mobiletechnologiessuchasM2M(machinetomachine)havebeenenabling anevenwidervarietyofvalueaddedservices.ThedeploymentofM2Mforroadandemergencysignalmanagement,for example, is an increasingly common use of mobile technology within the transport sector that helps central offices connectandcommunicateremotelywithmonitoringequipment. Fromtheperspectiveofconsumers,theavailabilityofrelevantinformationviamobileserviceshelpsthemmakethemost oftransportationservicesandshouldincreaseoverallsatisfaction.Mobileservicesareanoptimalmediumforreceiving trafficupdatesandevenreportingincidents.Anothernotableimpactofthegrowingadoptionofmobiletechnologyisthat itreducestheneedforuserstotravelinordertoengageincertainactivitieswhenthesecanbeconductedefficientlyviaa phonebasedconversation.Withnetworkaccessgettingfasterandmoreaffordable,companiesandindividualssearching for efficiencies are continually evaluating the costs and benefits of travel and conference calling. In technologically advancedcountries,newservicessuchasvideoconferencingareresultingintravelsubstitutionwhilehelpingtoenrich overallbusinesstransactions.
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Exhibit121:Samplemobileapplicationsusedinthetransportandlogisticssector
Application OnStar Telematics
Company GeneralMotors
Country US Canada
Description Invehiclesecurity,diagnosticsand communicationsservice. RFIDreadersautomateweighingtransactionsin landfill.DataissentoverGPRStoacentralserver andanalyzed,anenduserreportisgenerated,and anSMSnotificationissentincaseofdiscrepancies. Vendingmachinesareequippedwithsensorsfor stockandfailurenotifications.Theinformationis usedtoplanvendingroutes,managemachine inventoryandcontrolwarehousestock. Vehiclelocationsandotherdataissentover mobilenetworkstotrackfleetpositionsand movementandmonitorgasandmileage consumption. ListenerssendSMSmessagesorcalltoprovide trafficandaccidentupdates. Userscanrequestandreceivetrafficupdatesvia SMS.
OptoAfrica Wastemanagement
Pikitupwaste management
SouthAfrica
VianetvOpen Vendingmachine management
IdealServices
UnitedKingdom
CtrackAssist Vehicletracking
Ctrack
SouthAfrica Nigeria
VAS2NET HotFMAbuja SMSshortcodeservices eNowNow SMStrafficupdates
Nigeria Nigeria(Lagos)
eNowNow
Source:Serviceproviders,PyramidResearch,2009
4.6.1Leveragingmobiletechnologyinthetransportandlogisticssectoraroundtheworld Theimplementationofmobileservicesbytransportationandlogisticscompaniesrequiresclosecollaborationfrompure playvehiclevendors,trafficauthorities,mobiledevicemanufacturersandmobileoperators.InEuropeancountriessuchas theUKandGermanymobileoperatorsincludingO2andVodafonehavebeenpromotingM2Mservicesforafewyears nowtosupporttrafficmonitoringwithcamerasinremotelocationsthatarelinkedviamobilenetworks.Themainusersof connectedroadapplicationswillbetransportationauthoritiesofdifferentgeographicalregionswithineachcountry,but weexpecttheimpacttoalsoreachindividualusers,giventhatcongestionanalysisandotherusesservetoalleviatetraffic bottlenecks.
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Exhibit122:OverviewofM2MapplicationsinthetrafficspaceinWesternEurope
Source:O2UK,2008
AnotherexampleoftheuseofmobiletechnologiesinthetransportindustryistheOnStarservicebycarmanufacturerGM intheUS.Theserviceisaimedatimprovingthedrivingexperienceofendusers.ItcombinesGPSandmobilenetworkson differentplans,includingmobilevoicecalling.
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CASESTUDY:OnStarbringstelemetrytothe consumermarketintheUnitedStates
General Motors (GM) launched the OnStar service in the US in 1995. The invehicle security,diagnosticsandcommunicationsserviceissubscriptionbased. TheserviceiscurrentlyavailableintheUSandCanada. By 2007, all of GMs new vehicles came equipped with OnStar; the system cannotbeinstalledbydealersorthirdparties. OnStarprovidesawidevarietyofservices: 1. Emergency Automaticcrashresponse Automaticairbagdeploymentresponse Emergencyservices Crisisassist Roadsideassistance 2. Security Stolenvehicleassistance Remotedoorunlock Remotehornandlights 3. Navigation Information/conveniencestore OnStarturnbyturnnavigation 4. Diagnosticservices OnStarvehiclediagnostics 5. Handsfreecalling Handsfreevoiceactivatedcalling Exhibit123:OnStarautomaticairbagdeploymentresponseservice
Invehiclesensors detectairbag deploymentafter accident.
Emergencysignal sentautomatically totheOnStar center.
Anadvisor attemptsto communicate withthedriver.
Incaseofnoreplyorifthe driverreportsan emergency, advisorcontactsclosest emergencyservice.
Source:OnStar2009
AccesstoOnStarservicesrequiresamonthlysubscriptiontoeitherofthetwo plans: 1. The Directions and Connections plan includes all the services for $28.90permonth.
