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Internet Subscriptions Slip by -5.3percent on GSM Platforms

Proshare

Monday, February 13, 2017 9:34 AM / FBNCapital Research

The latest data released by the NCC, the industry regulator, show that internet subscriptions stood at 91.9 million in December, representing a y/y contraction of -5.3%. The figure implies density of 50% in a population estimated at 185 million, placing Nigeria well above the African average of around 16% as estimated by McKinsey. We attribute the decline in subscriptions to changes in consumers’ spending patterns. Given the squeeze on household pockets, there are competing priorities for disposable income (particularly for low income earners).

In 2016 MTN was the leading operator in terms of internet subscriptions. In December its market share was 34.6% while Globacom and Airtel accounted for 29.4% and 21.1% respectively.

We gather that MTN has decided to increase the price of its data packages; this is due to a mandate issued by the regulator. It will not be surprising if the declining trend in subscriptions via GSM continues.

Internet service providers that offer fiber optic broadband services are gradually gaining momentum. Due to the reliable data speed offered, most corporates utilise their services, and there seems to be a growing trend for residential usage as well.

The FGN’s target of achieving 30% broadband penetration by 2018 from its current level of 21% may be threatened by the prevailing fx illiquidity. Most operators are having issues importing equipment for upgrading their networks. Furthermore, there are also growing issues surrounding the vandalism of telecommunications base stations.


 
Improved access to internet connectivity can have a multiplier effect. Beyond the immediate impact on the technology and telecommunications sectors, agriculture, education and health can also be big winners.


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