Visafone Facing Uncertain Future

What is happening over there at Visafone?

The telecommunications company which was once rated by the Nigerian Communication Commission as the fourth largest in the telecommunication sector and at a point boasted of a combined subscriber base of over 3million users seems to have stagnated.

A recent report by the NCC showing figures of active subscribers on each of the networks indicated that Visafone now has just over 2million subscribers representing more than 1million loss of visafone subscribers from 2010.

The report stated that of the 150.7 million active phone subscriptions, GSM operators, including MTN, Globacom, Airtel and Etisalat, control 148.4 million and CDMA, where Visafone remains the only active operator in the segment, has just over two million. Fixed wired/wireless networks had 188,281 telephone lines.

The NCC report of the last three years shows that Visafone has faced a pretty unstable time. Within that period, the company has lost more subscribers than it has gained. As a matter of fact, it has been a case of one step forward and two backward. For example in 2013, from 2, 138, 154 subscribers in the first quarter, it fell to 2 094 785.

In the third quarter the figure rose slightly to 2 438 990, then in the fourth quarter number of subscribers again fell to 2 063 330, leaving the network will lesser subscribers than at the beginning of the year.

That trend of instability again continued in 2014 where by second quarter it had 2,061,458 users, then the figure rose to 2,406,382 by the next quarter, but at the final quarter the company slumped again to 2,187,845 users.

This year, Visafone has not fared better, it started the year with 2,108,960 people using Visafone lines, but at the last count in July, NCC noted that the telecommunication outfit had lost over 51, 000, leaving it with just 2,057,519.

Visafone which rolled out in September, 2009 started impressively, accumulating over a million subscribers in 6months and over 3 million in the first 16months of operation- even the GSM companies took more time to accomplish same figure. The company ran aggressive campaigns and offered incredible offers like giving out 10terabyte {10,000 GB} on their monthly blackberry subscription for a paltry N1000.

It offered high speed internet access via reliable EVDO network, and established chains of Apple-style ultra-modern stores -28 mega shops and 16 mini shops-across the nation which brought it products closer to the customers.

In December 2009, the company owned by former MD/CEO of Zenith Bank, Jim Ovia, announced that it had met all the requirements to comply with CMDA Development Group OMH initiative – the first operator to do so in Africa. That meant Visafone could offer sim cards that could be purchased separate from handsets, thus offering subscribers more freedom of choice.

But as the years went by, it seems the company could not sustain the tempo in an intensely competitive field of top players.

More so, the CDMA technology platforms, where Visafone is the sole player (Starcomms, the only other major player in the sector vanished several years ago) faced stiff competition from the GSM companies despite being most suited for broadband and data services. And because of its capital intensive nature and Nigeria’s obvious preference for the GSM, Visafone has struggled to compete well in the market. They are further challenged by data business LTE service providers such as Swift Nigeria, Smile, and Spectranet.

Their inability to break even has eaten deeply into Visafone’s finances, forcing it to owe Zenith Bank, its sister company, over N345 million. Earlier in the year, the company offered itself for sale, but the deal fell through when MTN Nigeria suddenly pulled out at the 11th hour.

Now, it remains to be seen what lies ahead for Visafone, but analysts have said that it is a matter of time before the company is eventually offloaded to a new owner.