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TheSafeandSoundplanincludesalltheservicesexcepttheturnby turnnavigationfor$19.90permonth. Every new activation comes with 30 free minutes of voice communications through handsfree voiceactivated calling. However, customers have to purchaseprepaidminutesforadditionaltalktime. OnStarsinterfaceissimpleandeasytouse,relyingonasetofthreebuttons thatcomepreinstalledinthevehicle. OnStarservicereliesonacombinationof: 1. Onvehiclemonitoringdevices 2. Mobilecommunications 3. GPStechnology 4. Customerserviceandsupport24/7
2.
As of mid2009, the service had about 5.5m subscribers. OnStars statistics are compelling:betweenOctoberandDecember2008,itgeneratedamonthlyaverageof: 2,600automaticcrashresponses 10,400emergencyservices 6,000goodSamaritancalls 600stolenvehicleassistance 62,700remotedoorunlocks 54,500remotevehiclediagnostics 3.4mOnStarvehiclediagnosticsemails 30,200roadsideassistancecalls 961,000turnbyturnroutes 29mOnStarhandsfreecallingminutespurchased Givenitssuccess,GMlaunchedtheserviceinChinainDecember2009throughShanghai OnStar, a joint venture with SAIC, its local Chinese manufacturer. China Telecom providedthejointventurewithmobileconnectivitysupport,andtheservicewentlivein December2009.
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4.6.2MobileservicesandthetransportandlogisticssectorwithinNigeria TheavailabilityofmobileapplicationsspecificallyfortransportandlogisticsinNigeriaisstillatanascentstage.Mobileend usershaveseenareductionintheirtransportationneedsthankstothewideravailabilityofmobilephonesandmobile service,whichenablethemtoconductsocialandworkrelatedconversationsfromremotelocations.Inaddition,Pyramid ResearchhasidentifiedaseriesofinnovativeservicesleveragingSMSthataimtohelpthegeneralpublicavoidoralleviate trafficbottlenecks. AccordingtoPyramidResearchssurveyofNigerianusers,mobileservicesarehelpingtoreducetheneedforphysical transportation.Roughly60%ofintervieweessaythatmakingmobilecallsisaffectinghowoftentheytravel,whichshould reducetheirtravelcosts.Thistrendaffectsvisitstofamilyandfriendsaswellasbusinesstrips,andisslightlymorenotable amongruralmobileusers.Theuseofapplicationstochecktimetables,makereservationsoracquireticketsisalmostnon existent,whichsuggeststheseareopportunitiesforfuturedevelopmentthatshouldbenefitfromthegrowingavailability of3G,smartphones,localcontentandlocalapplicationsinNigeria. Exhibit124:Scopeofuseofmobileservicesrelatedtotransportandlogisticsactivitiesamongruralandurban mobileusersinNigeria,2009
Rural Checking flight schedue Using maps via mobile or GPS to locate an address Checking timetables, service availability or pricing Coordinating family/social meetings Making calls instead of visiting friends Making calls instead of visiting family 0% 10% 20% 30% 40% 50% 60%
Urban
Thatpeopleopttocallratherthantravelisaphenomenondrivennotonlybycostsbutalsobyconvenienceandadesire tooptimizetheuseoftime.Intracountrytraveldependslargelyonthestateofinfrastructure.Thelackofanadequate railwaysystemmeansthatroadsarethemainsourceoftransportation,butwithlessthan50%oftheroadsystempaved, thispresentschallengestothetransportationofpeopleandgoods.Newinitiativesatthestateandfederallevelsaimto addresstheissueinNigeria:anationwiderailsystemisbeingplannedanddeployed,andspendingonroadprojectsis increasing at the state level. Other initiatives include the establishment of a regulatory body, the National Transport Commission,whichinconjunctionwiththeNationalCouncilforPrivatization(NPC)andtheFederalMinistryofTransport (FMOT)havefinalizedanewnationaltransportpolicy. Traffic challenges are also notable in the metropolitan areas. While Lagos epitomizes Nigerias transport network ills, Abujasroadsemergeasanexampleofawellorganizedandwellmaintainednetwork.ItisdifficulttocompareAbujato Lagos given the differences in their size and layout, but the two cities face similar issues when it comes to booming populations and increased stress on the existing network of roads, leading to constant traffic bottlenecks. Given the rapidlyincreasingpopulation,commutingiscommoninNigeriasmetropolitanareas.InAbuja,about60%ofthecitys
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workforce reportedly lives in areas that are 1520 kilometers outside the city. Taxi and bus drivers, city dwellers, government officials and private entrepreneurs, whether living in Abuja Model City, one of many highend gated communitiesoutsideAbuja,orindistantshantytownslikeSulejaandGwagaladaalltaketheroadsleadingintoandout of Abuja on a daily basis. This leads to heavy traffic on highways such as Airport Road, the A2 Highway and Murtala MohammedExpresswayduringmorningandeveningrushhours. Exhibit125:LagosandAbujacitylayoutsandtraffic
Lagoslayout
Abujalayout
Lagostraffic
Abujatraffic
Source:PyramidResearch;GoogleMaps,2009
Private initiatives continue toemerge to respond to trafficchallenges. Private helicopter transportation is widespread, catering to the needs of the oil and gas industry, while a radio station in Abuja started a traffic monitoring system leveragingitslistenerbaseandmobiletechnology.
