Etisalat Nigeria to Raise $500m Debt

Etisalat office

The Nigerian operation of United Arab Emirates phone operator, Etisalat will raise $500 million in debt from local banks to expand its network this year.

The company’s commercial officer, Wael Ammar  disclosed this  at  the  Reuters Africa Investment Summit yesterday.
Reuters News quoted Ammar as saying that the  investments would enable the mobile phone carrier grow the market share of Etisalat Nigeria, which is 40 per cent owned by its parent company, to 17 per cent this year.

The company currently has a mobile market share of 15 per cent, behind MTN 's 43 per cent and Globacom's  22 per cent. Airtel, a subsidiary of India's Bharti Airtel, has a 20 per cent share.

Ammar also said he expected average revenues for voice traffic across the industry to continue to decline to around $5 per user over the next 3-5 years, from around $6-7 per user currently. ARPU was $10 per user in 2008, he said.

"We are investing $500 million this year to expand our network and services to Nigerian consumers," Ammar said, adding that Etisalat aims to increase its existing 3,000 cell sites by an undisclosed number.

Ammar said Etisalat entered Nigeria's fast growing market as a start-up operation with a $2 billion investment  seven  years ago, facing more established rivals like South Africa's MTN  and Globacom, owned by billionaire tycoon Mike Adenuga.
Ammar  noted that Etisalat would be able to grow its subscriber base without having to poach large numbers of customers from rivals because some 40 per cent of Nigerians  still did not own a phone.

"We see the second wave of growth coming from the youth segment. It is a huge segment that will ... turn into future consumers and the growth will happen across multiple years," he said.

The International Telecommunications Union forecasts Nigeria to have 120 million mobile subscribers by end 2013, out of a population of 170 million.

The number of mobile users in Africa's most populous nation crossed the 100 million subscriber base in the first half of last year, adding six million new callers from 2011.
Analysts say average revenue per user (ARPU is falling behind, owing to increased competition and the fact that the new subscribers tend to be poorer.

"What we see for the future is that the growth will be on data and this will be the balancing act for ARPU stabilization," Ammar said.