Telecoms sector value-add to top N1trillion by 2015

Value addition to the economy stemming from the telecoms sector is estimated to surpass the N1trillion mark by the end of 2015, Businessday estimates show.

The rise of the telecoms sector has engendered the growth of other service-oriented sectors associated with it. New sectors have also arisen to take advantage of the opportunities that the telecoms sector provides.

Telephone density or teledensity (the number of telephone connections for every hundred individuals living within an area) in Nigeria now stands at 100.6 percent (compared with South Africa at 140 percent). Figures are naturally printed at above 100 percent because people usually have more than one telephone line.

This means that more than ever before, more products and services can penetrate to the market through telephone lines, and businesses are seeing this route as the path to the future.

MTN Nigeria’s FY 2014 report gave insights to the magnitude of revenue accruing to support services firms in other economic sectors, resulting from their direct sales to the telecoms firms.

MTN Nigeria accounts for about 50 percent (49 percent in more precise terms) of Nigeria’s telecoms market, going by the number of active phone lines in the country.

The amount of revenue generated from servicing the 50 percent of active lines can be doubled to estimate the revenue generated from servicing the remaining 50 percent, which are connected by the other telecoms operators.

Using this analogy, MTNN’s payment to the other service sectors, can serve as a proxy for what the larger telecoms industry paid to the service-sectors, when doubled.

MTN’s FY report showed that the segment which benefited the most from the telecoms sector was the government, which received N97.4 billion from MTN Nigeria (or an estimate of N195 billion from the telecoms industry) in levies and taxes in 2014 alone.

Financial institutions were the second largest recipient of telecoms revenue, receiving N52.3 billion from the firm (and an estimated N104.6 from the industry).

Local contractors and suppliers in the industry were remunerated to the tune of N89.6 billion, approximately.

The workforce received approximately N49 billion from the telecoms industry in wages and salaries.

Trade partners and dealers estimated sales as a result of involvement with the telecoms sector is estimated at N105.12 billion.

The print media industry made sales directly attributable to telecom sector activity in the region of N34 million.

Providers of local content received an estimated N43.14 billion in 2014.

Petroleum product marketers received an estimated N69 billion from the industry in the form of payment for the purchase of diesel.

Firms involved in advertising and promotional activities raked in about N15.4 billion from the telecoms industry.

Sponsorships to other business endeavors and individuals arising from the telecoms sector is estimated at N4.9 billion.

In 2014, MTN alone generated over N5billion for the music  industry through the  monetization of Caller Ring Back Tunes utilizing local musical content.

Brand Ambassadorship, appearances and performances  fees generated over N500m for the music industry

This shows that the telecoms sector has offered huge opportunities for businesses in other sectors to ride upon through the adoption of mobile technology. 

“Today mobile penetration is so extensive – often well beyond the reach of national energy grids and social security systems – that it is not only driving growth, it is one of the most effective platforms for distributing economic opportunity”, said the MTN in its report.

“The opportunity for businesses and governments to transform sectors such as financial services, healthcare and agriculture, through mobile communications is already apparent”, it said.

Telecoms infrastructure supports various critical sectors of the economy including banking, insurance, e-commerce, Oil &Gas from an infrastructural and product perspective.

Some wholly indigenous companies which have thrived from conducting business with telecoms firms such as MTN include: CNSSL – Call Centre and network support services. Computer Warehouse – IT hardware, software and solutions. Media Perspectives – Media buying agency. NTS Nigeria – Site maintenance and diesel supply. Linksoft – Site maintenance and diesel supply. Mtech – a Value Added Services Providers. Tavia – Value Added Services Providers.

Edozie Ifebi