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MTN Nigeria Loses 7.6 Million Subscribers Amid Regulatory Restrictions

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Karl O Toriola - Investorsking.com

MTN Nigeria Communications Plc, Africa’s leading telecommunications giant, reported a 7.6 million decline in subscribers to 68.9 million in the first half of the year.

MTN Nigeria reported in its unaudited financial statement released on Friday and obtained by Investors King.

MTN Nigeria Key Highlights

• Mobile subscribers declined by 7.6 million to 68.9 million, impacted by the regulatory restrictions on new SIM sales and activations
• Active data users declined by approximately 52,000 to 32.5 million
• Service revenue was up by 24.1% to N790.3 billion
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) grew by 27.6% to N417.2 billion
• EBITDA margin improved by 1.4 percentage points (pp) to 52.7%
• Capital expenditure was up by 39.1% to N186.4 billion (up 50.6% to N114.5 billion excluding right of use [RoU] assets)
• Dividend per share of N4.55 kobo, up 30%.

Speaking on the results, MTN Nigeria CEO, Karl Toriola, said “In the first half of 2021, we made good progress strengthening the resilience of the business, managing the impact of the COVID-19 pandemic and enhancing support to our people, customers and other stakeholders. We extended our commitment to the Coalition Against Covid-19 (CACOVID) with an additional N3 billion contribution over a two-year period, half of which has already been paid.

This is in support of efforts to promote the health and security of Nigerians, as we navigate our way through the pandemic; and in line with our Y’ello Hope initiatives through which we provided support to our broad base of stakeholders to the value of approximately N25 billion in 2020.

Our progress towards achieving greater business resilience is reflected in the upgrade by Global Credit Ratings (GCR) of our national scale long-term issuer rating to AAA and affirmation of our national scale short-term rating of A1+ with a stable outlook. This puts MTN Nigeria on the highest possible GCR scale for short-term and long-term ratings, providing a solid platform for growth.

2021 marks the 20th anniversary of MTN’s presence in Nigeria. As we celebrate this milestone, we are pleased to announce that our Board of Directors has approved our participation in the Road Infrastructure Tax Credit (RITC) Scheme. This is in response to Government’s drive towards public-private partnerships in the rehabilitation of critical road infrastructure in Nigeria. We intend to participate in the restoration and refurbishment of the Enugu-Onitsha Expressway. Conversations in this regard have already commenced, and further announcements will be made in due course.

In line with our desire to plant deeper and more permanent roots in Nigeria, we have also initiated plans to commission a purpose-built, state of the art MTN Head Office, designed to act as a central hub for our network, a catalyst for creativity and innovation, and a showcase for the flexible working structures that are driving
efficiency gains in this new normal working environment. Aligned with our wider commitment to environmental sustainability, it will meet the highest global environmental standards, demonstrating the role of green technology in our future.

Following MTN Group’s stated intention to sell down up to 14% of its investment in MTN Nigeria, subject to market conditions over the medium-term, MTN Nigeria’s shareholders approved an equity shelf programme at the last Annual General Meeting.

This will facilitate a process to increase ownership of the Company by more Nigerian retail and institutional investors. Alongside this, we further localised our predominantly Nigerian management team with the appointment of Nigerians to two key senior positions (Chief Marketing Officer and Chief Information Officer) previously held by expatriates.

MTN Nigeria continues to invest in improved world class services and its network, accelerating the expansion of our 4G coverage and providing home broadband. As part of our rural connectivity programme, we plan to connect approximately 1,000 rural communities to our network this year with additional 2,000 communities in
2022.

We are delighted that these are translating into strong operational performance in line with the objectives of Ambition 2025. In the next 3 years, we will invest over N600 billion to expand broadband access across the country in support of Government’s Broadband Plan.

Operationally, our mobile subscribers closed H1 at 68.9 million, down 9.9% from December 2020. This was due to the regulatory restrictions on new SIM sales and activations, which was lifted on 19 April 2021. Although the initial run-rate of additions has been slower than usual due to new process requirements, we anticipate
growth to normalise in the short-term as more of our acquisition centres are certified for SIM registration.

Finally, our Board of Directors has approved an interim dividend of N4.55 kobo per share to be paid out of distributable net income. This represents a growth of 30% over N3.50 kobo per share paid in H1 2020.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Telecommunications

Nokia and African Telecommunications Union (ATU) to Speed up Digital Transformation and the Knowledge Economy in Africa

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Nokia - Investors King

Collaboration to leverage the power of ICT including 5G for Industry 4.0 (IR 4.0), connecting the unconnected and transforming lives; Both organizations reiterate commitment to shape policy, develop talent, and promote inclusion and diversity in Africa.

Nokia has signed a Memorandum of Understanding (MoU) with the African Telecommunications Union (ATU) to drive digital transformation and the knowledge economy for socio-economic development across the continent. The two parties will leverage the power of telecommunications, including 5G networks, to connect the unconnected and identify innovative use cases, as well as business models. In addition, the MoU will lay ground for both organizations to better help governments shape telecom policy, develop talent and promote inclusion and diversity. This includes women, as well as the underprivileged in both rural and urban areas.

The MoU was signed in Nairobi, Kenya, by John OMO, Secretary General at ATU and Rajiv Aggarwal, Nokia Representative and Head of Central, East and West Africa Market Unit at Nokia.

Announcing the partnership, Rajiv Aggarwal, Head of Central, East and West Africa Market Unit at Nokia, said: “We remain keen on supporting Africa’s digital transformation journey and by collaborating with the ATU, we strengthen this commitment. We will leverage our global technology expertise and insights on policy matters to positively impact the universal socio-economic development in the continent.”