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CASESTUDY:HOTFMleveragesSMSfortraffic monitoringinAbuja
Hot98.3FM,aradiostationinAbuja,launchedtheTrafficJamshowin2006. Theshowbroadcasts4pmto8pmdailyandreliesonlistenersforliveupdateson trafficpatternsandroadsafetyissuesviamobilecallsorSMS. Hot FMs broadcast coverage extends beyond Abuja to many parts of Kaduna, Plateau,Niger,Nasarawa,Kogi,BenueandImostates. Thestationusesatollfreephonenumberforthecalls. TheSMSmessagesaresenttoadedicatedshortcode(33535). TheSMSsystem,providedbyVAS2NET,issimpleandstraightforward.Itincludes ashortcodeandaplatformtotrackincomingSMSmessages. Exhibit126:Hot98.3FMtrafficjamshow
Drawing increased audiences in prime time and thus more advertising revenue, theTrafficJamhasgrownintoastapleprogramforthestation. Theradiostationreceivesanaverageof5060trafficrelatedcallsandtextsper day;about80%comeintheformofphonecalls. Thetextmessagesaresenttoadedicatedshortcode(33535).
Listenersliketocallbecauseitletstheminteractwiththeshow,expresstheirviewson the different topics that are raised in the show, request songs or say hello to family members, says Ndu Anyanwu, the stations managing director. He believes mobile service was the right choice for providing a valuable service to the community. Mr. Anyanwu notes that listener contributions go beyond traffic reporting, addressing concernsoftravelerssuchaspolicebehavior,corruption,roadcrime,accidentreporting andinfrastructuremonitoring.
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4.7Theimpactofmobileservicesontheentertainmentandmarketingsectors
Atthegloballevel,themobileentertainmentindustryhasexperiencedexplosivegrowthoverthepastfewyearspropelled by the growth in mobile data. Pyramid Research estimates that global service revenue from data services 20 reached $214bnatyearend2009.Messaging,informationservices(news,weatherprovidedthroughSMS)stillaccountforthe bulk of mobile data revenue: 50% in 2009, down from 54% at yearend 2008. Going forward, we expect mobile applications(music,video,browsing/WAP)aswellasmobilebroadbandaccesstobethemaindriversofthemarket. Consumptionanddeliveryofmobileentertainmentcontenttendstofollowanevolutionarypathdrivenbyadvancesin handset capabilities, by the availability and cost of bandwidth and by the pace of development of the local content industry.Duringtheinitialstagesofacountrysmobileentertainmentindustry,whichappliestomostemergingmarkets with low consumer spending, mobile users generally leverage basic platforms such as SMS and sideload the content informallyandoftenforfreefromfriendsandpeertopeerwebsites.SMSbasedtransactionsalsohelpthedeliveryof content,mostfrequentlyringtonesandmusic,toprepaidsubscribers.Thesetransactionsareinitiatedbyarequestsentby subscriberstoashortcodedesignatedbytheoperatororathirdpartycontentproviderforapremiumratethatcovers thecontentprice,whichisdeductedfromthesubscribersbalance.Oncethetransactioniscomplete,thecontentisthen downloaded to the subscribers handset over the air. In more developed markets, consumers access entertainment services more directly, often using smartphones and 3G networks to connect through mobileoperator or thirdparty mobilespecificportalstomultimediacontent. Exhibit127:Evolutionofmobileentertainmentservices
Entertainmentapplicationsformobilehandsetsarenotlimitedtothedownloadsthatcanbeofferedonamobileportal. Handsetvendorshaveenteredintoagreementswithcontentdeveloperstopreloadgamesandmusicontheirdevices.In
20
PyramidResearchdefinesmobiledataas: Messagingservices,whichincludeSMS,MMS,emailandothermessagingservices. Mobileapplications,whichincluderingtones,graphics/images,games,browsing/WAP,musicandvideo. Mobilebroadband,whichincludesInternetaccessfromcomputersusingdatacardsorembeddedmodems.
138
markets where 3G+ networks have been deployed, content streaming is gaining ground as the preferred method for enjoyingvideoandaudioentertainment.Initiativesacrossemergingmarketsarebeingpromotedbyglobaltechnology playerssuchasGoogleandAppleaswellasregionalmobileplayerssuchasAmericaMovilinLatinAmerica. Exhibit128:Examplesofmobileentertainmentinitiatives
Applicationprovider
Deliverymode
Specifics GoogleTraderisanew SMSbasedmobile initiativeinUganda
Userexperience MTNuserscan: Postads Findads onGoogleTraderbysendingafree(duringtrial period)SMStoashortcode.
GoogleinUganda (thirdparty)
SMSbasedtrading: GoogleTrader
ClaroinArgentina (mobileoperator)
Preloadedcontent: TheFergiePhone
ClaroofferedaFergie themedMotoroladevice
Packincludes: FoursongsbyFergie Onecompletevideoand30secoverviewof othervideos Onewallpaper
MXitin SouthAfrica (thirdparty)
MXitapplicationcanbe WAPbasedinstant downloadedtoany messagingandsocial GPRS/EDGEphoneand networkingplatform usedonanyoperator network
MXituserscan: ChatwithotherMxit,AIM,YahooMessenger, GoogleTalk,ICQandMSNusersformuch cheaperpricespermessage. Uploadandvoteforpicture,musicandvideos BuySkinz
AppleiPhonein multiplemarkets (handsetvendor)

