Nigeria remains the largest mobile market in Africa in subscriber terms and the region’s second largest in revenue terms. Over the last decade, the Telecom sector has recorded the fastest growth rates in terms of its annual average subscriber growth rate.
In nominal terms, the Information and Communication sector grew by 17.66 per cent (year-on-year) in the Third Quarter of 2014, up by 5.68 percentage points from Third Quarter of 2013 and 6.55 percentage points from the Q2 2014.
“Telecommunications was the major driver of growth in the sector, growing by 6.25 per cent. Quarter-on-quarter, the sector slowed by 11.81 per cent,” according to NBS data for Q3.
Internet usage has expanded, from 0.1 per cent penetration of the population in 2000 to about 30 per cent in 2014 (approximately 68 million users).
Over the past decade, Nigerian telecoms operators have invested a cumulative $25bn in deploying their networks however, there are indications that the Nigerian telecoms market still operates below its real potential.
Reports by Pyramid Research, a London base strategic consulting firm, indicated that the structure of Nigerian telecoms network cost base was highly slanted. In comparison with other African markets, average network costs in Nigeria are 2 – 3 times higher.
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Over 60 per cent of network costs are on diesel/fuel alone, amounting to an annual expenditure of over N60bn, the report said.
Nigerian telecom operators have invested a cumulative $25bn in deploying their network over the past decade, with over 25,000 base stations, 25,000 Km of terrestrial fibre networks and more than 100Gbps of lit international fibre capacity across the nation.
However, Nigeria’s Infrastructural requirements are considerable below par – more than 25,000 new base stations required over the next five years in addition to an extensive deployment of metro and national fibre to support data traffic and improve the overall broadband penetration.
“There are fundamental, systemic challenges to building up a broadband infrastructure reliable enough to provide the platform for a vibrant Internet economy and attract data centres, providers of content and other technology companies,” the report said.
Access to the web via fixed (wired) broadband subscriptions in Nigeria last year amounted to a mere 15,045 according to the international Telecommunication Union (ITU), a penetration rate of just 0.009 per cent.
Infrastructural improvement in the sector would improve Broadband penetration in the country slightly above the government’s 20 per cent target by 2017, and service revenues from broadband would be $1.5bn more by 2018.
Lack of policy action in the Telecoms sector is quickly emerging as one of the most critical risks to the growth of the industry.
Analysts suggest that lack of policy action in the Telecoms sector could cost Nigeria a cumulative N400bn (US $2.5bn) in unrealized direct and indirect contribution to GDP, between 2014 and 2018.
DAN OJABO