Co-signing the MoU with Mr. Rajiv, John OMO, Secretary General of the African Telecommunications Union (ATU), said: “Our vision is to make Africa a full and active participant in the global information and knowledge society by enabling universal access to ICT systems and services across Africa. Collaboration with a global industry leader such as Nokia is therefore crucial in this regard and will help us accelerate towards a digital transformation and knowledge economy.”

The MoU framework is guided by six tenets designed to facilitate this acceleration. These are:

  • Sharing of best practices on telecom technology trends and developments
  • Identification of innovative industrial use cases toward the Fourth Industrial Revolution
  • Recommendation on implementation of emerging technologies and business models
  • Promotion of connecting the unconnected with broadband
  • Development of emerging talent for digital innovation
  • Promotion of inclusion and diversity

Nokia has a long history of collaboration with international organizations and bodies across the globe. Regionally in MEA, Nokia recently partnered with UN Women to promote inclusion and diversity in Middle East and Africa. Nokia is also working with UNICEF as part of a shared-value partnership in Kenya to connect schools with broadband and empower children in rural as well as disadvantaged urban areas. In November 2020, Nokia supported the Forge Academy in South-Africa with the launch of a fully inclusive artificial intelligence (AI) laboratory to help students to become entrepreneurs in the Fourth Industrial Revolution and the global digital economy.

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Broadband Penetration in Need of a Leg-up – Coronation Merchant Bank

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Broadband Penetration - Investors King

Digital technologies can promote growth in an economy partly due to their capacity to reduce costs and improve the quality of delivery. However, to achieve this, highspeed and reliable internet and broadband are required. The latest data released by the Nigerian Communications Commission (NCC), the industry regulator, show that internet subscriptions stood at 139.4 million in July, representing a y/y decline of -5%. Furthermore, we noticed a m/m decline of c.431,000 in subscriptions.

The decline in subscriptions can be partly attributed to the temporary suspension of SIM card sales to ensure the achievement of the National Identification Number (NIN) registration exercise. Additionally, based on our channel checks, the stress associated with the NIN-SIM linkage has resulted in customers abandoning SIMs of devices that are not their primary source for communication or internet connectivity.

MTN Nigeria (MTNN) accounted for the largest share (42%) of total subscriptions though down -1.0% m/m in July ‘21. Airtel (-0.5%) and Glo (-0.9%) also recorded m/m decreases.

Over the past year, there has been a visible shift to fibre broadband internet plans which do not necessarily need SIM cards to function. We note that some residential estates are increasingly using this service given the heavy reliance on internet services at home due to the newly adopted work-from-home approach.

In November ‘19, President Buhari launched the National Digital Economy Policy and Strategy. The strategy is hinged on eight critical pillars. One of the critical pillars is developing a solid infrastructure by deploying fixed and mobile broadband infrastructure to deepen broadband penetration and drive an inclusive and vibrant digital economy.

Similarly, in September ‘21, the FGN approved the national policy for the fifth-generation (5G) network to boost the country’s digital economy. The national broadband plan set a target for the country to attain 70% broadband penetration at a price of N390 per 1GB of data (i.e. 1.3% of minimum wage).

The latest national accounts show that Information and Communications Technology sector grew by 5.6% y/y and contributed 17.9% to the total GDP in Q2 ’21. This is slightly higher than its contributions in Q2 ’20 (17.8%) and Q1 ’21 (14.9%). It also showed that telecommunications grew by 5.9% y/y in Q2 ‘21 compared with 7.7% in Q1 ‘21 and 18.1% in Q2 ‘20.

We note that investments into the sector have declined steadily. Capital importation into the telecommunications sector declined by 138.2% from USD944.1m in ’14 to USD417.5m in ’20. This can be linked to the infrastructure deficit in the telecommunications sector, the high cost of services and access devices, low digital literacy, poor perception of broadband value, among others.

Clear policy and regulatory guidance are fundamental to the optimal distribution and uptake of broadband services. The evolving work conditions, travel restrictions due to covid-19, the rise of e-commerce, and integration of technology in daily activities show that the rollout of broadband services has the potential to address various socio-economic challenges, grow the economy and create jobs.

Industry sources suggest that a 10% increase in broadband penetration can increase the GDP of an economy by 1.8 – 2.0%

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Telecommunications

Foreigners to Activate SIMs Every Six Months, Says NCC

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sim card - Investors King

Foreigners exempted from enrolling for the National Identity Number will have to request for Subscriber Identity Module activation every six months up to a period of two years.

The Nigerian Communications Commission disclosed this in its new draft for ‘Business Rules and Operational Processes for Implementation of the National Policy for SIM activation, Replacement and Other Key Telecommunications Operational Processes.

The report said, “SIM activations for foreigners exempted from enrolling for NIN shall be configured for a period of six months in the first instance and can be renewed further upon request and where the visa is not for a stay of two years and above.”

It added, “Foreigners validly transiting through Nigeria or are employed in or reside in Nigeria for less than 24 months are exempted from the mandatory use of NIN requirement. Persons in this category need to provide justification that they will be residing in Nigeria for less than two years.”

It said if such foreigner failed to request for SIM activation at the end of the six-month period, the SIM would be deactivated.

For foreigners staying in the country for more than two years, it is required for them to register for NIN as well as fully register their SIMs.

“NIN is mandatory for foreigners with legal residency status or those living in Nigeria for two years and above. For those who do not already have a NIN, mobile network operators shall capture the resident’s details for NIN issuance as part of the NIN enrolment process, upon presentation of resident’s permits,” it stated.

The Punch had earlier reported that foreigners not staying in Nigeria for up to two years do not need a NIN to register SIM cards, according to the Revised National Identity Policy for SIM Card Registration.

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