Contentstreaming: YouTube
YouTubeapplication comespreinstalledon theiPhone
Userson2.5and3Gnetworkscan: Search Watch AddtoFavorites AddtoPlaylist Sharevideoclipsuploadedbyotherusers.
Source:Serviceproviders;PyramidResearch,2009
Mobile operators are also looking at broadcasting as a means of content delivery. Broadcasting offers the ability to distributecontenttomultiplesubscribersatthesametimeonetomany.Themostsuccessfuloftheseinitiativesare mobileTVofferingsdrivenbycooperationbetweenoperators(whichhaveawidesubscriberbase,distributionchannels andextensiveinfrastructure)andcontentproviders(whichprovidepremiumcontent).
139
Advancesin3G+networkdeployments,increasingdemandformobilebroadbandandcheaperhandsetswithadvanced media capabilities will lead to higher uptake of music and video services in both developed and emerging markets. PyramidResearchforecaststhatinthe20092014periodthefastestgrowingrevenuestreamwillbemobilebroadband (definedasInternetaccessviadatacards/modems),withaCAGRof25%;itwillbecloselyfollowedbyvideo(24%),other messaging(23%)andmobilemusic(22%).Thegrowthofmobileentertainment 21revenueispiggybackingonmobile broadbandgrowth. InmostoftheAfricaandMiddleEastregion(AME),enduserspendingonservicesotherthanvoiceisstillatanearlystage, contributingonly15%oftotalmobileservicerevenuegeneratedbyoperatorsin2009comparedwithaglobalaverageof 25%.Thisslowuptakeistheresultofmultiplefactors,mostprominentofthemlowdisposableincome.Latedeployment of3GnetworksinsubSaharanAfricaisalsoamajorfactorbehindthesluggishuptake.Intheabsenceofthesenetworks, slowdownloadspeedsforcontentdiscourageseventhosewhohavethemeansandinterestinsuchcontent.Ofthe15% oftotalmobileservicerevenuegeneratedbymobiledatainAMEin2009,messagingcontributed69%comparedwith 50%globally,whilemobileapplications(excludingmobilebroadband)contributed18%comparedwith39%globallyfor thesameyear. Exhibit129:Breakdownofglobalmobiledatarevenue,20082014
Mobile broadband $450 $400 $350

