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Nigeria telecoms sector defies adversities

from OKORO CHINEDU in Lagos, Nigeria
LAGOS – NIGERIA’S telecommunications sector has maintained resilience in the face of adversity presented by uncertain economic policies, high input costs, insecurity and vandalism of critical infrastructure.

This defiance is reflected in an increase in internet subscriptions, the growth of the sector overall and its increased contribution over the past year to the economy of Africa’s largest economy and most populous country.

According to the latest data released by the regulatory Nigerian Communications Commission (NCC), internet subscriptions stood at 159,5 million in June 2023. This reflects a 5,6 percent year-on-year (y/y) increase.

“Internet subscriptions continue to remain resilient despite the country’s hazy macroeconomic environment,” Chinwe Egwim, Chief Economist at Coronation Merchant Bank, stated.

MTN accounted for the largest share (38,5 percent) of internet subscriptions in June 2023. Globacom, Airtel and 9mobile accounted for 27,9 percent, 27,4 percent and 6,2 percent respectively.

Egwim mentioned the above-mentioned core challenges, attributing the high input costs due to foreign exchange depreciation.

The new government of President Bola Tinubu, in power since May, has embarked on some forex policy reforms as part of efforts to resuscitate Nigeria’s economy.

Select MNOs recorded forex losses as disclosed in their respective 2023 half-year financial statements.

“Despite these challenges, the telecoms industry has remained resilient,” Egwim said.

The West African country has reported broadband penetration increased to 47 percent in June 2023 compared with 44,3 percent recorded in the corresponding period of 2022.

The increase is attributed to a surge in ecommerce and fintech activities.

Based on the latest national accounts released by the National Bureau of Statistics (NBS), the telecommunications sector grew by 9,7 percent and contributed 16,1 percent to gross domestic product (GDP) in the second quarter of 2023.

As part of some executive orders signed by Tinubu in July, the proposed 5 percent excise duty on telecommunications has been suspended.

Egwim believes this is positive for consumption patterns, as further tax adjustments would lead to increased data costs.

The prospects look favourable.

NCC recently licensed the launch of Starlinks, a satellite-based wireless broadband service.

The licensing of more service providers is anticipated to assist with deepening broadband penetration and as such, enable the NCC to achieve its broadband target of 70 percent by 2025, in this country of an estimated 224 million people.

On 5G, MTN has rolled out the spectrum in 13 states and currently has around700 sites in Nigeria.

There are 36 states and the Federal Capital Territory (FCT).

Airtel has also gone live in the FCT, Lagos, Ogun and Rivers states.

– CAJ News

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