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Telecoms ‘Will be The Fastest Growing African Business Sector’

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The telecoms sector will be the fastest-growing industry in Africa over the next five years as internet connectivity improves, new research with business leaders for blockchain-based mobile network operator World Mobile shows.

When asked to pick the three sectors that they believe will see the strongest growth over the next five years, three out of four (75%) senior executives selected telecoms in the study.

It was comfortably ahead of the healthcare sector which emerged as the second choice selected by 61% of survey respondents as one of three industries that will see the strongest growth ahead of tourism at 44%

Senior executives at companies with combined annual revenues of more than $6.75 billion based in Tanzania, Angola, Botswana, Cameroon, Ethiopia, Ghana, Nigeria, and South Africa were interviewed for the study.

Improvement in internet connectivity was identified as central to growth in the economy and across all sectors. Around two-thirds (66%) say it is important while 20% believe it is very important. The table below shows which sectors senior business executives believe will be the fastest-growing over the next five years.

SECTOR HOW MANY EXECUTIVES BELIEVE IT WILL BE ONE OF THE TOP THREE FASTEST GROWING SECTORS IN AFRICA OVER THE NEXT FIVE YEARS
Telecoms 75%
Healthcare 61%
Tourism 44%
Financial services 36%
Retail 36%
Manufacturing 22%
Education 22%

World Mobile is helping to revolutionise internet connectivity in sub-Saharan Africa and is already working with the government in Zanzibar where it is launching a unique hybrid mobile network delivering connectivity supported by low altitude platform balloons.

Its blockchain-based network vastly reduces capital expenditure and cuts costs compared to traditional telecom operators. World Mobile is in discussions to expand in Tanzania and Kenya, as well as other territories underserviced by traditional mobile operators.

Micky Watkins, CEO of World Mobile said: “The expansion of telecoms across the African continent is central to driving economic growth and senior business executives clearly agree as they rank it well ahead of other major sectors of the economy.”

“To a great extent, growth in telecoms spurs growth in other sectors as societies become more digital and technology focused and that applies very much to financial services, healthcare, retail and education.”

“Not all parts of Africa however have strong internet connectivity and we want to help by providing a service which is affordable and reliable and look forward to working with governments across the continent.”

World Mobile’s balloons will be the first to officially launch in Africa for commercial use, offering a more cost-effective way to provide digital connection to people and is the first step in its mission to help bring nearly four billion people online before 2030 in line with the UN and World Bank’s SDGs.

The World Mobile approach is more sustainable, in environmental, social and governance terms. Environmental impacts are mitigated using solar-powered nodes, second-life batteries, and energy-efficient technology. World Mobile creates a positive societal impact through the application of its circular economy model – a “sharing economy” where locals share in the ownership and rewards of the network.

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Telecommunications

MTN Nigeria Strengthens Working Capital By Raising N50bn In New Commercial Paper

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MTN Nigeria Communications PLC (MTN Nigeria) has disclosed plans to raise N50 billion through its latest issuance of commercial paper (CP) to boost its working capital.

The plan is under N250 billion Commercial Paper Issuance Programme.

Not only that this Series 11 and 12 CP issuance is expected to strengthen MTN Nigeria’s short-term working capital, it will also diversify its financing base.

A notification to the Nigerian Exchange Limited and the investing public further revealed that this proposed issuance is part of MTN Nigeria’s ongoing strategy to tap the debt market as a flexible funding source to meet immediate financial needs.

It builds upon the company’s series of CP issuances in the past year as it pursues a robust approach to balance its capital structure.

The funds are expected to support the company’s operational and growth requirements as it seeks to expand its infrastructure, improve service delivery, and cater to the increasing demand for telecommunications and digital services across Nigeria.

MTN’s financial statement as of September 2024 suggests it has negative working capital of about N1.49 trillion

The cash flow is necessary in order to enable the company meet cash flow demands and service short-term debt without over-relying on long-term financing

This approach provides financial flexibility, allowing MTN Nigeria to manage interest costs and adjust its debt profile in line with operational cash flow, which is critical for a company with significant external loans.

The issuance also serves the broader purpose of diversifying MTN Nigeria’s financing sources, reducing reliance on bank loans, and maintaining a balance between short- and long-term debt.

This financial strategy not only enhances MTN’s liquidity but also positions it to better withstand the economic challenges in Nigeria’s volatile business environment.

While the company has yet to disclose specific terms of the Series 11 and 12 notes, further details are expected to be shared in the coming weeks.

 

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MTN Nigeria Posts 33.6% Revenue Growth Despite Subscriber Drop in 2024

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MTN Nigeria Communications Plc’s total subscribers decreased by 0.9% to 77 million in the nine months ended 30 September 2024.

In the company’s unaudited financial statements, active data users increased by 5.1% to 45.3 million while mobile money wallets decreased by 21.8% to 2.8 million.

Service revenue rose by 33.6% to N2.4 trillion. See other details below.

