In the last one and half years, growth in Nigeria’s telecommunication industry has consecutively reported a slowdown to June 2021, thanks to the complexity around government SIM registration policy.
The sector, which has the largest customer base by any industry 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).
“It can be traced to the complexity in the acquisition of new SIM cards as well as the linkage of NIN to phone numbers,” Ayo Ebo, senior economist/head, research and strategy, Greenwich Merchant Bank, says.
Before the Q2’ 2020, about the same period the government commenced the policy that banned SIM registration, which also required telecom users to link their National Identity Number (NIN) to their SIM, the mobile service industry was growing by double digits every quarter. It grew 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.
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 their 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.
Read also: TFN Nigeria honours 44 fellows for developing digital learning solutions
The telcos have done a great deal in growing their subscribers over the years. As of 2001, only about 400,000 Nigerians had telephone lines from the defunct Nigerian Telecommunications Limited (NITEL). In 20 years, Nigeria has about 208 million active lines.
This means that every year about 10.4 million lines were activated and 866,000 lines were activated on an average monthly.
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.
The telecoms industry in the Q2’ 2021 attracted its lowest foreign investments ($340,000) since the data agency, NBS, started collating figures in 2013.
Before now, the sector had attracted an average of $87.7 million every quarter since 2013, according to data compiled by BusinessDay.
That helps provide a context of the magnitude of the slump in foreign investment in a sector that has powered Nigeria’s economy in recent times, and has been resilient in the face of two recessions in five years.
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, as the COVID-19 pandemic upended investment flows.
