MTN Nigeria’s Trillion Naira Profit and the Lessons of 25 Years…

Olusegun Adeniyi

At the 2016 edition of the International Telecommunication Union (ITU) annual ‘Telecom World’ held in Bangkok, Thailand, then Kaduna State Governor, Mallam Nasir El-Rufai shared the story of the difficulty encountered in selling Nigeria’s liberalised telecommunications industry to international investors. According to El-Rufai, who was the Bureau of Public Enterprise (BPE) Director-General between 1999 and 2003, Nigeria was so desperate to secure a foreign investor that we actually offered Vodafone a Digital Mobile License (DML) at a symbolic value of one dollar. Yes! $1.00. But the British Multinational telecommunications company rejected the offer, reportedly because their market analysis revealed that our population lacked the purchasing power to pay for GSM services!

On reflection, it must have taken a certain kind of nerve for MTN, a South African telecoms company, to bet on Nigeria in 2001. First, our electricity sector had already gained notoriety for incessant grid collapses in the transmission of the meagre megawatts being generated at the time. On that score alone, operators knew they would have to generate their own power supply to provide services, in addition to investing in other infrastructure, like cell sites. The regulatory landscape was also quite hazy in a country where public officials were renowned for looking for ‘what to eat’. For any rational investor, this was the definition of a high-risk territory. Yet MTN weighed the pros and cons and concluded that the Nigerian market was tantalising enough to prompt making the plunge.

For sure, Nigeria had (still has) Africa’s largest population, a vibrant entrepreneurial spirit, and millions of people eager to get connected. These were the prospects upon which the South Africa telecoms group took the gamble to spin off its local subsidiary, MTN Nigeria 25 years ago. And it has paid off tremendously. Last week, the company announced a revenue of $3.62 billion (N5.20tn) and profit after tax of $773 million (N1.11tn) in the year 2025. Even the most optimistic of their investors could not have foreseen that when the GSM auction was conducted in 2001. Two weeks ago, a friend reminded me that Nigeria is marking the 25th anniversary of mobile telephony without any appreciation of how we got here and the lessons that could still serve us in other sectors. That is the background to today’s column, which may read more like a special report.

Beyond the impressive financial performance of telecom operators like MTN, it is important that we examine the policy architecture and catalysts in both the private and public sectors that made this transformation possible. The success of the ‘telecoms revolution’ did not happen by accident; it was the product of deliberate institutional choices, transparent market design, and regulatory discipline. These lessons remain highly relevant for sectors that continue to struggle in Nigeria today, most notably the power sector.

But before I conclude with a number of lessons learned, I offer excerpts from my unpublished book, “25 Defining Issues in 25 years of civil rule in Nigeria (1999 to 2024).” A particular chapter deals with the reform of the telecoms sector and young Nigerians who were not around in 2001 need to know where we have come from. Because the question remains as to whether we can replicate the same story in the power sector where despite the public investment of billions of dollars in the last 26 years, the federal government has been unable to generate more than mere megawatts of excuses and darkness. It is therefore little surprise that the current Minister of Power, Bayo Adelabu is being subjected to mockery on social media. Among several other titles, he has been ‘coronated’ as ‘His Imperial Majesty and The Lord of Darkness.’ But let’s begin with the story of the reforms of the telecoms sector as captured in my uncompleted book.

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Between 1984 and 1999, Nigerians were told by some of the military leaders of the era, including those who have become prominent under the current political dispensation, that telephone service was “not for the poor.” And our people accepted their fate without questioning that dismissive assumption. Although the late General Sani Abacha’s government issued 12 mobile telephony licenses, nine of which were GSM licenses, and granted approvals for 21 others (covering local, regional and national operators), the licensees were seeking either to sell these licenses or waiting for regulatory clarity before making any investment in the sector.

This was the situation until 29 May 1999 when a new democratic government was ushered in with President Olusegun Obasanjo at the helm. Five months in office, the Obasanjo administration in October 1999 published a new ‘National Policy on Telecommunications’ which emphasised the need for reform and private sector investment. The short-term objective was the attainment of 1.2 million mobile lines within two years. “There shall not be more than 4 digital National Cellular Operators for an initial period of 5 years”, according to the national policy which also stated that “the modalities for appointing the carriers shall be competitive and transparent”. 

In December 1999, the National Communication Commission (NCC) placed adverts in some Nigerian newspapers inviting expressions of interest in not more than four national GSM licences, with a proposed cost of USD100 million each. This attempt involved the then Communications Minister as head of an inter-ministerial committee. It featured a two-stage process: a pre-qualification stage, where interested parties had to satisfy technical, financial, probity and compliance checks; and a bidding stage. But the entire process was cancelled on 28 February 2000, following serious allegations of unwholesome practices.

