Grace Ashiru
Airtel Nigeria, recognized as the country’s second-largest mobile network operator, has obtained three telecommunications licenses from the Nigerian Communications Commission (NCC) as part of its efforts to tap into new revenue sources.
The licenses include an Internet Service Provider (ISP) license, a National Long Distance license, and a Sales and Installation Major license. All three licenses were granted to Airtel Nigeria Telesonic Limited, a subsidiary of Airtel.
While Airtel Nigeria could have participated in the ISP market under its Unified Access Service License (UASL), acquiring a separate ISP license seems to be a strategic decision aimed at enhancing its declining revenue in the Nigerian market—Airtel Africa reported a $13 million loss in the first half of 2024.
The National Long Distance license, which is valid for 20 years, will enable Airtel Africa to deliver telecommunication services across long-distance networks—MTN has already entered this segment through its subsidiary Bayobab. The Sales and Installation license, valid for five years, authorizes the subsidiary to sell, install, and maintain telecommunications infrastructure.
Although Airtel Nigeria Telesonic Limited was established on August 26, 2022, and officially launched on February 13, 2024, it has yet to commence operations. An insider noted that internal processes, such as assessing the size of the investment and logistics requirements, must be finalized before the operations can begin.
“Obtaining the licenses is akin to a bank starting a fintech subsidiary,” remarked a telecom executive who preferred to remain anonymous.
“By maintaining a separation, Airtel Nigeria can serve as a wholesale supplier to Telesonic, which holds the ISP license. This setup allows Airtel to report revenue as a wholesale supplier, while Telesonic accounts for the bandwidth costs, effectively minimizing their tax liabilities by lowering gross profits.”
Airtel Nigeria did not provide a response to a request for comments.
Airtel Nigeria is the latest player to enter the competitive ISP market. Rivals like MTN Nigeria and Globacom have made significant advancements since launching their ISPs in 2022 and 2024, respectively. The market is currently dominated by established players like Spectranet, FiberOne, and Starlink. Airtel’s initiative could revitalize a market that has experienced several exits due to the challenging operating environment influenced by inflation and FX volatility.
However, this expansion may face limitations due to its cost-reduction strategies. The company is reportedly renegotiating contracts with tower companies to lessen its foreign exchange exposure, indicating that it may not have ample funds to invest in its new subsidiary.
“All mobile network operators are increasingly concentrating on last-mile services because they offer higher profitability,” stated the CEO of an ISP company who requested anonymity to speak candidly.
