The latest data released by the Nigerian Communications Commission (NCC) show that active mobile and internet subscriptions declined by -1.9% m/m and -2.2% m/m to c. 188.7 million and 141.8 million respectively in April. The fall in subscription is the fifth consecutive monthly decline following the National Identification Number (NIN) and SIM link exercise required by NCC, the industry regulator. The exercise which also included restrictions on SIM sales and activation resulted in a net active subscriber churn of c.15.9 million over the five-month period to April and a reduction in the teledensity rate to 94.4% in April '21 from 102.3% in December '20. Although the churn resulted in a deceleration in telecoms GDP growth to c.7.7% in Q1 '21 from 17.6% in Q4 '20, the sector was still among the fastest-growing in Q1, and a key driver of the country's 0.5% GDP growth.
According to recent data published by the Nigerian Bureau of Statistics (NBS) for Q1 '21, Kano, Lagos and Zamfara states had the highest absolute churn of c.1.68 million, 1.63 million and 0.85 million relative to the prior quarter.
However, Zamfara, Sokoto and Yobe had the highest churn rates of 28.1%, 18.2% and 13.4% respectively. The three states - the first two in the north-west region and the latter in the north-east - are some of the most challenged states in the country, security-wise.
Despite the contraction in active subscriber number, the strong growth recorded by the sector was mainly underpinned by double-digit growth in data traffic due to increased data usage per user, following strong demand for remote working, e-commerce, and streaming services for entertainment.
We estimate that the sector's voice traffic also grew by between high single-digit to mid-teens range following a recovery in voice demand after a weak spell in Q2 '20 because of the knock-on effects of the pandemic.
In Q1 '21 MTN Nigeria delivered sales and PBT growth of 17% y/y and 34% y/y respectively, driven by data revenue growth of 43% y/y and an 8% y/y increase in voice revenue. Airtel Nigeria's (not covered) sales and EBIT were also up by 23% y/y and 16% y/y on the back of data and voice revenue growth of 39% y/y and 13% y/y respectively.
Looking ahead, we expect the lifting of the ban on SIM sales and activation by network operators to bode well for sector revenue and earnings growth. We continue to see robust growth in the data segment, driven by mobile data traffic and increasing adoption of mobile applications and e-commerce.
Voice subscription churn rate by state (% chg q/q)
Source: National Bureau of Statistics (NBS); FBNQuest Research
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