Tuesday, April 26, 2016 9:12AM/ NBS
Telecommunications in GDP and growth
In real terms, the telecommunications sector contributed N 1,645,82 billion to GDP in the final quarter of 2015, or 8.88%, a slight increase relative to the 8.76% contribution recorded in the same quarter of the previous year.
It is also higher than the contribution of 7.71% recorded in the third quarter, but this is to a large extent due to different seasonal patterns of the telecommunications sector and whole economy.
The year on year growth rate recorded in the fourth quarter of 2015 was 3.49%, higher than the growth rate of 2.48% recorded in the same quarter of 2014.
The share of telecommunications in real GDP tends to fluctuate over the course of the year, due to different seasonal patterns, but nevertheless annual averages declined every year between 2010 and 2014.
In 2015 this trend was reversed; in each quarter the growth rate in the telecommunications sector was higher than for the economy as whole. As a result, the proportion of total annual GDP accounted for by telecommunications increased in 2015.
Subscribers as of December 2015
The total number of subscribers has increased rapidly over the previous decade, and over the past year has increased steadily.
Between December 2014 and December 2015 (final month of Q4), the number had increased by 11.97 million, or 8.61%; a slightly lower growth rate than in prior years, possibly as market penetration is already high, which leaves less room for large expansion.
It also implies that the number of subscribers grew by significantly more than the sectors contribution to GDP over this period.
Most of the increase in the number of subscribers was attributable to additional Global System for Mobile Communications (GSM) subscriptions. The yearly increase between December 2015 and December 2014 was 8.78%, slightly higher than the growth in the overall number of subscriptions, but considerably higher than for other technology types (explored below).
Figure 2 gives a breakdown of subscriptions by type over the period, and reveals that GSM is the most popular subscription type, and that only a small fraction of subscriptions are for fixed lines (wireless or wired).
Subscribers by Technology Type
Subscriber data is broken into four sections according to the technology type used. The first two are for mobile technology; Global System for Mobile Communications (GSM) and Core Division Multiple Access (CDMA), whilst the latter two are fixed lines, either wireless or wired.
Mobile subscribers using GSM dominate, and accounted for 98.45% of the total in December 2015 followed by CDMA with 1.42% of the total, whist fixed wired and wireless make up 0.08% and 0.04% respectively. The dominance of GSM users has increased slightly since December 2014, when 98.29% of subscribers used this technology type.
However it has decreased slightly since the end of the third quarter in September, when 98.52% of subscribers used GSM technology. The share of all other technology types has decreased between December 2014 and December 2015.
The dominance of GSM over CDMA in the mobile technology is characteristic worldwide; GSM accounted for over 80% of the global market in 2009 Q2 according to industry estimates1. With GSM technology, it is cited as being easier to switch networks, and it is regarded as being more accessible for international use, especially given that some markets (such as in Europe) have mandated the technology by law. However, CDMA is more prevalent in the United States.
Mobile Subscribers (GSM)
In December 2015, the total number of GSM subscribers was 148,681,362, an increase of 12,004,756 or 8.78% relative to December 2014. However, this number is a decline relative to the number in October and November, when there were 149,683,259 and 149,787,120 subscribers respectively.
Taking 2015 as a whole, July marked a clear turning point. Prior to July, each company saw increases in the number of subscribers every month. However, after this date, only Airtel experienced a consistent increase in the number of subscribers, and MTN and Etisalat ended the year with less subscribers than in April. This is demonstrated in figure 3, which shows subscriber numbers for each company indexed to July 2015.
Consequently, in the fourth quarter a clear divide emerged between MTN and Etisalat on the one hand, and Airtel and Globacom on the other. The latter two companies saw increases in their number of subscribers throughout the quarter, whereas Etisalat saw decreases each month, and MTN saw decreases in November and December.
Consequently, at the end of the fourth quarter of 2015, the number of subscribers with MTN and Etisalat were 1.99% and 5.67% lower respectively compared to the end of the third quarter, whereas the number of subscribers with Globacom and Airtel was 5.41% and 3.64% higher respectively.
The latter increases outweighed the reductions sustained by MTN and Etisalat, meaning the overall number of subscribers increased over the same period by 0.17%. As a result of these trends, Globacom and Airtel increased their share of the market, to 22.19% and 21.70% respectively, whilst Etisalat and MTN saw a decrease in their share, to 14.91% and 41.20% respectively.
Mobile Subscribers (CDMA)
In December 2015, at the end of the fourth quarter, there were 2,148,727 CDMA subscribers, an increase of 5.23% relative to September, although there were slightly more subscribers in November, when the number was 2,149,275. There was also a decrease in the number of CDMA subscribers over the year; in December 2015 there were 1.79% less subscribers than in December 2014.
The number of Multilinks CDMA subscribers decreased throughout the quarter, from 10,213 in September to 8,428 in December, continuing the trend seen over the last few years. Between December 2014 and December 2015 Multilinks subscriptions fell by 51.35%. The number of Visafone subscribers only fell by 1.39%, resulting in Visafone’s share increasing to 99.61% in December 2015, from 99.21% in December 2014.
Fixed Wireless Line
The number of fixed wireless line subscriptions remains similar to the previous year. In December 2015 the number was 59,745, marginally higher (0.24%) than December 2014. The third quarter saw some increases – the number of fixed wireless subscriptions rose by 12.53% between June and September 2015 to reach 66,319 – but these were reversed in the fourth; the number of subscribers in December was 9.91% lower than in September, after having fallen every month in between.
As with CDMA subscriptions, Visafone dominates the market, and has increased this dominance over the past year as a result of a steady decline in the number of Multilinks subscriptions. The proportion of fixed wireless line subscriptions accounted for by Visafone rose from 90.58% in December 2014 to 96.00% in December 2015.
Fixed Wired Line
here was a total of 127,410 fixed wired line subscriptions in December 2015, up from 125,254 in September and 123,686 in the previous December, which represents increases of 1.72% and 3.01% respectively. The biggest increase within the fourth quarter was in October, which saw the number of subscribers increase by 1.45% month on month, from 125,254 to 127,065.
There has been little movement in the composition of subscribers relative to other providers. 21st Century was the largest provider, and accounted for 80.94% in December 2015, only marginally higher than in the previous December when it accounted for 80.40%.
Glo and MTN were the second and third largest providers, and accounted for 9.19% and 7.65% respectively in December 2015, compared with 9.46% and 7.86% in December 2014. These share compositions changed little throughout the year.
IpNX was the smallest provider and accounted for 2.22% in December 2015, compared with 2.23% in the previous December. In contrast to the networks, the number of fixed wired line subscribers with IpNX exhibits a degree of seasonality. The number tends to decline throughout the first and second months of the quarter, before peaking in the third (e.g. falling in January and February before peaking in March).