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Ambitious Target for Broadband Penetration – Coronation Merchant

Internet subscriptions stood at 152.3 million in August ’22, representing an increase of 0.2% m/m and 8.6% y/y

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The latest data released by the Nigerian Communications Commission (NCC), the industry regulator, show that internet subscriptions stood at 152.3 million in August ’22, representing an increase of 0.2% m/m and 8.6% y/y.

On a month-on-month basis, there were 261,094 new subscribers, which is the lowest m/m increase recorded this year. Anecdotal evidence points towards weaker spending capacity among consumers, following the upticks in the headline inflation. We assume that to manage costs, consumers are reducing their usage of multiple
devices that require SIMs to access the internet.

MTN Nigeria (MTNN) accounted for the largest share (42%) of internet subscriptions in August ‘22. Meanwhile, Globacom, Airtel, and 9Mobile accounted for 28%, 27% and 3% of total subscriptions, respectively. Among these mobile network operators, Globacom and MTNN recorded m/m increases in internet subscriptions at 1.2% and 0.2% respectively.

Meanwhile, Airtel and 9mobile both recorded declines of -0.5% and -2.9% in total subscriptions.

Regarding market share by mobile network operators, MTNN accounted for 37.9% of total internet subscriptions. Based on MTNN’s Q2 ’22 results, service revenue grew by 18% y/y.

This was due to significant growth in data (+50.6% y/y). The increase in data consumption can be largely attributed to a y/y increase in active data subscriptions, increased usage (average MB per user rose by 61.8% y/y) and data traffic (+79.3% y/y). These increases were supported by expansion in network capacity and deeper 4G penetration. Notably, 4G coverage increased to 77.9%, compared with 71.7% in Q1 ‘22.

In August, broadband penetration marginally increased to 44.7%, compared with 44.5% recorded in July ’22. Based on local newswires, MTNN and Airtel increased the prices of their internet data services by c.10% in October. This may impact the pace of achieving the FGN’s broadband penetration in the next three years. For context, the FGN had set a target of 90% penetration by 2025.

This is compared with African countries such as Morocco (84%), Egypt (71%) and South Africa (68%).

Furthermore, rising inflation continues to pose as a key risk to consumer spending, given that consumers are seeking affordable data bundles across networks. The latest inflation report shows that the communications segment increased by 11.8% y/y in September ‘22 vs 11.6% y/y recorded in the previous month. Recently, the FGN suspended its plan to introduce a 5% excise duty on voice calls, SMS, and data services.

Excluding the potential macro benefits, deep broadband penetration enhances efficiency and supports socio-economic activities such as improved healthcare services, better public safety and a boost to energy supply on the back of smart grid technology enabled by broadband, among others.

A World Bank analysis shows that every 10% increase in broadband penetration can accelerate GDP growth by about 1.38 percentage points in developing economies. In our view, affordable, reliable and accessible broadband access will assist with bridging the wide digital divide and encourage competitiveness among countries.

Based on the latest national accounts, the ICT sector posted a 6.6% y/y growth in Q2 ’22 and currently accounts for 18.4% of total GDP.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Telecommunications

NCC Files Copyright Infringement Charges Against MTN Nigeria and Others

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Karl O Toriola - Investorsking.com

The Nigerian Copyright Commission (NCC) has taken legal action against MTN Nigeria Communications Ltd. and four individuals, including its Chief Executive Officer, Karl Toriola, over alleged copyright infringement.

The charges, filed in the Federal High Court, Abuja Division, revolve around the unauthorized use of musical works belonging to artist Maleke Idowu Moye.

According to the NCC, the defendants are accused of offering for sale, selling, and trading musical works of Maleke without his consent between 2010 and 2017. These works were allegedly used as Caller Ring Back Tunes without proper authorization.

The musical pieces in question include popular tracks such as “911,” “Minimini-wanawana,” and “Stop racism,” among others.

