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Nigerian Telecommunications (Service) Sector Report Q2 2016 - NBS

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Sunday, September 4, 2016 9:15AM /NBS

Telecommunications in GDP and growth
In real terms, the telecommunications sector contributed N 1,580 billion to GDP in the second quarter of 2016, or 9.8%, which represents an increase of 1.0% points relative to the previous quarter. This is the largest contribution to GDP made from this sector in the rebased period, which emphasises that growth in telecommunications has remained robust when compared to total GDP. However due to differing seasonal patterns, the contribution from telecommunications is usually the largest in the second quarter.

Although growth in the telecommunications sector remained positive, in contrast with the economy as a whole, year on year growth nevertheless dropped in real terms from 5.0% in the previous quarter to 1.5%, the lowest rate since 2011 Q3.

The share of telecommunications in total real GDP had declined throughout 2010 to 2014, but for the last five quarters growth in telecommunications has been higher, meaning the trend has reversed.

Figure 1: Percentage Contribution of telecommunication to constant price GDP, and annual growth


Subscribers as of June 2016
The total number of subscribers has increased rapidly over the past decade; at the end of 2005 there were 19,519,154 subscribers, but by the end of 2015 there were 151,017,244, which is equivalent to an increase of 13,149,809 every year. However, growth has been declining more recently, possibly as a result of high market penetration leaving less room for large expansion.

In June 2016 – the end of the second quarter – there were 149,803,714 subscribers compared with 148,775,410 in June 2015, which represents an increase of 0.69%. The yearly increase in total subscriber numbers has been decreasing steadily for the past year; in June 2015 the year on year increase was 12.05%. However, after falling between January and April 2016, the number of subscribers began to increase again, and in June the number was 0.71% higher than at the end of the first quarter in March.

This increase is despite a sharp drop in CDMA subscribers; between June 2015 and June 2015 the number fell from 2,105,981 to 454,092, a decrease of 78.44% (explored further below). Although CDMA remains the second most popular technology type, this decrease has meant that the GSM technology type has entrenched its position as the dominant provider of mobile subscriptions. This is illustrated in figure 2, which breaks down total subscriptions over the last year by technology type.

Figure 2: Total number of subscribers each month, Jun 2015 – Jun 2016



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 99.58% of the total in June 2016, followed by CDMA with 0.30% of the total, whist fixed wired and wireless make up 0.08% and 0.03% respectively. The dominance of GSM users has increased since June 2015 when 98.46% of subscribers used this technology type, however this increase was largely as a result of the decline in CDMA users over the second quarter of 2016. The proportion of subscribers using fixed lines has remained broadly stable over the past year, albeit at very small levels.

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 June 2016, the total number of GSM subscribers was 149,179,083, an increase of 2,692,267, or 1.84% relative to June 2015. In both percentage and absolute terms, the year on year increases in GSM subscriber numbers have been falling steadily over the past 12 months. In March 2016, the year on year growth rate was 4. 06%, and in June 2015 the rate was 12.22%. However, the number of GSM subscribers increased throughout the second quarter of 2016, from 146,866,356 in April.

The second quarter of 2016 saw a partial reversal of trends that had been recorded since August 2015. After declining between then and March 2016, the number of MTN and Etisalat subscribers began to increase again; the number of MTN subscribers rose from 57,045,721 to 58,409,767 between March and June 2016, and Etisalat subscriber numbers rose from 21,877,542 to 22,469,896 over the same period. These changes represent quarter on quarter growth rates of 2.39% and 2.71% respectively, although year on year growth rates were still negative, at -7.01% for MTN and -1.67% for Etisalat.

Airtel also witnessed a reverse in trend. In the second quarter of 2016 the provider recorded growth of -5.57%, following consistent positive growth since August 2014. Nevertheless, the year on year growth was positive at 8.17%, and there was a slight increase between May and June of 0.44%. Airtel ended the quarter with 31,978,848 subscribers.

