Business

Report Predicts N2.9trn Revenue for Telcos in 2020

By Emma Okonji

Agusto & Co. Limited recently released its 2020 Telecommunications Industry Report, which focused on voice, data, auxiliary services as well as the impact of COVID-19 pandemic on the quality and affordability of telecoms service in Nigeria.

According to the report, the entire telecoms market in Nigeria was estimated at approximately N2.5 trillion in 2019 with MTN accounting for nearly half of the industry’s revenue in the same period.

The Agusto & Co report, however expects Nigeria’s telecommunications industry revenue to maintain an upward trajectory in 2020, estimating an increase by at least 15 per cent to around N2.9 trillion on the back of the exponential voice and data traffic witnessed in April 2020,3 during the five-week long restrictions on movement to curb the spread of the pandemic.

According to the report, “Coming out of the pandemic, millions of users in Nigeria are more connected, better educated and familiar with digital tools. In the same vein, network operators have gained first-hand experience in dynamic network traffic management, while businesses and their telco partners have a better understanding of the challenges of homeworking.

“While the advent of the COVID-19 has somewhat fast-tracked Nigeria’s digitisation, particularly at the user experience level, the operational issues that have held back the country’s broadband penetration persist.

“Operators are grappling with the stifling effect of high business costs occasioned by ballooning interest expense on borrowings and a burdensome tax regime, while the long delays in processing right of way permits and their arbitrary costing models are the main reasons for the prohibitive cost of leasing transmission infrastructure in the country.

“This is in addition to the incessant cost of repairing damaged fibre infrastructure as a result of cable theft or damage during road construction, and insufficient electricity supply requiring operators to invest heavily in alternative energy projects to power base transceiver stations (BTS).”

The report further explained that the network congestion witnessed during the COVID-19 lockdown owing to the spike in data traffic brought to the fore the inadequacies in the country’s communications infrastructures.

While discussions around additional spectrum for network operators and the declaration of communications infrastructure as critical national assets continue to dominate debate within the Industry, the Agusto & Co. report believes addressing some of these operational challenges will improve the accessibility and affordability of telecom services in Nigeria and ensure sustainable growth for key players.

Based on available global indices, the report said it would expect telecom services playing a new “Super-Utility Role” in the COVID-19 era.
The report said global evolution from voice and short message service (SMS) to data services had continued to disrupt traditional telecommunications business models globally.

“This has been amplified during the coronavirus (COVID-19) induced lockdown as “work from home” and “social distancing” became the buzzwords in the current business landscape, with the telecoms sector being the invisible hand driving the shift to remote working, video conferencing and streaming services,” the report added.

It also cited statistics from the Nigerian Communications Commission (NCC), on the number of active mobile-broadband subscribers, which NCC said it rose sharply by 17 per year-on-year to 143.3 million as at 30 June 2020, to become the fastest growing segment of the Nigeria Telecommunications Industry.

MTN with over 60 million subscribers or 42.3 per cent share of the total subscription, leads the mobile broadband market, while Glo and Airtel with 26.5 per cent and 26.2 per cent shares respectively, occupy the second and third positions. 9mobile is the smallest of the four operators with 4.9 per cent of the GSM internet subscriber base.

Source: thisdaylive.com