The Nigerian Communications Commission has said the number of licensed Internet Service Providers dropped to 143 in October 2020. The commission stated this in a report titled ‘Study on the challenges and survivability of Internet Service Providers Licensees in the Nigerian Telecom Sector’.
The study found that the license renewal rate of ISPs in Nigeria had continued to drop, even as others took up the license. It noted that the number of licensed operators was at a time over 170 but because of the challenges surrounding the business, many operators had quit. NCC said, “The Nigerian Communications Commission currently has a total number of 143 Internet Service license under their individual service license category issued as at 26th Oct. 2020.
“The companies listed are those that have paid their license fees in full, and have collected their license documents for the respective telecommunications undertaking.” The commission said the role of ISPs was essential to Internet connectivity for the digital economy and for mass digitalisation of Nigeria, as well as the uptake of Internet of Things, adding that they served as the gateway to the Internet and a digitised world.
According to the regulatory body, with the work done by the Mobile Network Operators who provide ISP services as well as the ISP licence holders themselves, Nigeria had a 75.7 per cent active Internet subscription as of September 2020. It stated that the incursion of MNOs had been a major development in the life of the ISPs but however resulted in low survivability of smaller ISPs and on a larger scale, a huge churn in the industry due to the inability of the ISPs to renew their licences.
“Pioneer Nigerian ISPs faced intense competition when mobile network operators, with their large subscriber base, started offering Internet services, crashing the price of data, and inadvertently making the business unprofitable for small operators,” the report said.
Experts noted that the successful operators were those who carved a niche for themselves in the market or acted as resellers for the MNOs. The NCC therefore urged ISPs to develop business niches, improve their customer base through aggressive marketing as well as identify the right cost of data purchase, and other sound business that would ensure that continuity.
Another recommendation given was for the government and the NCC to put in place a regulated minimum price level, in order for both big and small telecom operators to compete on the quality of the network and customer services they provide. According to the commission, the provision of Internet services is still a financially viable endeavour despite challenges confronting the business.
The study showed that a total revenue of N53.74Bn was generated as of December 2019 by the ISPs, with an operating cost value of N41.10Bn in the same period. “From the study of the financial data, it seems to show that the provision of internet services is a financially viable field,” the NCC said.
Also, experts and industry watchers explained that new operators could still be expressing interest in the market despite its challenges because of the identification of a niche aspect of the market by the newcomers that could enable them succeed and thrive in the challenging market.
According to the study, the commission should also encourage adequate infrastructure build out and an enabling environment as it contributes to the efficient operation of the sector and the ISPs survival.