Literature Review Chapter: Telecommunication Privatization in Nigeria Definition

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[. . .] 6) Challenges of Telecommunication Privatization in Nigeria

The communication sector in Nigeria was founded decades ago. The country faced the challenges when it developed its first company Nitel. The company formed the organization in 1985 by merging Nigeria External Telecommunications Company and Department of Posts and Telecommunications. The country faced many challenges when it started privatization of the industry (Nwagboso, 2012). The management of telecom organizations resisted and the public also initially rejected the telecom privatization since the prices of the services were anticipated to rise.

a. Performances of Privatized Telecommunication from 2000-2013

After privatization, the country had one of largest mobile market in the region. There were dozens of new units opened each year to offer services gathering multi-billion dollars investment annually. The mergers of smaller private telecom companies resulted into bigger telecom players. The private firms collaborated to offer 85% of fixed connections. Consolidation occurred in internet service provider sector and mobile broadband subscriptions increased. The market penetration rate of all the telecom companies increased to 77%.

b. Statistic of performances

The telecom companies have improved in quality of service as well as number since 1985 when the first telecom company was founded in country (Nowye, 2002). The subscribers increased from 10 million in 2001 to 100 million in 2011. On the other hands, the cost of connection and the SIM has decreased from 50 units to 35 in a time of last ten years. About 31 million Nigerians used internet in 2009. The GSM connections reached above 100 million in 2011 from 96 million in 2010.

c. Management Performances of Telecommunication Privatized firms in Nigeria

The rise of the telecom sector as private entity was not accompanied initially by the management success. There were management problems that were a resistance in the way of telecom privatization. The NITEL and MTEL in this regard were most affected from management issues (Adediran and Usman, 2005). When the foreign talent and experience began to manage the Nigerian telecom like Dutch won management of MTEL, than the management issues began to settle down. The management performance also improved company performance and thus the telephone lines increased from 600.000 to 1.3 million in merely three years.

d. Key Performance Indicators and Key Results Areas

The telecom industry runs on the basis of subscribers and the number of lines and connections. The telecoms deal with individual clients as well as organizations. With about 114,000,000 mobile phones, there is 70% mobile penetration in country and Nigeria stands 11th in the world in use of mobiles.

Indicator

2000

2013

Fixed line network

Phone lines connected

492,000

1,308,000 (2008)

Average waiting time for line installation one year

Less than a year

Tele-density

0.39%

81%

Mobile network(s)

Number of mobile operators

2

8

Penetration rate

0.1%

70%

Number of internet users

Number of internet users

40,000

55,930,391 (world ranking 8)

7) Government policies reform on Nigerian Telecommunication Privatized firms

The Nigerian government, after deciding to privatize many sectors including telecom, made many authorities and bodies that would monitor and regulate telecom companies. These bodies ensure that there is fair competition in the industry and the consumers get best services. The policies include price regulations as well.

a. How adequate and how effective are these policies?

The performance indicators show that the regulatory policies, to bring all the stakeholders to a point where body is benefitted, are doing great job in telecom penetration in the country. Rom nowhere to now 8th ranking in mobile and internet users, the policies have been effective. Also the policies helped reduce cost and time spent in getting a telecom connection.

b. Any development policies and Economic Policy?

The Nigerian state established Telecom Consumer Parliament developed by Nigerian Communication Commission to bring Regulators, Operators and Consumers at single platform to discuss issues and opportunities. The International Telecommunications Union is established to innovate effective methods to resolve consumer complaints. The Consumer outreach program deals with consumer issues and educate them (Ndukwe, 2011). The consumer care policy ensures that a consumer is promptly responded and that his problems are solved.

c. The institution that governs the development of Telecommunication Privatized firms in Nigeria

The Nigerian Communications Commission deals with affairs of telecom privatization and development in Nigeria. It licenses operating companies and finds if there are any problems in the companies or if some company is not complying with the needs of customers. The company has the powers to issue as well as cancel the licenses. While NCC sees the regulatory tasks, the ministry of Communications serves as overall caretaker.

d. Impacts of Privatization role in national development in Nigeria

The Nigerians are benefitted socially and economically by the privatization of telecom companies. Yet, the penetration may be hindered by the resistance in industry. The prices are reducing and the telecom companies can enter oligopoly where the state will be required to play a role and stop any efforts to demolish free competition. However, the telecom privatization has enabled the people of the country to have multiple options thus the privatization resulted into a more aware and empowered nation.

e. Did Nigerian Privatization take the approach to be in line with best practice for meeting global trends

While the pace of Nigerian telecom growth is appreciable, there is far more to achieve. It is a challenge for the Nigerian firms to serve customers according to international standards and offer better local and national packages. The industry faces the challenge to implement latest technology in its organizations and offer Wi-Fi, wireless and optic fiber solutions as they are introduced in the other world.

f. Any economic transformation or transition since 2000-2013?

