Starcomms Boss says that CDMA Consolidation is vital for fair competition in Nigeria

Mergers, Acquisitions and Financial Results

Managing Director of Starcomms Plc, Maher Qubain has reasserted his position that consolidation in the Code Division Multiple Access (CDMA) segment of the telecommunications market and a fair playground for all networks are vital considerations in the effort for proper development of the telecoms market in the country.

Speaking in Lagos recently on the tough operating conditions of the CDMA networks in the country, Qubain said with all the CDMA networks, put together, controlling less than 10 per cent of the telecom market, operating in a lopsided competition against larger GSM networks, there is need for constructive measures by both the CDMA networks and the regulators.

"It is important for the CDMA networks to come together in the face of the operating conditions. With that, they can achieve scale. They can muster greater buying power. So, instead of struggling for survival, they can compete as a dynamic force in the industry. CDMA mortality rate is alarming. For instance, there were twelve active CDMA networks in the country two years ago. They came down to six by last year and now there are three or four. Meanwhile, GSM networks are growing in number because they have scale and they are favoured by the interconnect rate allowed in the industry," he said.

Speaking on Starcomms recent attempt to practice what it preached about consolidation in its bid to acquire another CDMA network in the country from a South African company, Qubain said the deal did not come through because Starcomms had done four months of exclusive and extensive due diligence and establishing the right price for the network, which the network turned down for a higher bidder.

"Our intentions then were original and well informed. We believed that all issues, including legal issues must be clearly resolved. That is the way of responsible businesses. So we offered the price we considered fair."

However, the Starcomms helmsman reiterated that consolidation can happen in diverse ways. He said that unused spectrums of moribund networks now lying fallow can be made available for others to use for better coverage. According to him it is important for the National Communications Commission to enforce its own "use the spectrum or lose it" rule on networks that are no more operating and reallocate to others.

He said that a lot of the CDMA networks that have closed shop were weighed down by the interconnect rate. He said the exclusive opportunity that the older GSM networks had for five years to enjoy high interconnect rate despite the size of their subscriber base did not allow some of these CDMA networks to take off properly.

"There is a lot of incongruence in the interconnect rate," he said, adding that Nigeria charges the highest percentage of interconnect rate in the world. He therefore enjoined the regulators to look into the issue of interconnect rate and unused spectrums to allow for proper development of the industry and effective deployment of different technologies to serve Nigeria better.