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Costly Smartphones, Low Investment Frustrate Nigeria’s 4G Drive

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  • Costly Smartphones, Low Investment Frustrate Nigeria’s 4G Drive

The efforts of telecom operators to offer Nigerians fast Internet connectivity via 4G network is being hindered by multiple challenges, IFE OGUNFUWA examines them

The adoption of fourth generation of mobile network technology, 4G, by Nigerians has faced many challenges prominent among them are low investment in the technology and costly 4G-enabled smartphones.

The 4G Long Term Evolution technology offers ten times download speed over the third generation of wireless mobile communications, 3G; has low latency and supports services such as high-definition videos streaming, video calls, fast downloads, seamless file transfer, data centres and cloud services, among others.

MTN launched the 4G LTE in Lagos, Abuja and Port Harcourt in 2016 and has expanded to other parts of the country. The same year, 9mobile (former Etisalat) launched the technology in six states with its 4G-enabled SIM cards; Airtel rolled out its 4G services this year in 60 cities while Globacom says it has 4G LTE coverage in all the 36 states and 208 tertiary institutions.

Despite these claims of extensive 4G presence in all parts of the country, a GSMA report released in November 2018 stated that Nigeria had slow 4G growth as only four per cent of connections are driven by 4G compared with other regional countries.

“Currently, only 44 per cent of mobile subscribers in Nigeria are using 3G technology and 4 per cent are using 4G technology, compared to over 18 per cent 4G penetration in South Africa and 16 per cent in Angola,” the report stated.

Speaking with our correspondent on factors responsible for the slow adoption of 4G, the Head of Sub-Saharan Africa, GSMA, Mr. Akinwale Goodluck, said regulatory environment, weak currency and insufficient spectrum especially in the sub-1GHz band, were not encouraging massive investment in telecom infrastructure.

He added that there was still insufficient locally-relevant content to drive demand for high-speed 4G broadband services among the majority of phone users in the country.

“Impact of regulatory and macroeconomic developments on capital investments – regulatory pressure, hard-line oversight by regulatory agencies and macroeconomic factors, such as currency weakness and the recession in 2016, have had a negative impact on investor confidence and the ability of mobile operators to raise the required capital for large-scale infrastructure projects,” he said.

In particular, the President, Association of Telecommunications Company of Nigeria, Mr Olusola Teniola, said the expensive right of way, multiple taxes and forex scarcity were creating bottlenecks for operators to expand broadband infrastructure across the country.

According to him, access to forex to import equipment for base stations and towers from other countries is difficult as the government has not prioritised forex to telecoms industry.

“In terms of 4G in Nigeria, the situation we find ourselves in is that over the last eighteen months, there hasn’t been any significant investment in rolling out networks, including 4G,” Teniola said.

He added, “What we have seen is that the government has actually not improved the ease of doing business and has actually made the situation worse. We have to understand that investors are nervous as to how government sees telecoms and its ability to improve the economic situation of the country.”

“We have a lot of 2G networks in the country and the penetration has increased to over 100 per cent. However, for high-speed data services, we need to upgrade the networks from 2G to 3G and 4G. There needs to be a relevant demand before service providers will install high-capacity networks such as 4G,” ATCON president added.

The Head of Technical Standards and Network Integrity, Nigerian communications Commission, Bako Wakli, identified the high cost of 4G- enabled phones and their incompatibility with the frequency of the 4G LTE networks in the country as major factors limiting 4G connectivity.

He also stated that some Nigerians are contented with the connectivity 2G offered even though network operators have intensified effort to encourage consumers to upgrade their SIM cards.

“What is affecting Ntel as a full 4G operator is the issue of device. Today, 4G is operated in over 40 sub-bands and we have not found devices operating in the bands; and they are much more expensive. The issue of device is very critical and and we need to find a way to address this,” he said.

A market research by our correspondent showed that many 4G-enabled smartphones are quite expensive for an average Nigerian, ranging from N40,000 to over N200,000.

Further findings showed that the “high-speed browsing experience” that network operators have promised Nigerians have not materialised as data from Ookla Speedtest Index showed a mobile download speed of 11.58 and upload speed of 5.06 Mbps, for Nigeria in October.