Thereafter, then NCC Executive Vice Chairman, Dr Ernest Ndukwe, was directed by President Obasanjo to oversee a public auction that would be supported by international consultants. The processes put in place culminated in the 19 January 2001 GSM auction in Abuja where there were five bidders: South African-backed MTN Nigeria Communications; Econet Wireless led by a Zimbabwean businessman, Strive Masiyiwa; Communications Investment Limited (CIL) by Dr Mike Adenuga Jnr; United Network Consortium led by Orascom Telecom (Egypt), in partnership with United Bank for Africa (UBA);and MSI International of Sudanese-British billionaire, Mr Mo Ibrahim. The auction lasted three days and the final bid price for each licence was US$285 million. At the end, US$855 million was generated from the auctions following a process globally acclaimed as very transparent. It earned Nigerian accolades from the international media.

Following the successful auction process, each of the three winners and M-TEL, (subsidiary of the government-owned NITEL for which the fourth slot had been reserved) was required to pay the same licence fee of $285 million. Before the auction, each bidder had paid a non-refundable deposit of $20 million so they were only required to pay the balance of $265 million within two weeks. But by the deadline of 9 February 2001, what started as a seamless process exploded in controversy when the NCC announced that CIL’s payment for the $265 million had not arrived at Chase Manhattan in New York, bankers for the Central Bank of Nigeria (CBN).

This narrative was immediately countered by CIL. After winning the auction and before the payment deadline, according to the company, it raised a query about the frequency offered which was already the subject of litigation involving a previous licensee. “When you begin from day one with a frequency that is encumbered, that puts you at a disadvantage with your competitors,” a spokesman for CIL said. For such a successful exercise, the CIL controversy over payment was an unfortunate fall-out. Meanwhile, each of the licence winners was expected to commence operations within three months from the auction date. Each was also expected to install at least 30,000 lines within one year of operation.

The federal government dangled incentives to the new licensees to encourage investment and quick rollout of services. These incentives included pioneer status, reduction of import duties on telecommunication equipment and tax exemptions. With Adenuga’s CIL edged out, ECONET in perpetual disarray and M-TEL clueless as to what to do with its licence, MTN Nigeria ran a virtual monopoly while telling Nigerians that it was impossible to do per second billing for subscribers. The story, however, changed when Globacom eventually entered the market after winning the bid for the second national operator license and rolled out its mobile service under the Glo brand in August 2003. But that is a story on its own.

Globacom Executive Director, Special Project Mike Jituboh, has explained how the misfortune of CIL ended with the triumph of Glo. “A day after winning one of the three GSM licenses, a CIL team led by Dr. Adenuga headed for Paris for negotiations with BNP Paribas. After several days of protracted negotiations, agreement was reached on the terms and conditions for a loan facility of $265 million for paying the balance of the GSM license,” Jitubor said in his recollection of events at that period. “The deadline for making payment was 5pm of 9th February 2001 and on that fateful day all was set for a transfer by swift instruction when word came in from our colleagues in Lagos that the frequency allocated to CIL was the same frequency that had been allocated to and being used by Motophone. The latter was in court to challenge the government’s withdrawal of the frequency.”  

With its assigned frequency under litigation and the deadline for payment approaching, according to Jitubor, CIL management was confronted with a difficult situation that required quick action: “We decided to make payment with the condition that the money should be released after the government gives CIL an indemnity to cover the possibility of Motophone winning its suit and retaining the litigious frequency. Consequently, payment of $265 million was made by BNP Paribas before the deadline hour on 9th February 2001, directly to the designated account at JP Morgan Chase, New York, along with the aforementioned condition.”  

The federal government rejected the condition that was placed on the payment and cancelled the CIL license. But the story did not end there, as Jitubor would later recollect: “Eventually we won the bid for the Second National Carrier Licence and launched Glo mobile. Ironically the same erstwhile litigious frequency was given to Globacom along with the indemnity that had been denied CIL.”

I have in the past written on the critical role Adenuga played in the sector, especially given the widely believed cynicism at the time that a Nigerian could not run a successful telecoms company. It is all the more remarkable that Adenuga succeeded where the federal government failed with MTEL that was handed a free license (0804). Given the disproportionally high population of young people in Nigeria, it is also noteworthy that Globacom has since inception kept that demographics in focus while developing its sponsorships and promotions. From putting a lie to the claim that per second billing was impossible in Nigeria to crashing the prohibitive cost of acquiring a GSM line to bringing down the cost of airtime, Adenuga, from Day One, positioned Globacom to play a disruptive role in the telecoms sector to the benefit of Nigerians.

