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Airtel And MTN Nigeria Pay The Sum of N117.4 Billion to Renew 3G Spectrum Licences

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Telecommunications - Investors King

Telecommunications giants Airtel and MTN Nigeria have paid the sum of N117.4 billion to the Nigerian Communications Commission (NCC) for the renewal of 3G spectrum licenses for 15 years.

This is coming amid their investments in the 4G expansion and the recent 5G rollout in the country.

Airtel Nigeria paid the sum of N58.7 billion for the 2×10 MHz 2100 MHz spectrum license, while MTN paid the same amount for the renewal of the 3G license.

Speaking on its renewal, Airtel said, “This investment to renew the license reflects our continued confidence in the opportunity inherent across the Nigerian market, supporting the local communities and economies through furthering digital inclusion and connectivity”.

On the other hand, MTN said, “Having accepted NCC’s offer to renew our 2100MHz spectrum for a period of 15 years, effective May 1, 2022, to April 20, 2037, MTN Nigeria has paid N58.66 billion to NCC. The 2100MHz spectrum license enables the provision of 3G mobile services on our network”.

Both companies had their previous licenses for the 3G spectrum expired at the end of April 2022. Their recent license renewal will see it valid till April 2037. Despite their investments in 3G, the two operators said they remain committed to forging ahead with the expansion of 4G networks and 5G rollout.

While there had been concerns that the operators might shut down their 3G service to concentrate their investments in the new generation networks, 4G and 5G, the 3G license renewal has no doubt doused the tension.

Investors King also understands that both companies’ recent renewal of the 3G licenses has raised hope for rural connectivity as it is a strategic effort to bridge the rural-urban connectivity gap.

Also, it is worth noting that the Nigerian Communications Commission (NCC) granted MTN Nigeria approval to rent two spectrums, from the Natcom Development and Investment Limited (NTEL), for N4.25 billion, as it plans to widen broadband services in the country.

Notably, while Nigeria and other countries in Africa are planning to pick up the pace of 5G deployment, the continent is the only region where no 2G or 3G shutdowns have been announced so far.

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Telecommunications

Network Service Providers in Nigeria Lose Millions of Voice Subscribers as Broadband Penetration Drops

Network service providers in Nigeria have reportedly lost about 2.5 million voice subscribers as broadband internet penetration declines.

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Network service providers in Nigeria have reportedly lost about 2.5 million voice subscribers as broadband internet penetration declines.

The significant increase which was recorded in the country’s telecom sector this year seems not to have been sustained after it saw a slight downward trajectory.

The sector which recorded 227.1 million subscribers in February, fell to 226.2 million in March which saw about 1.5 million subscribers SIM become inactive. The downward trend continued to March falling to 223.7 million subscribers.

Reports reveal that the decline in subscribers negatively impacted the country’s tele density which saw it fall from 118.4 percent in March to 117.1 percent by the end of April. Also, penetration in the broadband segment declined from 48.21 percent to 48.14 percent.

Meanwhile, Internet users on the narrow band (GSM) platform increased by 678,485, where operators moved from 156.9 million in March to 157.6 million by April.

On active voice subscriptions, MTN has continued to lead as it recorded 39.7 percent penetration and 88.6 million users, while Globacom had a 27.3 percent market share with 60.3 million users. Airtel occupied the third position with 60.3 million customers and 27 percent penetration, and 9mobile had 13.4 million users and 6% penetration.

Investors King understands that the decline in voice subscribers in the telco sector could be attributed to the cash crunch that ravaged the country between February and March. This was a fallout of the Central Bank of Nigeria’s (CBN) policies on naira redesign and cash withdrawal limit, targeted at boosting the country’s cashless policy.

Nigeria, through the New National Broadband Plan (2020 to 2025) hopes to deepen internet penetration in the country by 70 percent, however, with the decline of voice subscribers recorded, it has posed a challenge to the country’s broadband plan.

In order to ensure to meet up its national broadband plan, Nigeria must ensure to eliminate factors that could hamper the penetration of internet service in the country, as it could also affect the nation’s GDP, as Broadband penetration is directly proportional to GDP.

A 2009 report by the World Bank estimated that for every 10% increase in broadband in developed nations, GDP will grow by more than 1%.

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Vodafone Plans to Sell M-Pesa For $1 as The Company Simplifies Its Management

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Leading technology communications company in Europe and Africa, Vodafone plans to sell M-Pesa to Safaricom for $1 as it plans to simplify its management.

After Vodafone announced its first quarter (Q1) results for the year ended in March, the company entered into an agreement in April with Safaricom to sell MPHCL. MPHCL holds M-Pesa customer funds on trust for the benefit of M-Pesa customers in Kenya. Any profit generated by MPHCL, after defraying direct costs, is donated for use for public charitable purposes only.

Notably, Vodafone stated that no material gain or loss is expected to arise on disposal, as completion of the transaction is subject to various approvals, which are expected to be obtained before or during July 2023.

Vodafone wrote,

“Balances included in the Group’s consolidated financial statements for MPHCL on 31 March 2023 include short-term investments of €1,247 million and €1,226 million, due to M-Pesa customers, recorded within other investments and other creditors, respectively.

“These sums are shown in the group’s consolidated financial statements in accordance with IFRS, but MPHCL acts as the independent trustee for M-Pesa customers, independently administering the trust and holding all funds from the M-Pesa customers on trust for the benefit of M-Pesa customers.

It is worth noting that Vodafone has a controlling stake of 65.1% in M-pesa and a 5% indirect equity in Safaricom, and the transfer of the assets to Safaricom came as the company looks set to simplify its management.

An amendment to the trust deed creating M-Pesa Holding, which was published by Safaricom, however, shows that Vodafone was unconstrained in the use of interest income derived from the mobile money cash pool

Investors King understands that the deal will see Safaricom have full control of the platform that started in Kenya. Reports reveal that the move will boost Safaricom’s cash flows in addition to providing interest income if Safaricom invests M-Pesa user deposits in short-term securities.

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MTN Nigeria Gains Massively as Thousands of Subscribers Migrated Across Various Networks in Q1 2023

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Telecommunications giant MTN Nigeria experienced substantial gains in Q1 2023 as thousands of subscribers switched networks, according to data published by the Nigerian Communications Commission (NCC).

MTN emerged as the sole beneficiary among the four mobile operators, as 6,855 subscribers ported across networks.

In this period, 4,765 customers migrated from Airtel, Glo, and 9mobile to MTN. Airtel gained 1,173 subscribers from other networks, while Glo attracted 620 customers through porting. However, 9mobile suffered the most significant loss, with 4,309 subscribers departing its network.

Subscribers cited various reasons for porting, such as more affordable call/data rates, improved service quality, enticing packages offered by other operators, and promotional offers.

MTN’s success in attracting a significant portion of the ported subscribers can be attributed to its 5G service, which provides high-speed internet. MTN became the first mobile network operator to introduce 5G in Nigeria in September, and it has since focused on expanding its home broadband strategy, resulting in a substantial increase in its subscriber base.

The deployment of 5G technology has enabled MTN to offer faster speeds, lower latency, and unlock new use cases for consumers and enterprises. The network’s efforts in this area have contributed to a 14.6 percent rise in its active user base to 38 million, as well as a 68.7 percent surge in fintech active subscribers to 11.2 million.

MTN remains committed to supporting communities, investing in the coverage and capacity of its 4G network, and expanding its 5G sites. The network emphasizes expense efficiencies and disciplined capital allocation.

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