By contrast, Globacom continued their uninterrupted growth in subscriber numbers. With the highest quarter on quarter growth and and year on year growth rates of 4.95% and 16.20% respectively, Globacom also recorded the largest increases in absolute terms by both measures. At the end of the second quarter Globacom had 36,320,572 subscribers.

Figure 3: GSM subscribers relative to Jun 2015 by provider, Jun 2015 – Jun 2016



As a result of these trends, Globacom increased their share of total subscriptions to 24.35%, from 23.48% at the end of the previous quarter and 21.34% a year previous. Both MTN and Etisalat also increased their percentage share of subscribers relative to the previous quarter; MTN’s share increased from 38.70% to 39.15% and Etisalat’s share increased from 14.84% to 15.06%. However, both providers nevertheless recorded a decrease in their share relative to June 2015, when the shares for MTN and Etisalat were 42.88% and 15.60% respectively. Airtel was the only provider to record a decrease in their share relative to the previous quarter; in June 2016 their share was 21.44% compared to 22.98% in March. However, this still represents an increase relative to the share of 20.18 recorded in June 2015.

Figure 4: Share of total GSM subscribers by provider, Jun 2016

Mobile Subscribers (CDMA)
IN June 2016, at the end of the second quarter of 2016 there were 454,092 CDMA subscribers, which represents a decline of 61.19% relative to the end of the previous quarter. This is the second consecutive sharp decline in CDMA subscriber numbers; in March there was a drop of 45.55% from 2,148,727 in December 2015 to 1,170,031. As a result, the year on year fall was 78.44%, from 2,105,981 in June 2015.

Both providers of this technology type contributed to the decline, but Visafone recoded the larger fall both quarter on quarter and year on year, of 61.37% and 78.54% respectively, compared to 27.09% and 58.66% respectively for Multilinks. This, accompanied by Visafone’s much larger share of the market meant that Visafone was the main driver of the large decrease in subscribers. Of a decline in absolute terms of 715,939 subscribers quarter on quarter, Visafone accounted for 714,282. Nevertheless, the decline in the number of Multilinks subscribers has been consistent since 2014; there have been only two months in which they have recorded increases, and the only quarter to recorded positive growth was the second quarter of 2015 since May 2014.

Despite the large fall in Visafone subscribers, Visafone remained by far the largest CDMA provider, and accounted for 99.02% of CDMA subscriptions in June. Considering the large fall in subscriber numbers, this is only slightly less than the share of 99.48% that Visafone accounted for in March. However, it is nevertheless the smallest share recorded since August 2014.

Fixed Wireless Line     
As with CDMA subscribers, the number of fixed wireless line subscriptions dropped sharply in June 2016, after having remained fairly stable for over a year. However the decline was less sharp than for CDMA subscriptions. In June 2016 there were 45,087 subscriptions, compared with 51,383 in March 2016 and 58,935 in June 2015, which imply declines of 12.25% and 23.50% respectively.

In percentage terms, Multilinks recorded by far the biggest decreases. In June 2016 the provider had 428 subscribers, compared with 1,787 in March 2016 and 3,387 in June 2015, which represents falls of 76.05% and 87.36%. By contrast, Visafone recorded quarter on quarter and year on year decreases of 9.95% and 19.60% respectively. However, given Visafone’s larger share of the market, their decline had a far larger impact on overall numbers of fixed wireless line subscribers. Of the 6,296 fixed wireless line subscribers that were lost between March and June 2016, 4,937 of these were accounted for by Visafone. In June 2016 Visafone had 44,650 subscribers, compared to 49,596 in March 2016 and 55,548 in June 2015.

Due to Multilinks recording a larger decrease in percentage terms, Visafone’s share of total subscriptions continued to rise, from 96.52% in March 2016 to 99.05% in June 2016. This was the first period in which Visafone dominated the fixed wireless line market to a greater extent than the CDMA market, although both markets are recording consistent declines in subscriber numbers.

Figure 5: Share of Fixed Wireless line subscribers, by provider, Jun 2015 – Jun 2016



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