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Nigerian telecom launches low-cost 4G LTE wireless network

Telecommunications startup Tizeti launched its initial 4G LTE wireless network in Port Harcourt, the fifth largest city in Nigeria, according to TechCrunch. Tizeti has amassed over 1.1 million unique users since it launched in 2012. Sub Saharan Africa Has The Least Affordable Data Of Low  and Middle Income Regions

The company offers unlimited internet for 9,500 Nigerian Naira ($26) a month, and CEO and cofounder Kendall Ananyi told TechCrunch that its unlimited broadband plans are 30-50% cheaper than traditional plans due to its operations structure: Its internet service uses free spectrum through long-range Wi-Fi and a solar-powered network to keep expenditures and operating costs low. Its unique network spans Nigeria and Ghana, though the firm plans to launch in additional West African markets in 2020 as it looks to establish a new model for wireless operations in the region. 

Tizeti’s internet offering addressed a neglected segment of the market, as incumbent wireless operators offered relatively expensive data with coverage concentrated in big cities. Sub-Saharan Africa has the least affordable data prices of all low- to middle-income regions, as 1GB of data costs 6.8% of the average monthly income, according to GSMA.

By comparison, 1GB of data costs 1.2% of average monthly income in South Asia, and 2.1% in Latin American & Carribean. Tizeti’s internet offering capitalizes on these market conditions by optimizing for cost thanks to freely available Wi-Fi spectrum and relatively inexpensive solar power. By not relying on the grid, Tizeti also gains flexibility to place towers where the grid may not reach, similar to Verizon’s strategy for scaling its 5G towers where fiber costs are exorbitant.

Tizeti’s business model is particularly attractive, considering sub-Saharan Africa is expected to add 165 million network subscribers by 2025, second only to the projected growth in Asia Pacific, according to GSMA. 

With the launch of 4G LTE, Tizeti becomes a more direct threat to multinational operators — but it’ll face major barriers translating the low-cost Wi-Fi model to 4G LTE wireless coverage. Even with a limited coverage area, a low-cost Wi-Fi service could appeal to consumers so long as the service reaches their home or region.

By contrast, consumers looking for 4G LTE coverage are likely more sensitive to the size and reliability of the coverage area. Large, multinational network operators are the predominant purveyors of connectivity in the Nigerian market, while Tizeti’s user base accounts for less than 1% of connected consumers. Conversely, larger network operators may be less inclined to go after Tizeti’s low-cost Wi-Fi market, as the rollout of solar-based networks in underserved regions may add operational complexity that the size of prize does not warrant.

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