Telecom foreign investment crashes 91% despite sector reforms

Foreign investment into Nigeria’s telecommunications sector plunged by 91 percent in the first quarter of 2026, despite regulatory reforms, tariff adjustments and massive spending by operators to improve network infrastructure.

New data from the National Bureau of Statistics (NBS) showed that the sector attracted only $7.24 million in foreign capital during the period, down sharply from $80.78 million recorded in the first quarter of 2025.

The figure also represents a 93 percent decline from the $103.36 million received in the fourth quarter of 2025, making it the weakest quarterly performance for the telecom sector in more than four years.

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The development comes at a time when Nigeria is pushing to deepen broadband penetration, expand digital infrastructure and strengthen its position as Africa’s largest digital economy.

Industry stakeholders say the latest figures raise concerns about the ability of the telecom sector to attract the long-term capital required to sustain network expansion and support growing demand for digital services.

The poor performance is particularly striking because it comes after several measures aimed at improving the sector’s investment appeal.

In January 2025, the Nigerian Communications Commission (NCC) approved a 50 percent tariff adjustment for telecom operators. The decision was expected to improve industry revenues, strengthen operators’ financial position and encourage fresh investment into the sector.

Operators also significantly increased spending on infrastructure. According to the NCC, telecom companies invested more than N2.5 trillion in network expansion and upgrades in 2025, one of the highest annual investment levels recorded by the industry.

Yet foreign investors remained largely on the sidelines.

The contrast becomes even clearer when compared with overall capital inflows into Nigeria. While telecom investment collapsed, total capital importation into the country surged to $10.37 billion in the first quarter of 2026, representing an 83.8 per cent increase from the corresponding period of 2025.

Most of the funds, however, flowed into banking and financial assets.

Banking attracted $7.55 billion, while the financing sector received $2.43 billion. Together, both sectors accounted for more than 96 per cent of total inflows.

This reflects a growing preference among foreign investors for short-term opportunities that offer quicker returns.

Portfolio investments accounted for about 95 percent of total capital imported during the quarter, while foreign direct investment (FDI), often associated with factories, infrastructure and long-term projects, remained low at just $135 million.

This trend suggests that investors are increasingly attracted to high-yield financial instruments rather than sectors that require patient capital and long-term commitments.

For telecom operators, the challenge goes beyond attracting money. Building and maintaining modern telecom networks requires substantial investment in fibre infrastructure, towers, spectrum, data centres and power systems. These are long-term assets that depend heavily on stable financing conditions.

Although Nigeria’s foreign exchange reforms have improved liquidity and boosted confidence in financial markets, concerns about exchange-rate volatility, inflationary pressures and long-term policy certainty continue to influence investment decisions.

The latest figures indicate that higher tariffs alone may not be enough to attract foreign capital into the telecom sector.

Investors appear to be looking beyond revenue growth and focusing on broader economic factors such as currency stability, ease of capital repatriation, regulatory predictability and long-term returns.

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The decline also highlights a wider challenge facing the Nigerian economy. While billions of dollars are flowing into short-term financial instruments, productive sectors such as telecommunications, manufacturing and agriculture continue to receive only a small share of foreign investment.

For a country seeking to accelerate digital transformation, this imbalance carries significant implications.

Telecommunications serves as the foundation for digital banking, e-commerce, artificial intelligence, cloud services, remote work, education technology and government digitalisation initiatives. Weak investment inflows could slow the pace of infrastructure expansion needed to support these ambitions.

The first-quarter data therefore sends a strong signal to policymakers. Sector reforms may have improved operators’ earnings outlook, but attracting long-term foreign capital will require broader economic stability and stronger investor confidence.

Until that happens, Nigeria may continue to attract billions in foreign funds while strategic sectors like telecoms struggle to secure the investment needed to drive sustainable digital growth.