Key Financial Highlights points:

● Total subscribers decreased by 0.9% to 77.0 million, impacted by the NIN-SIM regulations
● Active data users increased by 5.1% to 45.3 million
● Active mobile money (MoMo PSB) wallets decreased by 21.8% to 2.8 million
● Service revenue increased by 33.6% to N2.4 trillion
● Earnings before interest, tax, depreciation and amortisation (EBITDA) decreased by 5.3% to N860.2 billion
● EBITDA margin decreased by 14.9 percentage points (pp) to 36.3%
● Loss after tax was N514.9 billion (Q3 2024 profit after tax of N4.1 billion)
● Profit after tax (PAT) adjusted for the net forex loss was N118.5 billion, down 59.2%
● Earnings per share (EPS) was negative N24.51 kobo (positive N5.65 kobo adjusted for the forex loss, down 59.2%)
● Closing retained earnings and shareholders’ funds of negative N723.0 billion and N573.6 billion, respectively
● Capital expenditure (capex) excluding leases was down 27.8% to N217.6 billion
● Positive free cash flow of N536.8 billion, an increase of 21.9%

Commenting on the company’s performance, MTN Nigeria CEO Karl Toriola “In the first nine months of 2024, we sustained the growth in our underlying operating performance – underpinned by our resilient business model and operational agility –despite challenging conditions.

The inflation rate remained elevated amidst rising energy prices and naira depreciation. Inflation averaged 32.8% in the nine months (Q3 2024: 32.8%) compared to an average of 24.5% in 2023 (Q3 2023: 25.5%). To curb inflation, the Central Bank of Nigeria (CBN) increased the Monetary Policy Rate (MPR) by 8.5pp to 27.25% during the period, resulting in higher funding costs, although this helped reduce volatility and improve liquidity in the forex market.

The higher inflation and interest rates weighed on consumers’ spending power and impacted business activity. However, we remain focused on enhancing operational efficiency and driving the growth of our commercial operations.

Additionally, the naira closed at the Nigerian Autonomous Foreign Exchange Market (NAFEM) in September 2024 at N1,542/US$ (December 2023: N907/US$), exerting pressure on business activity. The improvement in liquidity in the foreign exchange (forex) market has helped us reduce our exposure to foreign currency-denominated
obligations.

We continued to manage the effects of the Nigerian Communications Commission’s (NCC) industry-wide NIN-SIM directive, which has impacted the evolution of our customer base. Having implemented the directive with all our subscribers fully compliant, we continue our drive towards reconnecting those affected to reduce churn
while extracting increased value from the market.

Sustained commercial momentum notwithstanding the macro headwinds

Our commercial momentum drove broad-based growth across all revenue segments, demonstrating the underlying strength and resilience of the business. We recorded an increase in service revenue of 33.6%, which was ahead of the average inflation rate in the period. This growth was led by data and supported by voice, fintech and digital
services.

We recorded a 9.8% increase in voice traffic and a 42.1% increase in data traffic. In addition, data usage per user grew by 31.2% to 11.3GB, supported by the rising demand for data and digital services, which has contributed to revenue growth.

In the fintech business, we focused on executing our growth strategy, prioritising increasing wallet quality, focusing on advanced services and the MoMo PSB app to enhance the user experience and engagement. We have introduced cross-border remittances with thirteen fellow African countries to boost adoption and monetisation.

Taking advantage of their interoperability, we are now leveraging the existing network of agent and merchant ecosystem in the industry to bring our services closer to our customers.

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Elon Musk’s Starlink Suspends Internet Subscription Price Hike for Nigerian Users 

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Starlink, the satellite internet service owned by Elon Musk’s SpaceX, has suspended its earlier announced price increase for Nigerian users.

A message from the Starlink Team on Thursday noted that the suspension of the price hike is temporary, adding that the latest decision is to navigate regulatory challenges.

Investors King had on October 2 reported that the internet service inflated its prices owing to rising inflation in Nigeria.

The monthly subscription fee had risen by 97 percent, from N38,000 to N75,000, as customers expressed displeasure over the significant increment.

Starlink had also said that new users would also face a higher cost for the Starlink kit (hardware for installation), which was to be priced at N590,000, a 34 percent increase from the previous price of N440,000.

Meanwhile, about 22 days after, the internet company rescinded its decision to increase the price, citing some regulatory challenges.

Even though the company stated that the increment would have enabled it to deliver reliable service for its users, it pointed out that it could no longer proceed with it in the meantime.

According to the company, it needed regulatory support to make the improvements necessary for a better customer experience.

While assuring customers who had already subscribed to packages carrying the hiked prices that their account would be credited, the company declared that users could still cancel their services.

The message by Starlink to its customers read, “Last month, we increased the monthly service price for Starlink in Nigeria to account for inflation, helping us maintain operations and continue delivering reliable service.

“Today, we are temporarily suspending this price increase as we navigate regulatory challenges.

“If you’ve already been charged at the higher rate, a one-time credit will be applied to your account to cover the difference. You also have the flexibility to cancel your service at any time.

“We remain committed to providing high-speed Internet in Nigeria, but we need regulatory support to make the improvements necessary for a better customer experience. Without these approvals, our ability to continue delivering service is at risk.

“Thank you for choosing Starlink and supporting our mission to bring affordable, high-speed internet to more people as many people around the world as possible.”

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