Stakeholders warn MVNOs face high failure risk without infrastructure, niche strategies

Telecom industry stakeholders have raised concerns that many Mobile Virtual Network Operators (MVNOs) in Nigeria may struggle to survive in the coming years unless they address infrastructure challenges, focus on underserved segments, and adapt to the country’s unique market realities.

The warning came during the sixth edition of the Telecoms Sector Sustainability Forum (TSSF), organised by Business Remarks in Lagos on Tuesday.

According to the Nigerian Communications Commission (NCC), 43 companies have secured MVNO licences since the framework was introduced, with operators collectively spending about N8.6 billion to obtain them.

However, only a handful have commenced services, sparking fears that most may not endure in a market already dominated by MTN, Airtel, Globacom, and 9mobile.

Speaking at the forum, Chidi Ajuzie, Director of U.SK Mobile, projected that only half of the licensed MVNOs may remain operational within the next five years. He stressed that licences alone cannot guarantee success, warning that players must invest in infrastructure, understand customer needs, and innovate with tailored services.

“Too many people think that once you get a licence, the money will start rolling in. Without infrastructure and innovation, many MVNOs will die out quickly,” Ajuzie cautioned.

He added that smaller operators, particularly those in lower tiers, face significant financial strain since they are required to build part of their own infrastructure, though this could also encourage creative business models.

Other panelists advised Nigerian MVNOs against competing head-on with established Mobile Network Operators (MNOs). Instead, they urged new entrants to focus on niche markets, citing international examples such as South Africa and India, where MVNOs succeeded by targeting specific groups like youths, migrant workers, and fintech service users.

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Tony Emoekpere, President of the Association of Telecommunications Companies of Nigeria (ATCON), explained that the NCC introduced multiple MVNO licence categories to liberalise the market and expand consumer choices.

He noted that sustainability for MVNOs lies in differentiation, pointing to Kenya’s M-Pesa as a model of telecom-driven innovation that revolutionised financial access for rural and low-income communities.

“Designing a low-data package for POS machines in rural areas could be a game-changer. These terminals do not need broadband; a simple 2G network can handle them,” Emoekpere said, highlighting the untapped opportunities in Nigeria’s rural regions.

Similarly, Olusola Teniola, a Director at IPNX, urged operators to adapt their strategies to Nigeria’s realities rather than replicating European or American MVNO models.

He emphasised that affordability, rural connectivity, and infrastructural limitations should form the core of business strategies.

“The biggest market is not the flashy smartphone users in Lagos. The biggest market is at the bottom of the pyramid,” Teniola stressed, warning that over-reliance on foreign-owned MVNOs could result in capital flight and stifle local innovation.

Industry watchers say the success of Nigeria’s 43 MVNOs will depend on how effectively they leverage existing MNO infrastructure to serve unserved and underserved communities.

However, concerns persist as MNOs themselves struggle with infrastructure investments due to prevailing foreign exchange challenges.