January 13, 2020 / 11:25 AM / CSL Research / Header Image Credit: THISDAYLIVE
Recently, the Nigerian Communications Commission (NCC) and a consortium of infrastructural companies disclosed they will raise N265bn for the development of broadband infrastructures across the country in the next four years. The Executive Vice Chairman of the NCC, Prof Umar Danbatta, further revealed that the commission would raise N65bn subject to the approval of the Federal Executive Council (FEC) as counterpart funding while the balance of N200bn will be raised by the infrastructural companies. He also hinted that the Public Private Partnership project was in line with the State Accelerated Broadband Initiative- an initiative designed to address infrastructural deficits in the telecommunications sector.
We recall that the federal government set a 30% benchmark for broadband penetration in the National Broadband plan of 2013-2018 which was attained in November 2018; 30.9%. Since then, there has been a remarkable improvement as evidenced in the latest data released by the NCC which showed that Broadband penetration has risen to 37.7% as of November 2019 compared to 31.5% in December 2018. Similarly, broadband subscription grew 20% to 71.9m subscriptions during the same period. We attribute the improvement to the aggressive expansion of broadband access by the major network players in the industry (particularly in states such as Lagos, Kano, Rivers, Oyo and FCT, Abuja) coupled with licenses granted to about six infrastructure companies to drive the development of infrastructure across the nation's geographical zones.
With further investments expected in broadband infrastructure, we believe it bodes well for the industry players as they step up their efforts in moving the industry from a voice-centred to a data-centric model as widely adopted in developed countries. The growing use of smartphones among the teeming population, improvement in mobile penetration, rising population density and urbanisation further suggests that there is significant upside potential for growth in broadband penetration in Nigeria.