In order to improve 4G adoption in the country, Goodluck advised the telecoms regulator to make more spectrum available for 4G services and reverse the fragmentation of sub-1GHz spectrum which had led to small-scale operators that account for less than two per cent of total connections owning as much as 50MHz of sub-1GHz spectrum.

He added, “Government should support mobile ecosystem players in the creation of locally relevant content and also spearhead the digitisation of public services in order to drive demand for data services.”

Meanwhile, the analysts at Xalam Analytics, a market research company, stated that 4G network deployment and adoption had not directly improved the cash flow of network operators.

The report from the research entitled ‘The failure(s) of African 4G’ described 4G network in Africa as “a commercial success in user terms, but an economic failure” saying that the financial impact could be destructive considering the capital costs of purchasing 4G licences and rolling out of the network.

“The monetisation of African 4G is highly problematic. We found no solid correlation between strong 4G adoption and increased mobile operator profitability. Far from helping turn around African mobile operators’ cash flow problems, 4G is making them worse over the medium term,” it added.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Jumia’s Gross Merchandise Value Drops 13 Percent in Q1 2021 Despite Lockdown

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Jumia, Africa’s leading online marketplace, recorded a 13 percent decline in Gross Merchandise Value (GMV) from €189.6 million in the first quarter (Q1) of 2020 to €165.0 million in the first quarter of 2021.

This was despite Amazon, Alibaba and other global e-commerce companies posting high GMV due to the surge in online orders because of ongoing movement restrictions in most nations.

Annual Active Consumers rose by 6.9 percent to 6.9 million in the quarter under review, up from 6.4 million in the same quarter of 2020, the leading e-commerce stated in its financial statements.

Orders grew by 3 percent year on year to 6.6 million from 6.4 million posted in the corresponding quarter of 2021.

Gross profit expanded by 10.9 percent from €18.4 million in Q1 2020 to €20.4 million in Q1 2021. While gross profit after fulfillment expense rose by 149.5 percent to €6.2 million, up from €2.5 million achieved in Q1 2021.

Sales and advertising expense moderated to €8.1 million in the quarter under review, representing a decline of 9.1 percent from €8.9 million posted in Q1 2020.

Technology and content expense stood at €6.9 million in Q1 2021, below €7.2 million in Q1 2020. G&A expense, excluding SBC improved from €24.4 million decline posted in Q1 2020 to €20.3 million decline in Q1 2021.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) also improved by 24.2 percent to a €27 million decline in Q1 2021 from €35.6 million.

Similarly, operating loss improved by 23 percent from €43.7 million posted in Q1 2020 to €33.7 million in Q1 2021.

Commenting on the company’s performance Jeremy Hodara and Sacha Poignonnec, Co-Chief Executive Officers of Jumia, said “Our first quarter results reflect solid progress towards profitability. The drivers remain consistent: selective and disciplined usage growth, gradual monetization and continued cost discipline. The first quarter of 2021 was the sixth consecutive quarter of positive gross profit after fulfillment expense, which reached €6.2 million, more than doubling year-over-year, while Adjusted EBITDA loss contracted by 24% year-over-year, reaching €27.0 million”.

“Our strategy to increase our exposure to everyday product categories continues to yield positive results, enhancing the relevance of our marketplace for consumers. We are making further inroads in payment and fintech with 37% of Orders in the first quarter of 2021 completed using JumiaPay. Last but not least, we have raised over $570 million over the past six months, strengthening our balance sheet and increasing our strategic flexibility.

“We are confident we have all the right ingredients to continue to build a growing business across both our e-commerce and fintech activities.”

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Google Wins Cloud Deal From Elon Musk’s SpaceX for Starlink Internet Connectivity

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Google announced on Thursday its cloud unit has won a deal to supply computing and networking resources to SpaceX, Elon Musk’s privately held space-development company, to help deliver internet service through its Starlink satellites.

SpaceX will install ground stations at Google data centers that connect to SpaceX’s Starlink satellites, with an eye toward providing fast internet service to enterprises in the second half of this year.

The deal represents a victory for Google as it works to take share from Amazon and Microsoft in the fast-growing cloud computing market.

Investors are counting on Google’s nascent cloud business to boost growth in the event that its advertising business slows down. While Google’s cloud business delivered only 7 percent of parent company Alphabet’s total revenue in the first quarter, it grew almost 46 percent year over year, compared with growth of 32 percent for Google’s advertising services.