The story of Econet Wireless has been more interesting. Although the company was the first GSM operator to go live in Nigeria, there were signs of trouble from the outset–even before it started changing its management and name. In fact, the company has had its name changed so many times along with different management companies that it soon became the butt of jokes in the investment world. The question that arises is why such a promising enterprise unravelled so quickly. In 2015, Masiyiwa chose a blog post to reveal the dark side of the investment climate in Nigeria while making serious allegations against certain individuals. “To participate in the bid, you not only had to raise money, but there had to be a member of the bidding consortium who was an experienced GSM operator,” Masiyiwa wrote. “Econet Wireless met the requirements because of its experience in Zimbabwe and Botswana. Our Nigerian partners, which included state governments, local banks and high net worth individuals, were financial investors. The largest shareholder had only 10%. That was the written agreement.”  

Masiyiwa said he managed to assemble a consortium of 22 investors to put up the money needed to bid. “Our shareholders were all Nigerian, mostly institutional investors including leading banks and two state governments, Lagos State and Delta State. The license cost us $285 million and was the most expensive licence ever issued in Africa at the time. This was 2001… Econet Wireless Nigeria had only 5% of the shares, but that was fine because it was 5% ownership of a very big pie.”  As the ‘technical partner and operator, according to Masiyiwa, “Econet was the company with the expertise to build and operate such a business. Our financial investors recognised this, and also allowed us to receive 3% of the turnover as our fees. This was standard practice in the industry.” Having launched two days before MTN, that put ECONET at an advantage. “Customers were pouring in. We were number one in the market with an estimated 57% market share. Then came the fateful day when I was told that our company must pay a total of $9 million in bribes to senior politicians (in state government) who had facilitated the raising of the money to pay for the license.”

Masiyiwa claimed he refused to authorise the illegal payments. “Meeting after meeting was held to try to get me to agree, but I would not. The money would not be paid as long as Econet was the operator and I had signing authority.” Refusal to yield to the bribe demand, according to Masiyiwa, led to the problem. “The shareholders met and voted Econet Wireless Nigeria out of management. They cancelled our management contract.”   Following the exit of Econet, a South African mobile operator, Vodacom, was brought in. But it lasted only a few months before crisis set in again and the name was changed to VMobile with Vee Networks as operators. Two years later, the company was acquired by Celtel owned by Mo Ibrahim, who took a 65% stake. At some point, the Zain Group took ownership of the network before it became Airtel, after acquisition by Airtel Africa, the continent’s unit of Bharti Airtel of India….

ENDNOTE:            

I leave the other parts of the chapter for whenever I decide to publish the book but the last 25 years in the telecoms sector has been revolutionary. In the early days between 2001 and 2003, owning a mobile phone line was considered something of a status symbol, a privilege reserved for the political class, bankers and the nouveau riche. Prices of simple handsets were well beyond the reach of ordinary people. In fact, MTN, a dominant service supplier at the time, boasted about the “impossibility” of per second billing for calls. It took the entrance of Globacom late in 2003 to change that narrative. Many would also recall having to walk to different locations, including climbing trees, just to be sure of connecting to mobile service.

However, over the years, mobile operators have invested heavily in infrastructure development, erecting cell towers, laying fibre-optic cables, and establishing distribution channels to ensure nationwide coverage. Today, to say that the advent of telecoms has spurred economic growth and entrepreneurship in Nigeria is an understatement. Small businesses have flourished as mobile phones become essential tools for conducting transactions, marketing products, and accessing financial services. Mobile banking services, which rode on the rails built by mobile networks, pioneered by new generation banks, has also revolutionised the banking industry, providing convenient and secure access to financial services for millions of unbanked Nigerians.

Now, what are the lessons, especially for the power sector?

In 2001, when Nigeria auctioned its GSM licenses, the country had fewer than 400,000 working telephone lines serving a population of about 120 million people at the time. Today, Nigeria has more than 226 million mobile subscriptions and over 150 million internet users. By contrast, electricity supply has not experienced any transformation despite the billions of dollars invested by the government. Nigeria’s installed power generation capacity is officially about 13,000 megawatts, yet actual average generation delivered to the grid often fluctuates between 3,500 and 5,000 megawatts for a population now exceeding 220 million people. So, what can we take from this?