The commission further alleges that the defendants distributed these musical works to subscribers without authorization, infringing upon the rights of the artist.

The charges are based on provisions of the Copyright Act, Cap. C28, Laws of the Federation of Nigeria, 2004.

As the case awaits assignment to a judge and a fixed date for mention, it marks a significant development in the ongoing efforts to uphold copyright protection in Nigeria’s telecommunications sector.

This legal action underscores the NCC’s commitment to safeguarding the intellectual property rights of artists and creators within the country.

MTN Nigeria, a major player in the telecommunications industry, now faces a legal battle that could have broader implications for how intellectual property rights are respected and enforced within Nigeria’s digital landscape.

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Telecommunications

MTN’s MoMo Sees 32.2% Surge in Transaction Volumes

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MTN Nigeria - Investors King

MTN Group’s mobile money platform, MoMo, has experienced a 32.2% surge in transaction volumes.

With 72.5 million active users, MoMo continues to solidify its position as a leading fintech service provider in Africa, tapping into the continent’s burgeoning mobile banking sector.

The company’s success underscores the growing trend of Africa’s young and tech-savvy population embracing mobile technology to address financial needs.

Mobile phones are increasingly becoming a tool for bridging gaps in services, particularly in banking, presenting a lucrative opportunity for wireless carriers like MTN to capitalize on the burgeoning fintech market.

MTN’s achievement comes as it finalizes a deal with Mastercard Inc., valuing its fintech business at an impressive $5.2 billion.

This strategic partnership further enhances MTN’s position in the digital finance space, positioning it for continued growth and innovation.

However, MTN is not alone in its fintech endeavors. Rivals such as Airtel Africa Plc, Safaricom Plc, and Vodacom Group Ltd. are also making strides in digital transformation, with plans to separate and monetize their fintech businesses in the long term.

Airtel Africa, for instance, is reportedly considering an IPO for its mobile money unit, indicating the high stakes and intense competition within the sector.

Despite the remarkable success in its fintech ventures, MTN faced challenges in its core telecommunications business, with service revenue growth slowing to 6.8%.

Inflation and currency devaluation in key markets, particularly Nigeria, impacted profitability, highlighting the complexities of operating in diverse African markets.

As MTN continues to expand its fintech footprint and invest in infrastructure to enhance connectivity across the continent, it remains poised to capitalize on the immense potential of Africa’s digital economy.

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Telecommunications

Telecom Operators Grapple with Rising Diesel Costs, Spending Hits N50.28 Billion

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Telecommunications - Investors King

As diesel prices continue to soar, Nigeria’s telecom operators are facing mounting challenges with expenditure on fuel hitting N50.28 billion in February.

This represents a 50.20 percent increase from the N33.48 billion spent in the same period last year, reflecting the growing financial burden imposed by escalating fuel costs on the sector.

Diesel serves as a critical component in powering telecom infrastructure, including base stations, which heavily rely on generators due to the country’s unreliable grid electricity.

Industry estimates suggest that operators consume an average of 40 million liters of diesel per month to sustain telecom sites, with prices reaching N1,257.06 per liter in February 2024.

The reliance on diesel for powering essential infrastructure has become increasingly unsustainable, threatening the sector’s operational viability.

Gbenga Adebayo, president of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), emphasized the adverse impact of diesel costs on the industry’s sustainability, noting that infrastructure companies bear the brunt of these expenses.

Adebayo highlighted the urgent need for new pricing regimes to address the widening gap between production costs and current telecom service prices.

While investments in alternative energy sources such as solar power present opportunities for mitigating diesel reliance, challenges such as intermittent supply and vulnerability to theft underscore the complexity of the situation.

The escalating diesel costs have prompted telecom operators to advocate for adjustments in service pricing to ensure the sector’s long-term viability.

As the industry grapples with these challenges, stakeholders are calling for collaborative efforts to address the root causes of the rising fuel expenses and safeguard Nigeria’s telecom infrastructure.

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