It’s also an unusual type of deal for Google — or any other cloud provider — as it relies heavily on Google’s internal network that connects data centers, rather than simply outsourcing functions like computing power or data storage to these data centers.

“This is one of a kind. I don’t believe something like this has been done before,” said Bikash Koley, Google’s head of global networking. “The real potential of this technology became very obvious. The power of combining cloud with universal secure connectivity, it’s a very powerful combination.”

“They chose us because of the quality of our network and the distribution and reach of our network,” said Thomas Kurian, CEO of Google’s cloud group.

In SpaceX’s case, there is no need for cell towers. Instead, customers’ devices will communicate to satellites, and then the satellites will link up to Google data centers. Inside those data centers, customers can run applications quickly using Google’s cloud services, or they can send the information on to other companies’ services that are geographically nearby, enabling low latency so there’s minimal lag. Data then comes right back through the Google data centers to satellites, and then down to end users.

The deal could last seven years, according to a person who declined to be named discussing confidential terms.

Starlink’s service might be valuable for consumers living in places with limited internet access, as well as businesses and government organizations running projects in remote areas, Kurian said. He anticipates that having Starlink draw on Google’s cloud network will lead organizations to deploy applications inside Google’s cloud to take advantage of high speeds.

Under the partnership, SpaceX will place its Starlink ground stations within Google data center properties, which can help the service support businesses requiring cloud-based applications.

Starlink is in the process of launching its satellite broadband internet service, which can reach customers without ground-based connections and is one of several space-based systems.

“Combining Starlink’s high-speed, low-latency broadband with Google’s infrastructure and capabilities provides global organizations with the secure and fast connection that modern organizations expect,” said SpaceX president and chief operating officer Gwynne Shotwell.

“We are proud to work with Google to deliver this access to businesses, public sector organizations, and many other groups operating around the world.”

Urs Hoelzle, senior vice president at Google Cloud, said the tie-up would help ensure “that organizations with distributed footprints have seamless, secure, and fast access to the critical applications and services they need to keep their teams up and running.”

This new capability for enterprise customers is expected to be available in the second half of 2021, the companies said in a joint statement.

SpaceX is seeking regulatory approval for broadband service for both consumers and businesses around the world from thousands of satellites.

Google is not the only cloud provider to be working with Starlink. In October, Microsoft said it was working with SpaceX to bring Starlink internet connectivity to modular Azure cloud data centers that customers can deploy anywhere. SpaceX would still rely on Google data centers in that scenario, a person familiar with the matter said. (Data would travel from the customer’s Azure modular data center through the Starlink satellite to Google’s data center and then out to other cloud services — and return in the opposite direction. Microsoft didn’t immediately respond to a request for comment.)

Initially, SpaceX will deploy the ground stations at Google data centers in the U.S., but the company wants to expand internationally, the person said.

SpaceX is one of the world’s most valuable privately held start-ups, having raised money at a $74 billion valuation in February, CNBC reported. Google invested $900 million in SpaceX in 2015. SpaceX has launched over 1,500 Starlink satellites into orbit, and last week the company said more than 500,000 people have ordered or made a deposit for the internet service.

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Chinese Smartphone Giant Xiaomi Shares Gains Over 6 Percent After U.S. Agrees to Remove it From Blacklist

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The U.S. has agreed to remove Xiaomi from a blacklist that would have barred Americans from investing in the Chinese smartphone maker.

Shares of Chinese tech giant Xiaomi rallied as much as 6.5 percent after the news, before paring some gains.

In January, the administration under former President Donald Trump designated Xiaomi as one of several “Communist Chinese military companies” or CCMC.

This meant the world’s third-largest smartphone maker was subject to a November executive order restricting American investors from buying shares or related securities of any companies given this designation by the U.S. Department of Defense (DOD).

Xiaomi brought a legal challenge against the U.S. Department of Defense.

In March, a U.S. court granted Xiaomi a preliminary injunction against the Trump-era order, saying the company would “suffer irreparable harm in the form of serious reputational and unrecoverable economic injuries.”

And on Tuesday, the DOD agreed that a “final order vacating” Xiaomi’s designation as a CCMC “would be appropriate,” according to a court filing.

Xiaomi and the DOD will “negotiate over the specific terms of the order” and provide the court with a “joint proposed order” on or before May 20.

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