Revenue (US$bn)
Messaging
Mobile applications
$300 $250 $200 $150 $100 $50 $0 2008 2009 2010 2011 2012 2013 2014
4.7.1MobileservicesandtheentertainmentsectorinNigeria InNigeria,uptakeofpaidformobileentertainmentservicesisstilllow,withmobiledatacontributinganestimated7.9% oftotalmobilerevenuegeneratedbymobileoperatorsin2009. PyramidResearchssurveyofNigerianmobileuserssuggestsNigeriansdousetheirmobilephonesonaregularbasisfor entertainment purposes, mainly offline. Of all interviewees, 90% claim to use their mobile phones for entertainment purposes,comparedwithabout50%forworkrelatedand30%foreducationrelatedmatters.Surveydataalsoshowsthat 50%ofNigerianswhohaveaphoneusetheirhandsetstolistentomusic,46%toplaygamesand36%totake,sendand receivedpicturesandvideos.
21
Definedasgraphic,ringtones,games,browsing/WAPandmusic
140
Exhibit130:FrequencyofuseofmobileentertainmentamongNigeriasmobileserviceusers,2009
A few times/month A few times/day
Playing games Taking, sending, receiving photos/videos Listening to music/radio 0% 20% 40% 60% 80% 100%

AfurtherbreakdownofsurveyresultsshowsthatyoungerNigerians(aged1625yearsold)arethemostinclinedtouse handsetsforentertainmentpurposes.Amongintervieweesinthisagebracket,64%usetheirphonestoplaygames,60% tolistentomusicandradio,and46%forpictureandvideorelatedactivities. Exhibit131:AdoptionofmobileentertainmentservicesamongNigeriasmobileusersbyagegroup,2009
70% 60% 50% 40% 30% 20% 10% 0% Ages 16-25
Listening to music/radio Playing games Taking, sending, receiving photos/videos
Ages 26-35
Ages 36-45
Ages 46-69
MobileoperatorseffortstopromotemobileentertainmentinNigeriahavewitnessedastronguptickinthepastyear.All GSMoperatorshavebeefeduptheirmobileentertainmentandapplicationcontentoffering.Mostcommonlyknownof these services is the ringbacktoneapplication. New initiatives such as MTNs GoogleSMS Search, Zains Chat(instant messaging)andEtisalatsSMStoFacebookalsolookpromising,withencouraginginitialfeedback.
141
Exhibit132:MobilevalueaddedservicesbythetopthreemobileoperatorsinNigeria
Service
Ringbacktones(RBT) Ringtones Songs Clips SMStoFacebook Chat GoogleSMS Wallpapers Information:football,newsandother entertainment MobileTV Games

