Sectoral Metrics Remain Positive as Broadband Subscriptions Climb


Monday, October 05, 2020 / 3:11 PM /by CSL Research / Header Image Credit: The Guardian Nigeria


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According to recent data on key industry fundamentals published by the Nigerian Communications Commission (NCC), the total number of broadband subscriptions grew 23% y/y and by 3% m/m to 82.7m in August 2020. Similarly, broadband penetration expanded to 43.3% in August 2020 from 42.02% in July 2020 and 35.1% in August 2019. We note that broadband penetration has sustained its uptrend for the fourth consecutive month since the marginal m/m decline in April, which was affected by delayed orders faced by industry players due to supply chain disruptions brought by the global pandemic.  In addition, the number of internet subscribers continued to climb, growing by 22% y/y and 2% m/m to 149.8m subscribers in August 2020 while teledensity rose to 106.6%  in August 2020 from 104.41 in July 2020.

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The telecommunications sector remains one of the fastest growing sectors in Nigeria's ailing economy. The resilience of the sector was evident in the Q2 GDP figures as the sector grew by 18.1% in Q2 2020 from 9.7% in Q1 2020, outperforming the services sector which contracted by 6.78%. In realisation of the potentials of the sector, industry players have accelerated investment in internet infrastructure to improve 4GLTE coverage across the country. Heightened competition among industry players for market share has also forced prices of data bundles lower, making internet usage very attractive to the average consumer.


With the advent of the global pandemic, we believe the growing use of digital channels for daily routine activities ranging from telecommuting, social interactions and engagement bodes well for continued growth in broadband penetration.  This will be further supported by increasing smartphone penetration, favourable country demographic and a fledgling social media culture. Accordingly, we believe investors should overweight telco stocks, as positive industry factors will remain supportive of growth over the medium to long term.      


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