Wednesday, March 11, 2015 9:31 AM / FBN Capital Research
Nigeria’s telecoms sector accounted for 8.4% of 2014 GDP at constant prices, and has grown at an average rate of 3.6% since 2011. The growth rate for subscriptions, while still impressive, is slowing, an indication of a market approaching maturity (teledensity of 82%). The latest data released by the Nigerian Communications Commission (NCC, the industry regulator) show that subscription growth slowed to 9% y/y last year from 13% y/y in 2013.
Data from the NCC also show that total active subscriber lines grew by 10% y/y to 140.8 million in January 2015.
MTN Nigeria, the nation’s leading telecoms operator and largest company in the non-oil economy, reported total sales of N824.8bn (US$6.9bn) in 2014. Sales growth slowed to 3.9% y/y from 5.3% y/y in 2013. Although MTN continues to dominate with a market share of 44% of total subscriptions, data from the NCC on porting activities show that subscribers from MTN accounted for almost half of the 145,998 customers that switched networks last year. Etisalat was the main beneficiary of network switches, with an inflow of 69,364 customers.
Despite the challenging business operating environment, as well as the kick-off of what we term Nigeria’s macro challenges in the second half of 2014, MTN alone accounted for 11% of non-oil taxes and 5% of total taxes in 2014.
The CBN’s cash-lite policy, one leg of which is a mobile banking platform, should assist in boosting growth for mobile network operators. In 2013 mobile payments were valued at N142.8bn. Our conservative estimate for 2014 is N260bn.
Safaricom’s M-Pesa mobile banking product in Kenya generated transactions totaling KES2.1trn (US$22.9bn) in January-November 2014, equivalent to almost half the country’s GDP. It has opened over 17 million mobile phone accounts, and will shortly launch money transfers to a neighbouring country (Tanzania). This is clearly the way forward for Nigeria in the long term.