First, credible and transparent market entry matters. The GSM auction of January 2001 was globally acclaimed because it was competitive and transparent. Investors knew the rules, trusted the process and were willing to commit significant capital as a result. The telecom auction also raised $855 million in license fees alone in 2001 and immediately triggered billions of dollars in follow-on infrastructure investment. In contrast, despite the privatization of power generation and distribution companies in 2013 for about $2.5 billion, the electricity market has struggled to attract comparable levels of sustained private investment due to market uncertainties, tariff disputes, and liquidity challenges within the sector. The less said about that exercise, which was anything but transparent, the better. What this shows very clearly is that sectors where entry processes are opaque will struggle to attract serious long-term investors. For Nigeria’s power sector, credibility of procurement, concession and licensing processes remains a foundational requirement for sustainable investment.

Second, regulatory independence and institutional clarity are critical. The NCC emerged as a respected regulator because it was allowed to function with professionalism and relative autonomy by the Obasanjo administration. This created confidence among investors that the rules of the game would not shift arbitrarily. Over the last two decades, this regulatory credibility has helped the telecom sector to attract more than $75 billion in cumulative investment. The power sector, however, continues to face a persistent liquidity crisis estimated at over N4 trillion in unpaid obligations across generation companies, distribution companies and gas suppliers. This is an indication of deeper structural challenges in the electricity market where regulatory decisions are frequently politicised. Therefore, strengthening institutional independence may be one of the most important reforms needed to unlock investment in the power sector.

Third, competition drives efficiency and consumer welfare. MTN Nigeria initially enjoyed significant market dominance, but the eventual entry of Globacom introduced competition that dramatically reduced prices, expanded access and improved service delivery. The lesson here is simple: monopolies rarely innovate. When properly regulated, effective competition is often the strongest protection for consumers. Unlike telecoms where multiple operators compete nationwide, electricity distribution in Nigeria remains geographically monopolistic. Each of the eleven distribution companies controls a regional franchise area, leaving consumers with no alternative supplier even when service delivery is poor. This structural limitation has made it more difficult for competition to drive improvements in service quality. We also witness this same problem in some other sectors of our economy where market monopoly reigns, at the detriment of Nigerian consumers.

Fourth, the role of government should be limited to enabling markets, not operating them. The experience of NITEL and M-TEL demonstrated the limits of state-run commercial enterprises in fast-moving technology sectors. Motivated by efficiency and profitability, the private sector has expanded the network far beyond what government could have achieved alone. Today, Nigeria has more than 41,000 telecom towers and extensive fibre-optic networks built almost entirely with private capital. In the electricity sector, however, the federal government still bears a significant financial burden through tariff subsidies and market support interventions estimated at hundreds of billions of naira annually to keep the system functioning. Notwithstanding, Nigerians continue to live in darkness.

In sectors such as power generation, transmission infrastructure, and even rail development, we as a country must increasingly adopt models where government sets the framework while private capital drives expansion. The country’s entire grid-based electricity generation averaging around 4,000 to 5,000 MW, is roughly comparable to the capacity of a single large metropolitan utility system in some major global cities. Yet our estimated electricity demand already exceeds 100,000 MW and is expected to grow rapidly with population and industrialization.

Fifth, policy consistency and investment protection matter enormously. The GSM investors committed hundreds of millions of dollars upfront because the reform signals from government were clear and sustained. Investors could forecast their growth and plan long term. By contrast, electricity sector investors often face uncertainty around tariff adjustments, payment guarantees and gas supply arrangements. These risks increase the cost of capital and discourage the scale of long-term infrastructure investment required to transform the sector.In sectors where policies change abruptly or contractual commitments are not respected, capital inevitably becomes scarce and expensive.

Finally, infrastructure transformation requires patience and scale. The telecom revolution did not happen overnight. It required billions of dollars of cumulative investment over two decades. But the enabling policy environment ensured that investors were willing to take a long view. Industry estimates suggest that Nigeria would require between $100 billion and $150 billion in electricity sector investments over the next two decades to achieve reliable nationwide power supply and close the massive energy deficit currently constraining economic growth. Unfortunately, there is nothing to suggest that we are ready.

I have always believed that President Obasanjo deserves more credit than he gets from the telecoms reform. A quarter century later, it remains one of the most successful economic reforms in Africa. The challenge before policymakers today is whether the same principles, transparent markets, strong institutions, competition, and private capital can be replicated in other critical sectors of the economy. I am one of those who believe that if these lessons are applied with enough commitment and discipline, the transformation witnessed in telecommunications could very well be repeated in power, transport, and digital infrastructure for the prosperity of Nigeria. 

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