The broadband penetration in Nigeria grew by less than 1 percent in the month of June, according to data from Nigerian Communications Commission (NCC). It is the first time in seven months the country is recording growth in broadband penetration.
Penetration grew to 39.97 percent from 39.59 percent the previous month which means that only 0.38 percent was added in the period. Broadband penetration has declined by 3.34 percent since January. While it keeps Nigeria at less than one percent above the African average penetration at 39 percent, the country is still 17 percent below the global average at 56 percent.
The growth in June may be connected to the increased activities by network operators to improve the quality of internet connection and in doing so lure back subscribers. The four largest operators have lost about 11.2 million subscribers since January 2021, and over 17 million since November 2020 when the decline started.
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However, the sector still closed the year 2020 in growth as broadband Penetration increased from 37.80 percent as of December 2019 to 45.02 percent as of December 2020. Similarly, Broadband Subscriptions increased from 3 72,153,824 subscriptions in December 2019 to 89,941,222 subscriptions as at December 2020.
The decline in penetration was only been a matter of time as the sector has been exposed to numerous economic policy somersault leading to the current currency depreciation crisis, the COVID-19 pandemic, and disruptions in the supply chain due to instability in the country, says Olusola Teniola, former President of Association of Telecommunications Companies of Nigeria (ATCON).
“Economic policy somersault is the biggest challenge facing the industry. No investor would want to come into an environment where there is so much instability in terms of policies,” Teniola said.
MTN said its operational cost rose 24.6 percent in 2020 due to the effects of naira depreciation on lease rentals and COVID-19 related expenditure.
Insecurity in the country has also contributed to capital flight in the sector and low investors confidence.
Capital expenditure (CAPEX) in the sector declined in 2020 compared to the previous year. A full-year report by the NCC found that capital inflow into the telecoms industry in 2020 was approximately $417 million compared to $942.8 million in 2019.
“This translates to a decline of 55.7 percent in Capital Importation year on year. The decline in capital importation was largely attributed by the Operators to the outbreak of the COVID-19 pandemic that distorted global businesses and impacted businesses negatively,” the report read.
Broadband penetration refers to the amount of the Internet access market that high-speed or broadband Internet has captured. In other words, it is a function of the number of 3G and 4G networks over a population size. Investment in broadband infrastructure more or less declined. For example, As of December 2020, the total on land fiber deployment was 43,898.8km as against 43,898.10 km in the year 2019. The on-land fiber deployment was reported as follows;- MTN – 14,612km; GLO – 13,306km; AIRTEL – 11,151km; EMTS – 4,650km and NTEL – 180km. Operators such as MTN and 9mobile maintained the level of investment in the critical infrastructure in 2020. Globacom slightly increased it whereas Airtel saw a decline.
MTN said it plans to drive 4G and rural network expansion. In that regard, for the next three years, the telco has set aside N600 billion to expand broadband access across the country in support of the government broadband plan. But the telco intends to continue its expense efficiency programme to strengthen its financial position and support margins.
