Nigeria's Telecoms Sector's Growth Slows For Sixth Quarter In A Row

Nigeria's telecommunications sector has recorded a streak of slowed growth for eighteen months in a row up till June 2021, as the NIN saga is still pricking businesses.

The sector, which has the largest customer base compared to other industries in Nigeria, reported a growth of 5.90 percent in the second quarter (Q2) of 2021, 12.2 percentage points lower than the 18.10 percent reported in the corresponding quarter of 2020, and lower than the 7.69 percent growth in Q1’ 2021 by 1.79 percentage points, according to the second-quarter GDP report by the National Bureau of Statistics (NBS).

Before the second quarter of 2021, Nigeria's mobile service industry was posting double-digit growth every quarter. The sector grew by 18.1 percent, 17.36 percent and 17.64 in the second, third and fourth quarter of 2020, helping to lift the economy out of the pandemic-induced recession as other sectors contracted.

However, after the Federal Government imposed a policy to not only suspend SIM registration, but also push telecom users to link their National Identity Number (NIN) to their SIMs in order to retain their mobile numbers, the sector's growth has been impeded.

The second-quarter growth of 5.90 percent is the lowest the sector has recorded in three years, an indication that the economy may have grown better if it had continued on its double-digit growth trajectory.

The ill-timed policy, which mandated the telecom sector to register over 100 million people in two weeks or lose half of its customer base, stifled the sector growth.

According to data from the Nigerian Communications Commission (NCC), the biggest telecom provider, MTN Nigeria, lost 4.8 million subscribers in Q1’ 2021. Airtel lost 5.26 million subscribers, while Globacom and 9mobile lost 1.92 million and 131.7 thousand subscribers, respectively. This means about 12.1 million subscribers were lost in Q1’ 2021.

On the other hand, the telcos listed on the Nigerian Exchange Group – MTN and Airtel – saw a surge in their revenue despite the loss in subscribers. MTN grew its revenue 17.2 percent year-on-year to N385.1 billion, while Airtel recorded revenue growth of 15.4 percent growth to $1.03 billion in Q1’ 2020.

MTN recorded a 42 percent growth in profit to N73.7 billion in Q1’ 2020 compared with N51.7 billion in Q1’ 2021. The management of MTN explained that the effect of the SIM ban on voice revenue was offset by increased data usage by active SIMs in its base and migration to a higher quality of experience. Airtel also grew its profit by 1.8 percent to $415 million.

However, over 2 million Nigerians were rendered jobless by the suspension of sale, registration and activation of SIM cards, according to the Arewa Telecom Operators Agents and SIM card Dealers Association (ATOASDA). There are now about 23 million jobless Nigerians, according to the NBS.

In the second quarter of this year, the telecoms industry attracted its lowest foreign investments ($340,000) since the data agency, NBS, started collating figures in 2013. The sector, before now, had attracted an average of $87.7 million every quarter since 2013, 

While NCC attributed the decline to both COVID-19 and the exchange rate volatility, analysts say it can also be traced to the recent policy, as policy uncertainty remains one of the biggest barriers preventing foreign investors from exploring the opportunities in Africa’s largest economy.

Investment in the telecoms sector slowed in the whole of 2020 following a 55.7 percent decline to $417.48 million from $942.86 million. The decline mirrors the 60 percent slump in total foreign direct investment into Nigeria in the same period.