How Huawei became Nigeria’s biggest telecoms vendor and enterprise business

When Huawei launched in Nigeria in 1999, two years before its telecommunications revolution, very few people could have predicted it would become the country’s biggest telecoms vendor and build one of the country’s biggest enterprise business.

In 1999, it entered a market with other big-name players like the Chinese multinational ZTE, Nokia, the Finnish giant, and Sweden-based Ericsson. These companies original equipment manufacturers (OEMs) doubled as infrastructure and service providers to telecom companies like MTN and Airtel. ZTE, for instance, was instrumental in building MTN Nigeria’s 2G and 3G networks.

While ZTE and Ericsson have trimmed their operations in the last two decades, Huawei has been on the ascendancy, expanding its carrier and enterprise business. Today, its offerings include networking equipment like routers, firewalls, switches, servers, and storage devices; it provides data centre solutions and cloud services and deploys applications like mobile wallets for its customers.

Huawei’s success in Nigeria is down to a mix of its pricing strategy and a bold decision to provide end-to-end solutions to customers in a market where its competitors often choose specialisation.

“While IBM and Dell are synonymous with storage, and Cisco focuses on networking and security, Huawei provides everything by competing in both the carrier and enterprise businesses,” an industry insider with knowledge of Huawei’s business told TechCabal.

Huawei declined to comment on any part of this story.

A roll-call of ambitious projects

Huwaei has sold servers and storage solutions for top Nigerian banks like UBA, Zenith, Access, and Fidelity. Other traditional banks Huawei serves include Keystone, First Bank, Unity Bank, UBA, and FCMB.

In May 2023, a fire at Zenith Bank’s primary data center caused a service downtime, and attempts to switch to its disaster recovery center also failed, two people told TechCabal.

That incident is thought to have convinced Zenith—a tier-1 bank with a market capitalisation of ₦1.1 Trillion—to sign a $10 million deal with Huawei for a storage solution, two people with direct knowledge of the deal said.

Chinese-backed Huawei has secured other significant deals in Nigeria. Galaxy Backbone, a government-owned internet IT shared services provider, is one of its biggest clients. Huawei is building two data centers for Galaxy, said one person familiar with the project.

Those data centers are part of a broader project called the National Information and Communication Technology Infrastructure Backbone (NICTIB). The first phase of the controversial project was completed in 2018 and the second phase—valued at $328 million—was also contracted to the Chinese company.

Huawei has handled projects for the Lagos state government, the Nigerian Ports Authority (NPA), the Central Bank of Nigeria (CBN), Nigeria National Petroleum Corporation (NNPC), and Ikeja Electric. It was also a Technical Partner for the Nigeria Customs Modernisation Project in 2022.

Before Huawei, there was Ericsson

Ericsson was the market leader among mobile telecommunications vendors in Nigeria since 2009, said one person familiar with the company. The Swedish company’s biggest clients were MTN and Airtel. At the time, Nokia and Alcatel had already lost significant market share and were beating a retreat, according to two people with industry knowledge.

But things began to change in 2014 as Huawei began its march to dominance by poaching several Ericsson employees. It then went after its Swedish competitor’s clients next.

Huawei had a model: ‘You can use our equipment now, you don’t have to pay right away,’ said an ex-Ericsson employee.

“Very quickly, they were able to win over a lot of the market share that Ericsson had. It was very easy for mobile telecommunication companies to swap out Ericsson to save costs.”

Unlike Ericsson which only catered to telcos, Huawei had bigger ambitions.

Jack of all trades

Handling managed services is one of the most lucrative businesses in the telecommunication industry. Not only do OEMs get paid for maintenance, but they can also propose solutions to operators that involve buying more services or equipment. Huawei benefitted greatly from this.

Huawei’s primary strategy is to sell one solution to a client and then ensure it upsells all its other inventory, according to a person familiar with the company’s thinking. “Huawei likes to position itself as the solution for every client,” the person said.

Huawei currently offers managed services to Galaxy, Lagos State government on the enterprise side, according to a person familiar with the company.

On the telco side, its clients include MTN and Airtel. It has also built data centres for Zenith Bank, MTN, Seplat Petroleum, and the Lagos state government, according to one person with direct knowledge of the deals.

In 2020, MTN launched a Tier III data center built by Huawei. In 2021, Cloud Exchange, a system integrator IT company, launched Africa’s first uptime institute tier IV modular prefabricated data center in collaboration with Huawei.

Huawei also offers cloud services. Opay, the Chinese fintech, runs on Huawei’s cloud architecture, a person with direct knowledge of the matter said. The cloud business is now a separate business entity, the person added.

Huawei’s government playbook

Huawei entered the government and enterprise business in 2015. The shift to enterprise was strategic, considering Nigeria’s place as the company’s most important African market. “We expect it [Nigeria] to remain the number-one global market for enterprise business,” Frank Li, Huawei Nigeria’s Managing Director at the time, said in a 2018 interview.

The company secured an office in Abuja, the nation’s capital, the seat of the federal government, hoping to build a stronger relationship with the government. That move has generated results.

Huawei now handles major contracts for the Nigerian government and in 2023, the company was awarded the National Productivity Merit Award by the Nigerian government.

By August 2004—barely five years into the market, Huawei had invested more than $10 million into its Nigerian training center. By 2018, the figure had risen to $76 million. In December 2023, it launched a scholarship program in partnership with the Ministry of Communications, innovation, and digital economy.

The company also invests in training employees and prioritises knowledge transfer.

Yet, Huawei’s success story in Nigeria is not without controversy. There have been allegations of poor pay and exploitation of workers at Huawei Nigeria.

In 2022, Nigeria’s House of Representatives investigated a memorandum of understanding signed by the government and Huawei for the National Information and Communication Technology Infrastructure Backbone (NICTIB).

Despite these issues, Huawei has been unscathed because of its close relationship with the government, claimed two people familiar with the company.

One thing is clear: Huawei is here to stay. If it retains its market share despite the presence of some new upstarts, the company will continue to profit massively from Nigeria’s huge telecoms market.