(limitedrollout)
Source:Operators;PyramidResearch,2009
One of the most innovative mobile entertainment offerings in Nigeria is a mobile TV service that combines DStvs premiumcontentandMTNsmobileplatform.ThepayTVmarketisfiercelycompetitive,drivenbyagroupofdirectto home(DTH)satelliteserviceproviders,ledbyDStv,HiTVandthemostrecentmarketentrant,DAARSAT.Weestimatethat Nigeriahadabout2.5mfixedlineTVsubscribersattheendofJune2009,that98%ofthemreceivedsomeformofDTH service,andthatabout25%ofthemwerepayingsubscribers. Sinceitsentryin1994,DStv,asubsidiaryofMultiChoiceSouthAfrica,ledtheNigerianpayTVmarketwithamixoflocal andinternationalcontentandafocusonsports.TheentryofHiTVin2007broughtincompetitivepricesandstrongerlocal content,andDAARSATsentry in2008 also generated aconsiderable responsedueto itsprepaid business model and attractivehardwareandservicepackages. DStvfacesanincreasinglycompetitiveenvironmentacrossafootprintof48marketsinAfrica,includinginNigeria.The challengesarecausedbyitslowcostbusinessmodelsandafocusonlocalcontent.However,givenitswidefootprintand scale,DStvenjoyssubstantialeconomiesofscale,whichitleveragestosecurepremiumcontent,includingbroadcasting rightsformuchprizedinternationalfootball(soccer)games. Amixofintensifyingcompetition,theneedtostayattheforefrontofthemarketandanattempttoexpanditsdistribution footprintpromptedthecompanytolooktowardmobiletechnologyandtoimplementamultiscreenstrategy:athome andonthemove.Otherinitiativestoreachouttoconsumersandfacilitateinteractionwiththemincludeapartnership thatDStvstruckwithNigerianbanksFinBankandFCMBandmobileoperatorstofacilitateonline,mobileandATMbill payments.
142
CASESTUDY:DStvandMTNpartnerformobile TVserviceinNigeria
DStv,inpartnershipwithMTN,launchedDStvMobileinNigeriaonatrialbasisinApril 2008. DStv provides DTH payTV service in 48 countries across Africa and is the leadingpayTVproviderinNigeria. MTNisapanregionalmobileoperatorinAfricaandtheMiddleEast,andthe leadingmobileoperatorinNigeria. TheDStvMobileserviceisbasedonDVBHtechnology,whichbroadcastslive TVtoeligiblehandsets. The TV signal originates from the DStv Broadcast Center and is relayed by broadcasttowerstohandsets. Exhibit133:DStvmobilebroadcast
Source:DStv,2009
The original launch covers areas in Lagos, Abuja and Ibadan, with plans to expandtootherareas. The subscription costs N1,500 (about $10) per month and is positioned as an entertainmentonthegotargetingdailycommuters. Subscriberswereofferedafreethreemonthsubscription,butthesubscribers neededtopurchaseanewphone,theDVBHcapableZTEF912,fromanMTN servicecenterforN45,000(about$300).
143
DStv Mobile offers 10 channels, covering the areas of entertainment (Africa Magic, Cartoon Network, Magic World and NTA2), lifestyle (Channel O and TBN), News (CNNi) and sports (Super Sport 3, Super Sport 9 and Super Sport Update)(seeExhibit).
Exhibit134:DStvmobilechanneloffering
Source:MTNNigeria,2009
In June 2009, DStv announced a new agreement with Nokia Siemens Networks to expand its DStv Mobile network in four African countries: Ghana, Kenya, Namibia and Nigeria.Theexpansionwillalsobringashiftinthestandardusedtosupporttheservice, fromtheoutdatedIPDCstandardtotheOMABCASTstandard. The network expansion will be accompanied by adjustments to the business model. DStv brought on board Nokia, which will be offering a free 12month DStv Mobile subscription with the purchase of a DVBHcapable handset. Nokias range of capable devices(builtinorwiththeadditionofaNokiamobileTVreceiver)currentlyincludes theN79,N85,N86,N79,E75andNokia5800XpressMusicmodels.Thesedevicesoffer consumers a wide choice of handsets with different functionalities and price points. NokiaNigeriasgeneralmanager,PhilipdelaVega,announcedthattherangeofdevices willbeexpandedintherunuptothe2010WorldCup. DStvalsoplanstoexpanditspackageoffersandthelengthofsubscriptions,providing three different packages, the ability to purchase content on demand and different pricingschemesfordifferentsubscriptionperiods.Thesechangeswillenableplayersto attractnewsegmentsoftheNigerianmobilemarket.
