Telcos face negative half-year as subscriber numbers hit 16-month low
...Airtel regains second-largest telco in Nigeria from Globacom ...May loss the lowest since December 2020
The telecommunication sector would require a major growth result in June to stop it from ending the second quarter in decline and the first half of 2021 in the negative zone.
A decline in the first half of the year results is likely to affect the outcome of the half-year GDP growth of the industry. The first-quarter GDP data from NBS confirmed the growth of the industry is at 7.69 percent from the previous quarter where it recorded 17.64 percent.
The latest data from the Nigerian Communications Commission (NCC) showed the growth decline is not ending soon, with the sector losing 1.67 million subscribers in May to take the total number of subscribers in Nigeria to 186 million from 188 million recorded in April. The last time the sector was below 187 million subscribers was before the pandemic lockdown in February 2020, 16 months ago. It means the sector has now wiped off the gains made during the lockdown where millions of Nigerians had to adopt digitalisation to stay connected to their businesses and loved ones.
While most of the blame for the losses rests on the ban on SIM card sales and registration by the government, the Minister of Communication and Digital Economy announced in April the ban has been lifted and telecom operators have since resumed full operations. The expectation in April was that by lifting the ban the sector would go back to growth, but this is not happening yet.
Experts have, however, pointed out the impact of the economic devastation caused by the COVID-19 pandemic on the income of subscribers and the emergence of platforms that grants people access to connectivity without having to buy a SIM card. For instance, all a subscriber needs to launch a Zoom app, Google Meet, Microsoft Team, and many other virtual meetings is an email and WiFi.
Karl Toriola, CEO of MTN Nigeria in an interview with BusinessDay on Thursday, also alluded to the impact of the COVID-19 pandemic on the largest telecommunication service in Nigeria. Among the projects delayed by the pandemic is a 48 percent share sale in the telco’s Nigerian unit
“We have probably been slowed down by the entire COVID-19 pandemic which did not allow us to go to market early on. The intention was to sell down about 48 percent of MTN Group’s holdings in Nigeria and really targeted retail investors,” Toriola said.
Experts have also suggested that the new revised national SIM card policy which mandates the provision of National Identification Number (NIN) before SIM card purchase could have also contributed to the continued decline of the sector. According to the National Identity Management Commission (NIMC) there are about 56 million Nigerians with NIN, which leaves over 100 million potential telecom subscribers without and unable to own a SIM card in Nigeria.
The NCC data showed that MTN’s market share could not sustain the gain it made in the previous month as it declined to 39.66 percent in May from 39.72 percent in April. The total number of subscribers on the network is now at 74.04 million from 74.88 million in the previous month meaning MTN Nigerian only lost 775,177. This is actually an improvement given that it is the least number of subscribers the telco has seen leave its platform since November 2020 when the decline began.
Airtel is also in the same boat with MTN, in the sense that it let go fewer subscribers in May than it has done since December. Importantly, Airtel regained its ‘second-largest network operator’ title from Globacom with an impressive market share growth of 0.16 percent at 26.80 percent in May from 26.64 percent in April. 150,620 subscribers left the network leaving Airtel with 50.02 million from 50.1 million in the previous month. At this rate of decline, the telco is likely to mark its first subscriber growth in 2021 in the month of June.
Airtel, however, did not improve its year-on-year subscriber number. As of May last year, the telco had 51.4 million. The decline in May 2021 takes it back to December 2019 when it had 50.1 million subscribers.
Globacom, which has enjoyed the second-largest telco position since December 2020, lost it due to 817,640 subscribers dropping off its network in May. The telco’s total subscribers now stand at 49.7 million from 50.5 million it recorded in April. The market share also declined by 0.2 percent to settle at 26.6 percent from 26.6 percent in the previous month.