Telecommunications

Cost of Data to be Reduced as FG Plans to Launch ‘Dig Once’ Policy

The Federal Government has said it would launch the ‘Dig Once’ policy before the end of the year to lower the cost of infrastructure deployment for telecommunications companies and subsequently reduce the cost of telecommunications services for Nigerians.

Published

2 years ago

October 22, 2022

Investors King

In a bid to reduce the cost of broadband infrastructure, the Federal Government has said it would launch the ‘Dig Once’ policy before the end of the year to lower the cost of infrastructure deployment for telecommunications companies and subsequently reduce the cost of telecommunications services for Nigerians.

The Minister of Communications and Digital Economy Prof. Isa Pantami made the announcement while speaking at the fourth edition of the Policy Implementation Assisted Forum (PIAFo) on Dig Once Policy and Fibre Strategy in Nigeria with the theme: Laying the Foundation for Ubiquitous Broadband for Nigeria’s Economic Breakthrough.

The minister who was represented by Engineer Usman Aliyu, Secretary of the Broadband Implementation Steering Committee (BISC) stated that by implementing the ‘Dig Once’ policy, the government seeks to achieve 70% broadband penetration by 2025.

He said, “Some of the objectives of the policy are provisioning of shared infrastructure for existing internet service providers and entrants, promotion of installation of ready-made buried fiber conduit for broadband deployment, and reduction of the barriers to entry for Internet Service Providers.

“Others are to promote coordination and reduce the number of excavations and disruptions caused due to fiber installation works, to lower the cost of broadband internet service deployment, to promote the joint installation of infrastructures in a single phase and avoid unnecessary future digging as well as encouraging infrastructure, and to promote a unified and affordable pricing regime across the federation for Right of Ways.”

He further disclosed that once the policy begins to function in the country, there would be lower costs of repair and maintenance of installed fiber infrastructure and a lower cost of broadband internet service deployment.

This new policy was announced a few days after the government directed all telecommunications operators to revert to the old price and abolish the 10 percent increase on data and calls previously imposed on Nigerians.

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Telecommunications

MTN Nigeria Revises IHS Lease Terms, Aims for N100 Billion Yearly Savings

Published

4 weeks ago

August 20, 2024

Samed Olukoya

MTN Nigeria, one of the country’s leading telecommunications giants, has successfully renegotiated its tower lease agreements with IHS Towers, a strategic move expected to save the company approximately N100 billion annually.

This renegotiation is a significant step in MTN Nigeria’s ongoing efforts to improve its financial performance amid Nigeria’s challenging business environment.

The revised terms of the lease agreements introduce several critical changes aimed at reducing operational costs and mitigating the impact of Nigeria’s volatile currency fluctuations.

The new agreements reduce the US dollar-indexed component of the leases, which has now been linked to a discounted U.S. consumer price index (CPI).

This change is crucial in lowering MTN Nigeria’s exposure to the fluctuating naira, providing the company with a more predictable and stable cost structure.

Also, the renegotiation removes technology-based pricing, simplifying the company’s cost framework. Payments for tower upgrades will now be based on tower space and power consumption, rather than the technology deployed on the towers.

This shift is expected to bring more clarity and control over MTN Nigeria’s infrastructure expenditure.

Another key aspect of the renegotiation is the introduction of an energy cost component indexed to the cost of diesel power.

Given Nigeria’s unreliable power supply, telecom companies like MTN Nigeria rely heavily on diesel generators to power their infrastructure.

By linking energy costs to diesel prices, MTN Nigeria can better manage these expenses, which have historically been a significant burden on its operations.

The renegotiated terms also include provisions for discounts and incentives over the life of the contracts, further enhancing the financial benefits for MTN Nigeria.

These changes are expected to boost the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) margin, positioning it for stronger financial performance in the coming years.

MTN Nigeria’s strategic renegotiation comes at a time when the telecommunications industry is grappling with increasing operational costs and economic instability.

The savings generated from these new lease terms will not only improve the company’s bottom line but also allow it to reinvest in critical infrastructure and expand its services across the country.

As MTN Nigeria continues to navigate the complexities of the Nigerian market, the successful renegotiation of its tower lease agreements with IHS Towers underscores its commitment to maintaining financial stability and delivering value to its shareholders.

The telecom giant’s proactive approach to cost management and risk mitigation sets a positive precedent for other companies in the industry facing similar challenges.