Ndukwe (2011) says that while the company once has only 25,000 analogue cellular mobile lines in 2000, it is now serving 80% population with 3 million digital mobile lines. The country transformed since it offers 90% of cellular subscribers in the continent. The increased number of companies has increase employment opportunities thus improving economic lives of people.

1. The Economic and Social Significance of Nigeria Privatized Telecommunication Companies

It is not only the business and technology that was affected through the privatization of Nigerian Telecom but the whole economic and social system was improved. Counted among world's leading countries with respect to number of mobile and internet users, today the citizens are more connected to the outer world. From business to employment to rights of citizens, the people are better aware today than they were in 2001. The prices of the services of telecom have declined over a decade making businesses more operational. The speed of live has increased and the quality of communication has become much more improved.

2. Give Examples of Successfully operated Nigeria Privatized Telecommunication Companies

The privatization resulted into successful telecom companies. There are multiple internet, mobile and landline phone service providers in Nigeria. Some successful Telco's in the country include NITEL, MTN Nigeria, General Telecom Plc, Netcom, Cisco systems, Mobitel, Reliance Telecommunications Limited, Telnet Nigeria LimitedPivot Engineering Co. Ltd., Intosem International Comm. Ltd., and Otutubatu Telecom. Ltd. And Danisat Communications Ltd. The companies now have to prove their role in boosting employment rate and GDP of the country.

3. Factors Impacting on the Performance of Nigeria Privatized Telecommunication Companies

The privatized Nigerian telecom companies are performing way better than the public companies were doing (Privatisation and Commercialisation, 2013). There are many reasons behind this better performance. First of all the experienced western countries have invested both money and talent in the Nigerian telecom companies. Thus the speed of growth in sector is faster than it would be without these foreign factors. Than the competition increased in the sector because of privatization since more companies entered sector to make business and thus the quality of service increased. Then the government policies are also supporting the privatization and playing a positive plus regulatory role.

References

1. Adediran, Y.A., and Usman A.U., (2005), "Nigeria's Telecommunication Industry in New Millennium, The Annual Engineering Conference Proceedings," The Annual Engineering Conference Proceedings. FUT Minna June 2005

2. Adegbemi, B.O., Onakoya1, A., Sheriffdeen, and Osoba, M.A., (2012), "Investment in Telecommunications Infrastructure and Economic Growth in Nigeria: A Multivariate Approach," British Journal of Economics, Management & Trade, 2(4): 309-326, 2012

3. Crude, S., (2013), "PHCN Privatisation: Nigerians express hope for better days," Retrieved from: http://www.vanguardngr.com/2013/10/phcn-privatisation-nigerians-express-hope-better-days/

4. Daniel, M., (2013), "The Nigerian Economy In The 21st Century," Retrieved from:

http://www.onlinenigeria.com/economics/?blurb=498

5. Dikki, B., (2013), "Privatisation: New BPE Leadership on the Spot," Retrieved from:

http://www.thisdaylive.com/articles/privatisation-new-bpe-leadership-on-the-spot/157214/

6. Information on privatizing & commercialization in Nigeria, (n.d.), Retrieved from:

http://www.aboutus.org/Bpeng.org

7. Internet Usage and Telecommunications Reports- Nigeria, (2012), Retrieved from: http://www.internetworldstats.com/af/ng.htm

8. Nigerian Communications Commission, (2013), Retrieved from: http://www.ncc.gov.ng/

9. Nwagboso, C.I., (2012), "Globalization and Public Policy Decision-Making in Nigeria: The Challenges in the Privatization of Nigerian," British Journal of Arts and Social Sciences, 6(2)

10. Nowye, M.I., (2002), "A focus group discussion… [END OF PREVIEW]

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