The Telecom Space: Subscribers on the Increase

Proshare

Friday, June 22, 2018 1:50PM / FDC

The telecommunication sector plays a critical ingredient for pure competition and perfect markets in the development of any economy. It facilitates communication and dissemination of information which is needed to spur growth and development. According to the Nigerian Communications Commission (NCC) statistics, the total number of subscribers increased by 7.5% to 160.5mn in April from 149.3mn in March. 

Teledensity also increased to 114.66% in April from 106.64% in the previous month. In addition, the total number of internet subscribers increased by 0.6% to 101.2mn in April from 100.6mn in March. 

In the first quarter of the year, the telecoms sector staged a rebound after contracting for three consecutive quarters. The sector’s growth advanced by 1.88%, which is 516bps higher compared to -3.28% in Q4’17. In addition, the sector’s contribution to GDP increased by 54bps to 9.19% from 8.65% in Q4’17. The telecommunication sector emerged as the third largest contributor to GDP in Q1’189. 

One of the contributory factors to the sector’s improved performance was the $68bn10 foreign investment in the sector and the increase in the number of internet and voice subscribers. This impressive growth could imply more revenue and profits for the telecoms operators. However, major threats to the sustainability of the sector’s growth momentum are exchange rate volatility, inadequate funding and lack of technological advancement. 

The total bank credit to the telecoms sector was N870bn in Q1’18, 5.5% of the total bank credit to sectors (N15.6trn).

 
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In Q1’18, the capital importation to the telecoms sector was $87.25mn, 40% decline compared to $145.78mn recorded in the corresponding period in 2017 and 54.32% decline compared to $191.01mn recorded in Q4’17. As a percentage of the total capital importation to all sectors, the capital importation to the telecoms sector declined 2.1% to 1.4% from 3.5% in Q4’1713

 
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Recent Developments in the Sector 

Data rollover

The Nigeria Communications Communication (NCC) has directed the telecoms operators to begin data rollover from June 26th. This is to ensure that the unused data of customers in the previous month is added to subscription in the cur-rent month. The regulatory authority emphasized that the failure to adhere to this new development will attract a fine of N5mn on each subscriber which they have failed to roll over and N500,000 on each day that succeed the first de-fault day 

Implications 

This new development will help to protect the interest of the internet subscribers, save cost and increase efficiency (get maximum returns from every subscription). This could also intensify the increased preference for internet services over voice calls. On the other hand, the new initiative could lead to a reduction in the amount and value of customer’s subscription in subsequent months in order to utilize the unused data in the previous month. This is likely to pull down the revenue and profit of internet providers 

MTN Ghana launched its initial public offer (IPO) 

MTN Ghana has launched an Initial Public Offer (IPO) in an attempt to list on the Ghana stock exchange. This offer opened on May 29th and will run for nine weeks to close on July 31st. The corporation is offering up about 35% of its equity which will consist of both newly issued shares and a sale of existing shares held by MTN Group Limited. The listing will confer the firm the opportunity to meet with the localization conditions agreed in 2015 when the right for the 4G license was acquired. The condition required that the company offer Ghanaian investors the privilege to own up to 35% of its shares. 

Implications

One of the benefits of going public is being able to raise capital. The acquisitions of additional capital will provide the company the opportunity for further expansion. Aside this, the corporation will have more financial resources to invest in infrastructures which could enhance the provision of more satisfactory services to its customers. However, the likely threats are intense scrutiny from regulatory bodies, pressures from shareholders and cumbersome decision making as the interest of all stakeholders needs to be factored in. 

MTN Nigeria released its Q1’18 results

The telecoms giant, MTN Nigeria has released its first quarter 2018 financial results. According to the report, the firm recorded a strong and impressive growth. This was partly supported by the increase in the data and voice revenue. The data revenue which grew by 73.2% far outweighs the growth in voice revenue of 15.2%. During the quarter, the company reported a net addition of 2.3 million new subscribers to its subscribers’ base due to increase in its SIM registration footprint across the country. 

Implications

The increase in the data revenue far outweighs that of voice revenue. This implies that the preference of customers is more skewed towards internet services. This could be as a result of the relatively cheaper cost of data services com-pared to voice calls. The new data roll over policy could further intensify the increased usage of data over voice calls. 

Telecoms operators deploy 52000km fibre optic cable to bridge access gap

In an attempt to improve infrastructural development in the telecommunication sector, the telecoms operators have deployed about 52,000km of fibre optic cable to bridge access gap in the country. 

Implications

The newly deployed fibre optic cable will help to improve internet services rendered by the telecoms operators.

 
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