ATCON President, Mr. Lanre Ajayi
The ongoing $200 million merger deal between some core investors and three Code Division Multiple Access (CDMA) operators has been commended but with some reservations.
The core investors recently bought into Multilinks and MTS and have almost concluded discussions to invest $90 million cash liquidity and $110million worth of assets into Starcomms in order to merge the three CDMA operators into a single large operator, with a new name Capcom.
While commending the core investors for the planned investment, President of the Association of Telecoms Companies of Nigeria (ATCON), Mr. Lanre Ajayi, told THISDAY that although $90 million cash was huge sum of money, the three CDMA operators needed more than that for total overhauling to enable the new company compete favourably with the Global System for Mobile Communications (GSM) operators.
According to him, “CDMA business thrives in other parts of the world but with exception of the Nigerian market because of the peculiar nature of the Nigerian telecoms environment, where telecoms operators have to invest in infrastructure rollout by themselves, before thinking of expanding their networks.”
He said for any telecoms operator to survive the Nigerian market, such operator must be ready to get huge funding for investment, which he said was lacking on the part of licensed CDMA operators in Nigeria, since their inception.
Ajayi further explained that GSM operators have remained viable in the Nigerian telecoms market as a result of their huge financial investments in the business.
Explaining the ordeals of CDMA operators, which forced many of the operators to close business, Ajayi said: “The problem with CDMA operators is not in the technology deployment as widely speculated, but in the business model. They have been operating on a small scale business because they lack the required capital needed to boost the business, and as such, they were unable to compete with GSM operators.”
He however said the disparity between GSM and CDMA operations would soon be a thing of the past, as operators would be focussing on Long-term Evolution (LTE) technology, which is the next generation technology.
Ajayi said both GSM and CDMA operators would be operating on the LTE technology in the nearest future and that will place the operators on the same technology platform and enhance better competition among them.