Deepening internet penetration

Proshare

Thursday, June 18, 2015 9:12AM / FBN Capital Research     
                                             

The latest data released by the NCC, the industry regulator, show that internet subscriptions grew by 32% y/y to 86.9 million in April 2015. This represents a density of 51% on a population of 170 million, placing Nigeria well above the African average of around 16% as estimated by McKinsey. 

Subscriptions were primarily on the global system for mobile communications (GSM). MTN Nigeria dominated, with a share of 45% of total subscriptions. Globacom, Airtel and Etisalat accounted for 23%, 20% and 12% respectively.  
                                                        

Based on data from the NCC, internet usage grew by 47% y/y last year on an average annual basis, compared with 11% recorded in 2013. According to industry estimates, Nigeria accounts for 24% of total internet usage in Africa.

The FGN’s medium-term goal is to increase broadband penetration to 30% at a minimum speed of 1.5mbps. The national broadband council has accordingly approved four fibre optic cable landing points in four states (Bayelsa, Cross River, Rivers and Ondo).

Initially, there was only one fibre optic landing point, which is situated in Lagos. It has serviced optic cables from Main One and MTN among others.

Over the past few years, the broadband sector has attracted sizeable investment, which has assisted in driving e-commerce platforms such as Jumia, Konga and Wakanow. On average, the leading online stores achieve about US$2m worth of transactions per week (Good Morning Nigeria, 08 June 2015).


We expect the industry to continue to be a significant contributor to growth through private-sector investment. In 2014 telecoms accounted for 8.4% of constant price GDP.

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