How Nigeria’s CDMA operators built a market, then lost it

Before MTN, Airtel, and Globacom took over Nigeria’s telecoms scene and became status symbols in the early 2000s, a much quieter telecom revolution was already underway. In the years before the Global System for Mobile Communications (GSM) era formally began in August 2001, a handful of companies were giving ordinary Nigerians access to reliable telephone connections: something that was quite radical at the time.

They were the CDMA operators — Code Division Multiple Access networks built on a technology that many people still argue was superior, in several important aspects, to the GSM alternative that would eventually bury them.

Between 1985 and the late 1990s, in Nigeria, if you wanted a personal telephone in your home or office, you needed a fixed telephone line (often referred to as a land line) connected to a socket in the wall, routed through cables to a pole outside, and finally to the Nigerian Telecommunications Limited (NITEL). NITEL, Nigeria’s only telephone company at the time, was largely unreliable due to poor infrastructure maintenance, a lack of investment, congested networks, frequent disconnections, and waiting lists stretching into years. Entire cities outside Lagos and Abuja barely had coverage.

But all of these came to an end in the late 1990s, when the Nigerian Communications Commission (NCC) licensed several Private Telecommunications Companies (PTOs) to improve telecoms services in the country, ending NITEL’s monopoly and introducing Code-Division Multiple Access (CDMA) technology in Nigeria.

This license opened the door for some of Nigeria’s oldest telecoms companies, which provided fixed and mobile telephony services using CDMA technology. Multilinks was the first CDMA network company to receive a license in 1996 and began operations in December 1998, followed by many others, including Intercellular, Starcomms, and Visafone. MTS First Wireless, which had launched Nigeria’s first mobile phone network in 1992, also repositioned itself as a CDMA operator by 2002.

For the first time, Nigerians had a choice, and it was revolutionary.

CDMA’s core strength was that it shared the available airwaves among all users simultaneously, rather than carving out a dedicated lane for each user. This made it more efficient with spectrum, which translated to better call quality and faster data speeds compared to early GSM.

Starcomms, which became the first CDMA operator listed on the Nigerian Stock Exchange in 2008, was also the first company on the continent to launch EV-DO high-speed broadband services. At its peak in late 2008, Starcomms had reached 2.7 million subscribers and was described as the fourth-largest telecoms operator in the country.

The CDMA ecosystem had real momentum. Visafone, founded in 2007 by Jim Ovia (also the founder of Zenith Bank), assembled its network by acquiring three existing CDMA operators: Cellcom, the Independent Telecommunications Network (ITN), and Bourdex Telecoms in Aba. Within six months of its February 2008 launch, Visafone had reached one million subscribers. By January 2009, it had announced 2.5 million. At its peak between 2010 and 2011, Visafone had approximately three million subscribers — the highest subscriber count any CDMA operator in Nigeria ever achieved.

But even at the height of that boom, the structural fault lines were already visible.

One of the most consequential decisions that ultimately led to the death of CDMA network operators was not the granting of GSM licences in 2001—although this played a role. It was the structure of the licences issued to CDMA operators.

Initially, CDMA operators were issued regional licences, not national ones. This meant that while MTN or Econet (later Airtel) could roll out infrastructure and acquire subscribers anywhere in Nigeria from day one, a CDMA operator licensed for Lagos and the South West could not legally serve a subscriber in Kano or Abuja. This placed a structural cap on the subscriber numbers CDMA companies could ever achieve, and therefore on the revenue base from which they could finance expansion.

“While CDMA operators refined regional networks, GSM operators were playing a different game. MTN, Econet (later Airtel), and M‑Tel were granted a five‑year period of exclusivity starting in 2001 to build nationwide mobile networks[6]. They used that window ruthlessly well, expanding coverage, acquiring millions of subscribers, and embedding themselves into everyday Nigerian life,” one industry analysis notes.

In 2006, the NCC upgraded the CDMA operators’ regional licences to Unified Access Services Licences (UASLs), giving them the same national reach as the GSM players. But their GSM counterparts had amassed a significant subscriber base. By 2006, MTN already had 40 million subscribers, and Globacom, which launched in 2003 with the transformative promise of per-second billing, had grown to 15 million subscribers. The window for CDMA operators to catch up, had it ever existed, had closed.

Although SIM cards sold for as much as ₦30,000 when GSM launched in 2001, making CDMA operators cheaper and more accessible to many Nigerians, as prices fell and coverage expanded, this advantage began to wear off. The more fundamental problem was devices. Because GSM allowed subscribers to use their SIM cards with a variety of phones, it became more attractive than CDMA devices, which were locked to specific networks.

CDMA companies began to phase out one at a time, starting with Mobitel in 2005.

Multilinks had the opportunity of being the first private telephone company in Nigeria, but it never caught up with the GSM operators and was eventually acquired by South Africa’s Telkom in 2007 for $410 million. Telkom announced its withdrawal from Nigerian operations in November 2010, selling the CDMA subsidiary to Visafone in April 2011 for $52 million, a fraction of what it had paid four years earlier, effectively bringing an end to Multilinks.

Intercellular was among the original wave of CDMA operators that gave Nigerians their first taste of private telephony in the late 1990s. But it was too small, too regional, and too undercapitalised to survive. It ceased meaningful operations before 2011 and was among the operators whose numbers were withdrawn by the NCC in 2018.

Starcomms was the most ambitious of the operators. By 2008, it had 2.7 million subscribers, was listed on the Nigerian Stock Exchange — the first telecom company to achieve a domestic listing — and had launched the first EV-DO high-speed broadband service in Africa. But its subscriber base collapsed as GSM operators undercut its pricing and expanded into its territory.