MTN Nigeria unveils $1 billion plan to conquer cloud market

In a significant stride toward transforming Nigeria’s digital landscape, MTN Nigeria has announced a comprehensive $1 billion initiative aimed at dominating the country’s burgeoning cloud computing market.

This ambitious project includes the establishment of what MTN claims to be Nigeria’s largest prefabricated modular data center, positioning the telecom giant as a formidable competitor to global leaders like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud.

The timing of MTN’s announcement comes as demand for cloud services in NigeriaNigeria surges, fueled by the rapid adoption of mobile applications, financial technology tools, and e-learning platforms. Additionally, the devaluation of the Nigerian naira has made foreign cloud services increasingly expensive, prompting local businesses to seek more affordable options.

“This is one of the biggest data centers in West Africa and probably one of the biggest in Africa,” said MTN Nigeria’s CEO, Karl Toriola, during an interview prior to the launch. He characterized the state-of-the-art facility, which will provide locally hosted cloud infrastructure, as “transformative for the technology ecosystem in Nigeria and very supportive of the federal government’s agenda.”

MTN, Nigeria’s largest telecommunications provider, has already invested $120 million in the first phase of this project, achieving an IT load capacity of 4.5 megawatts (MW). The second phase, which aims to double this capacity to 9 MW, comes with an additional budget of $135 million. Toriola expressed confidence about future expansions, stating, “We will go to 9MW in short order, possibly 14MW, and we can expand even further.”

The new cloud facility is expected to cater to a diverse range of clientele, including local technology developers, large enterprises like banks and oil companies, and government agencies. Historically, these markets have been dominated by foreign cloud service providers.

Toriola noted, “Multinational companies such as Netflix, Facebook, and Instagram can also host a lot of their data here. That improves the quality of service and reduces the cost of storage.”

Increasing Demand for Local Solutions

According to research from Mordor Intelligence, Nigeria’s cloud computing market is projected to reach $1.03 billion by 2025 and expand to $3.28 billion by 2030, growing at an impressive annual rate of nearly 26%. This growth is being driven in part by the nationwide rollout of 5G networks and the increasing integration of artificial intelligence, big data, and the Internet of Things (IoT) across various sectors, including healthcare, finance, and retail.

The recent devaluations of the naira, which saw it lose approximately 70% of its value against the dollar from June 2023 to January 2024, have significantly raised costs for customers relying on foreign cloud services. This economic shift has heightened demand for local providers, such as Nobus, Layer3, and Okra, many of whom are now accepting payments in naira. Notably, AWS recently began accepting naira payments in January 2024, responding to customer concerns related to foreign exchange costs.

Despite the current economic climate, MTN’s strategy centers on providing local pricing advantages, even as the naira has depreciated from about N450 to roughly N1,600 per dollar since the project’s inception. “When we say we are here to stay, it is come rain, come shine,” Toriola asserted, emphasizing the company’s commitment to the Nigerian market.

Toriola pointed out that local hosting significantly reduces costs for businesses: “The cloud service provided is priced in naira, which reduces exposure to foreign exchange volatility. It minimizes the initial outlay while improving performance, since everything is hosted in Nigeria—therefore, latency is reduced.”

Notably, MTN claims that Nigeria currently spends over $850 million each year on foreign cloud services. This reliance on overseas providers has drawn attention to the Nigerian government’s Cloud Computing Policy, which was developed by the National Information Technology Development Agency (NITDA) in 2019. The policy encourages public institutions and small and medium-sized enterprises (SMEs) to utilize local cloud providers whenever feasible.

A Big Step Forward

MTN’s journey in Nigeria began in 2001 with the establishment of its first data center. The ground-breaking for this new project took place in July 2023, and construction has been in progress for the past year. Toriola highlighted the importance of local hosting for national enterprises, stating it would help mitigate exposure to “sovereign data risks in foreign states, possibly in aggressive negative foreign states.”

“I am extremely proud that once again MTN is at the forefront of technology, particularly in the data center space,” Toriola added. He noted that the company is committed to continuously expanding its capacity to meet growing technological demands and to be well-prepared for the increasing reliance on artificial intelligence technologies.

In partnership with the Nigerian Data Protection Commission and NITDA, MTN aims to promote local data hosting for critical services, such as issuing national identity numbers and passports. “With the hosting of data services, we can provide many critical services—whether as primary or secondary backups—locally,” Toriola commented.

Ifeanyi Otudoh, head and senior consultant for cloud solutions at MTN Nigeria, echoed the sentiment that local hosting would positively impact employment. “This initiative will generate jobs in areas such as cloud engineering, cybersecurity, facility management, and support services,” Otudoh stated. He emphasized the strategic significance of lessening reliance on foreign infrastructure, which could bolster the resilience of Nigerian digital services.

“By decreasing dependence on foreign infrastructure, we can bolster the resilience of Nigerian digital services,” Otudoh explained. “This shift empowers us to navigate global disruptions and changing foreign policies with greater confidence and stability.”