144
Annex:Methodologyofendusersurveyforthisstudy
WiththegoalofanalyzingtheimpactofmobiletelephonyonNigeriansocietyandunderstandingthevalueofmobile technologyinthegeneralpopulationsdaytodayactivities,PyramidResearchcarriedoutasurveyofover1,500Nigerian mobilephoneusers. In order to secure participation and ensure the quality and consistency of consumer feedback, Pyramid Research developedaquestionnairecomprisingmostlyclosedendquestions.Themaintopicscoveredinourinterviewswereas follows: Determinantsofmobileownership Driversofusage Purposeandpatternofmobilephoneusage,including: o Workrelatedactivities o Entertainmentandaccesstoinformation o Accesstohealth,education,financialandlogistics/transportationinformationandservices Perceivedchangesinpatternsandbenefitsofeconomicactivityamongmobilephoneusers Perceivedchangesinworkpracticesandnetworksofsocialcontactsamongmobilephoneusers
Data was collected via a combination of phonebased and facetoface interviews in households and hightraffic pedestrianareas. Exhibit135:Endusersurveyexecutionintheintervieweeshouse,2009
The sample group of our survey is representative of Nigerian society, including a combination of female and male participants. The research was designed to include mobile users living in different parts of the country, with 70% of intervieweeslivinginurbanareasand30%livinginruralareasinthefollowingregionsandcities:Lagos,Abuja,Kano, Akure, Kaduna, Ibadan, Jos, Aba and Enugu. In terms of age groups, we focused the study on the 1669yearold population,assumingthattheseusersnotonlyrepresenttheoverwhelmingmajorityofoverallmobilesubscriptionsinthe
145
countrybutalsothatgiventheiractiveroleintheeconomypeopleinthisagebracketusetheirmobilephones acrossawidervarietyofactivities. Exhibit136:Endusersurveyintervieweeprofilebygenderandagegroup,2009
Age 46-69 10% Age 36-45 17% Age 16-25 39%
Women 49%
Men 51%
Age 26-35 34%
Note:n=1,500. Source:PyramidResearchsurveyof1,500mobileserviceusersinNigeria,2009
Amongourinterviewees,theoverwhelmingmajority(99.3%)ownapersonalmobilesubscription,withonlyafew sharingamobilesubscriptionwithanotherfamilymemberatnocost.Amongthosewhoclaimtohavetheirown subscription,welookedatmultipleSIMownership:71%haveonemobilesubscription(oneSIMcard)inoperation, while22%havetwomobilenumbersand6%havethreemobilesubscriptionsinservice.Theseproportionsvary betweenruralandurbanareas,withruralrespondentshavingahigherrateofonephonesubscriptions,79%, comparedwith68%inurbanareas. Exhibit137:Endusersurveyintervieweeprofilebyurbanizationandlocation,2009
Location Lagos Ibadan Akure Kano Kaduna Abuja Jos Aba Enugu TOTAL PERCENTAGE
Numberofurban interviewees 150 201 135 222 147 154 155 201 135 1,049 70%
Location Ikorodu Maniya Ikere Osisioma Emene Jogana Rido Bukuru Lugbe TOTAL PERCENTAGE
Numberofrural interviewees 45 60 40 67 44 47 48 60 40 451 30%
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Notes:
AboutPyramidResearch
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Authors:
GabrielaBaez: ManagingDirector,GlobalResearch&Consulting BadiiKechiche: SeniorAnalyst SylwiaBoguszewska: Analyst
PyramidResearchWorldHeadquarters
10CanalPark Cambridge,MA02141 USA Tel:+16178711900 Fax:+16178711933 Email:sales@pyr.com Web:www.pyramidresearch.com
NigerianCommunicationsCommissionHeadquarters,Abuja,Nigeria

