GSM operators shy away from CDMA acquisitions

Indications are that the much anticipated consolidation in Nigeria’s telecommunications industry will not take place anytime soon as major GSM operators are increasingly shying away from mergers and acquisitions, and paying more attention to improving internal organic growth, analysts told Business Day.

GSM and CDMA are going to end up on a new technology called Long Term Evolution (LTE). In a couple of years, we would see a full scale commercial implementation of LTE. So, if you are going to have a convergence, we are gradually moving to technology neutrality or, if you like, interoperability of devices, networks, and so on.

Starcomms, Multilinks-Telkom, Visafone and ZOOMmobile are the CDMA firms operating in Nigeria’s telecoms industry. Between January and July, CDMA operators in Nigeria lost about 1.08 million active subscribers. Subscriber information made available by the Nigerian Communications Commission (NCC) covering December 2009 to July 2010 shows that active mobile CDMA lines, which stood at 7.7 million in January 2010 dropped to a dismal 6.6 million lines by July.

Also, the ease to change from one network to the other gives GSM operators an edge, whereas, the CDMAs have to buy handsets and subsidise them. This adds to their costs of operation. If a handset is faulty, GSM subscribers can easily buy another handset and swap their SIMs, but for CDMA subscribers, it is not like that. Most times, subscribers have to buy new handsets and re-programme their old numbers. That is one of the reasons why CDMA is not really growing”.

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