Mobile network operators (MNOs) in Nigeria are expected to record major milestones in data revenue as a result of the current coronavirus-induced lockdown in major cities across Nigeria.
“We believe the outbreak of COVID-19 which has disrupted activities, leading to the shutdown of offices, factories, schools, and social gatherings will result in increased data and voice consumption in the short term as people increasingly communicate remotely and seek entertainment during the lockdown,” CSL Stockbrokers said in a recent report.
To curb the spread of the deadly coronavirus, Lagos, Abuja and Ogun State have been on lockdown since March 30, and on April 13, President Muhammadu Buhari extended the lockdown in the three areas by 14 days, meaning that residents would now spend a whole month at home. Residents in many other states across the country have also been asked by the governors to stay at home.
Agusto & Co., a Lagos-based consulting firm, in a recent publication tipped telecommunications as one of the three sectors, alongside agriculture and home and personal care, that would post strong growth on the back of the lockdown as the bottom line of most businesses in the country is expected to head south.
The consulting firm said growth in Nigeria’s telecommunication industry is expected to be fuelled by a surge in work-from-home activity, the increasing search for news online, and the use of airtime for voice calls (as many are frequently checking up on their loved ones).
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A week before the first lockdown was proclaimed by President Buhari, internet traffic grew by 10 percent as many companies had introduced remote work, according to Internet Exchange Point of Nigeria (IXPN).
The IXPN also said there was internet surge on Tuesday after the lockdown order went into enforcement.
“Working remotely implies that several white-collar professionals will consume more internet data for work and virtual meetings leading to a spike in demand for data,” Agusto & Co. said in the publication ‘COVID-19 in Nigeria: Economic Perspectives and Mitigating the Risks’.
The consulting firm also expects that more telecoms consumers (beyond the white-collar professionals) will spend more time on social media and other streaming apps at this time.
“We believe these trends will help drive growth in the telecommunications industry in 2020 through to 2021,” it said.
According to CSL Stockbrokers, MTN, the largest telecommunication network in Africa, is expected to lead the growth table. The mobile network operator reported double-digit growth in revenue (up 13 percent year-to-year to N1.2 trillion in FY 2019), on the back of growth in voice (+8 percent year-to-year) and data revenue. Buoyed by the topline growth and the sub inflationary growth in operating expenses (up 4 percent year-to-year), pre-tax profit grew strongly, up 31 percent year-to-year to N290.1 billion in 2019 financial year.
MTN has not shown signs of slowing down in 2020. As of January, the telco’s internet subscriber market share grew by over 1 million people to 55,527,289, from 54,113,148.
The telco recently pushed its brand visibility into rural communities with the provision of 300 free SMS per month. With about 50 percent of its subscriber base in these communities, the network has become the mainstay of millions of people contacting loved ones and conducting business outside their location.
“We think favourable demographics, rising smartphone penetration along with increasing internet penetration (38.47 percent as at Jan-2020 compared with 32.34 percent in January 2019), and continued investment by the company in deepening 4G coverage are positive catalysts for earnings growth,” CSL Stockbrokers said.
Along with MTN, Airtel has also been described as a “defensive stock” by market analysts. A defensive stock is capable of shielding from turbulence in the market. It also provides consistent dividends and stable earnings regardless of the overall stock market.
However, as MNOs smile to the bank, Nigerian internet users remain concerned about the quality and cost of internet.
“I can say with certainty now – remote working does not work in Nigeria,” Mark Essien, founder of Hotels.ng, said. “I have worked with more than 50 remote workers, and only about 10 percent have ever worked out. There are too many issues around power + internet to make this model work.”
Alliance for Affordable Internet (A4Ai) categorised Nigeria among top 10 countries in Africa with the most affordable internet data. The price of one gigabyte plan of data is 1.7 percent of the average monthly income of Nigerians as 1GB costs about $2.78.
While nearly all the networks have announced further data price slashes weeks before lockdown, Nigerians still struggle with cost of data. Many people have alleged that the packages disappear too quickly ensuring that they spend more money on data within a month. The agitations got to a head in early April when customers took to Twitter to demand for ‘Free Wifi’.
“I have spent some of my time in the last three days engaging a notable telco to provide discounts on data plans for startups and SMEs across Nigeria,” said Bosun Tijani, founder and CEO of Co-creation Hub (CcHUB).
FRANK ELEANYA