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THE IMPACT OF MOBILE SERVICES IN NIGERIA

How Mobile Technologies Are Transforming Economic and Social Activities

THEIMPACTOFMOBILESERVICESINNIGERIA HowMobileTechnologiesAreTransformingEconomic andSocialActivities

Mobile subscriptions (millions)

Foreign capital investment (US$ billions)

120% Net increase in private investment

100% 90% 80% 70%

60% 50% 40% 30% 20% 10% 0% Male Female

Furthermore,morethan80%ofoursamplehasseenfinancialgainsfromusingmobileservicesthrougha combinationofsavingoncommunicationsexpensesandgeneratingadditionalincomebywayofstaying connected. Exhibit5:Haveyouseenapositivefinancialimpactonyourlifefromtheuseofmobileservices? Nigerianmobileusers,2009

100% 90% 80% 70%

Benefited from savings in telecom and other areas

Benefited from additional income

Benefited both from savings and additional income

Government: Federal, state (36), local (774)

President Umaru Musa YarAdua

Vice-president Goodluck Jonathan

Special advisers & assistants

Minister Ministry of Information & Communications Dora Akunyili

Nigerian Communications Commission (NCC): Independent regulator

Executive vice chairman Ernest Ndukwe

Sector Policy Macroeconomy Infrastructure Education

20% Real GDP per capita

Real GDP growth

$0 2001 2002 2003 2004 2005 2006 2007 2008 2009

Purchasing power adjusted GDP per capita (US$)

Withsuchalargeandyoungpopulation,curbingunemploymentisaconsiderablechallenge.AccordingtotheNBS,the nationalunemploymentratereached14.6%in2007. Exhibit12:WorkingpopulationasproportionoftotalpopulationinNigeria,20012009

Total working population 60

Working population / total population 40% 35%

Working population (millions)

50 40 30 20 10 0 2001 2002 2003 2004 2005 2006 2007 2008 2009

30% 25% 20% 15% 10% 5% 0%

Ghana $1,093 Nigeria $6,580 Senegal $716 Algeria $3,101

Cameroon Kenya $826 Egypt $1,086 $4,708 Cote d'Ivoire $1,148

Tunisia $1,395 Morocco $3,016

South Africa $10,008

GDP per capita (US$)

April:Appointmentof Pentascopetomanage Nitel/Mtel. December:Mtelrolledout GSMservicestothecapital citiesofall36states.Also introducedpersecond billing.

April:Econetrebrandedto VeeNetworks(wastrading asVMobile)after acquisitionofacontrolling stakebyVodacom.

September:Rolledout GPRSservices. September:Rolledout GPRS/GSMservices.

Pentascopecontactwas cancelled. May:Mtelssubscriber totalpeakedat1.2mand itsmarketshareat8%.

March:Launchedfixed wirelessservicesbasedon CDMAand3GEVDOmobile broadbanddataservice. May:Awardedunified licensebytheNCC.

Redefinedmobileandfixed voiceservice.Introduced freedomroamingtariffs.

June:Acquired Cellcom. August:Awarded unifiedaccesslicense (800MHzspectrum)by theNCC,whichallows ittoofferfixedand mobileservices.

August:Celtelwas rebrandedasZain followingtheglobal acquisitionofCeltel InternationalbyMTC.

August:Hitthe20m subscribermark. September:Launched Internetpackagesover3G plusnetwork.

February:Transcorp sharesweresuspended fromtheNigerianStock Exchange(NSE).

March:Firstofficialcallon thenetwork. October:Launched commercialoperationsin Nigeria.

July:Starcommslistedon theNigerianstock exchange. November:Reachedthe 2msubscribersmark.

September:Crossed the1msubscribers landmarkaftersix monthsand2.5mafter 10months.

April:RaisedN15bnina privateplacement. February:Transcorp starteddivestingitsstake inNitel. June:Subscribershit1m marksevenmonthsafterit launchedoperations.

February:Zainlaunched 3GserviceinNigeria. April:Announcedplansto migratetoallIPnetwork. October:Signednetwork managementdealwith NokiaSiemensNetworks.

January:Reduced internationalcallratesby 70%. October:Announced expansionofitsnetwork coverageto86 predominantlyremote communities.

February:Introduced missedcallnotification serviceandcallwaiting.

February:Launched voiceSMSserviceand introducedfreelate nightcalls. July:AgreedwithNokia tointroducedualband mobileCDMA handsets.

Mobile subscriptions 80 70 60 50 40 30 20 10 0 2001

Subscription penetration 50% 45%

Mobile subscriptions (millions)

13.8% 20.9% 28.2% 43.1% 48.9%

12.0% 17.4% 23.3% 34.5% 38.0%

99.9% 99.8% 99.6% 99.6% 99.5% 99.5% 99.5% 99.2% 99.1%

$48.21 $47.56 $41.55 $29.94 $17.80 $13.65 $12.12 $11.26

18.5% 18.6% 26.8% 27.9% 48.4% 44.0% 41.8%