Tuesday, June 08, 2021 / 09:42 AM / by FBNQuest Research / Header Image Credit: Technext
The latest data released by the Nigerian Communications Commission (NCC), the industry regulator, show that internet subscriptions stood at 144.6 million in March, representing y/y growth of 7%. However, we noticed a m/m decline of c.3.5m in subscriptions. This decline can be largely attributed to the National Identification Number (NIN) and Subscriber Identity Module (SIM) integration exercise. Based on our channel checks, the stress associated with the NIN-SIM linkage has resulted in customers abandoning SIMs of devices that are not their primary source for communication or internet connectivity.
MTN Nigeria (MTNN) accounted for the largest share (43%) of total subscriptions, though down -2.0% m/m. Airtel (-3.0%) and 9mobile (-3.2%) also recorded m/m decreases.
The latest national accounts show that telecommunications grew by 7.7% y/y in Q1 '21. During the quarter, MTNN's revenues grew by 17% y/y, thanks to a 43% y/y growth in data revenue (this was partly due to a rise in smartphone penetration).
Over the past year, there has been a visible shift to fibre broadband internet plans which do not necessarily need SIM cards to function. We note that some residential estates have adopted this service given the heavy reliance on internet services at home, due to the lockdowns and restriction on movement.
Broadband penetration currently stands at 41.1%. The minister of communications and digital economy, Isa Pantami, recently disclosed that the FGN hopes to achieve 90% broadband penetration in the country by 2023. This is in line with the national broadband plan 2020 - 2025. It also targets a speed of 25mbps for urban areas and 10mbps for rural areas. Both are ambitious, in our view.
To deepen broadband infrastructure and increase digital expansion in the country, state governments need to allow open access infrastructure rollout. We understand that Anambra state has waived right-of-way (RoW) fees for telecom operators. This is part of the state's efforts to drive broadband expansion. The absence of a unified RoW fee across states within the country continuously stalls the advancement of broadband fibre networks.
Industry sources suggest that a 10% increase in broadband penetration can increase the GDP of an economy by 1.6 - 1.8%.
Internet subscriptions (% chg; m/m)
Sources: Nigerian Communications Commission (NCC); FBNQuest Capital Research