Telecommunications

Airtel Africa Launches $50 Million Share Buy-Back Programme

Published

4 weeks ago

August 19, 2024

Samed Olukoya

Airtel Financial Results - Investors King

Airtel Africa, a major player in telecommunications and mobile money services across 14 African nations, has announced the initiation of the second tranche of its $100 million share buy-back programme.

This latest phase is a significant step following the completion of the programme’s first tranche earlier this year.

The buy-back programme, which commenced today, aims to enhance shareholder value by reducing the company’s capital through the repurchase and cancellation of its own shares.

The second tranche is expected to conclude by December 19, 2024. Airtel Africa has engaged Citigroup Global Markets Limited (Citi) to facilitate this phase of the buy-back.

Under this agreement, Citi will conduct on-market purchases of Airtel Africa’s ordinary shares, with the company subsequently acquiring these shares from Citi.

Citi will operate as a riskless principal and will make purchase decisions independently of Airtel Africa.

“The purpose of this buy-back programme is to reduce the capital base of the Company, thereby benefiting our shareholders through increased value per share,” stated a spokesperson from Airtel Africa. “All shares repurchased under this programme will be cancelled.”

The share buy-back transactions will be conducted within the framework of pre-set parameters outlined in the agreement between Airtel Africa and Citi.

These transactions will adhere to the guidelines established by the Company’s general authority to repurchase shares, as granted by its shareholders during the annual general meeting held on July 3, 2024.

At that meeting, shareholders approved the purchase of up to 374,141,187 ordinary shares.

In compliance with regulatory standards, the buy-back will be conducted according to Chapter 9.6 of the Financial Conduct Authority’s UK Listing Rules and the Market Abuse Regulation (EU) No 596/2014, as incorporated into UK domestic law.

Market Impact and Outlook

This strategic move comes as Airtel Africa seeks to optimize its capital structure and deliver value to its investors.

The share buy-back programme is anticipated to reduce the number of outstanding shares, potentially increasing the value of each remaining share and reflecting positively on the company’s stock performance.

The commencement of the second tranche follows the successful execution of the first tranche, demonstrating Airtel Africa’s commitment to shareholder returns and capital management.

The company’s decision to continue with the buy-back programme highlights its confidence in the long-term growth prospects and stability of its operations across the African continent.

Telecommunications

MTN Records First Loss in Seven Years Due to Naira Devaluation

Published

4 weeks ago

August 19, 2024

Samed Olukoya

MTN Group Ltd., Africa’s largest wireless carrier by revenue, has reported its first loss in seven years due to the steep devaluation of the Nigerian naira.

The company announced a loss of 7.39 billion rand ($414.7 million) for the first half of 2024, a stark contrast to the 4.14 billion rand profit it recorded during the same period last year.

The loss marks MTN’s first since 2016, when the company was hit with a massive fine exceeding $1 billion by the Nigerian government.

This time, however, the company’s financial setback is largely attributed to the economic challenges in Nigeria, one of its most critical markets.

Since President Bola Tinubu took office in May 2023, the naira has depreciated by more than 70% against the U.S. dollar, severely impacting MTN’s revenue in the region.

Nigeria, Africa’s most populous nation, contributes nearly a third of MTN’s total earnings, making the devaluation a significant blow to the company’s overall financial health.

Currency devaluations in other African markets, such as South Sudan, have also compounded MTN’s financial difficulties.

Despite these challenges, the group managed to increase its total customer base by 0.8%, bringing its total number of subscribers to 288 million.

However, the ongoing conflict in Sudan and MTN’s recent exit from Afghanistan have led to a decline in users in those regions.

MTN’s Chief Executive Officer, Ralph Mupita, revealed that the company is considering further exits from specific markets as part of its strategy to stabilize operations.

The company is currently in discussions to divest from its Guinea Conakry unit and plans to reduce its stake in the Nigerian business to as low as 65% by selling shares to local investors. MTN currently holds a 73% stake in its Nigerian operations, according to data compiled by Bloomberg.

Despite the financial challenges, MTN remains committed to its long-term growth strategy in Africa. The group continues to focus on expanding its digital and fintech services, which are seen as key drivers of future revenue.

However, the current economic conditions in some of its major markets, particularly Nigeria, underscore the volatility and risks that come with operating in the region.

As MTN navigates these turbulent waters, the company’s ability to adapt to the rapidly changing economic landscape in Africa will be critical to its future success.

Investors and stakeholders alike will be closely watching how MTN manages its operations in Nigeria and other key markets in the coming months.