Telecommunications

Nigeria’s Monthly Internet Usage Skyrockets by 501.99% in Just 5 Years

Published

4 months ago

May 27, 2024

Nigeria’s digital landscape has transformed in the past five years with monthly internet usage soaring by an astonishing 501.99%.

The surge in online activity, driven primarily by the proliferation of streaming services and other digital platforms, has bolstered the country’s internet usage.

According to data from the Nigerian Communication Commission (NCC), monthly internet usage has surged from 125,149.86 terabytes (TB) in December 2019 to 753,388.77 TB as of March 2024.

This exponential growth reflects a fundamental shift in how Nigerians access and consume information, entertainment, and services.

The COVID-19 pandemic acted as a catalyst for this surge in internet usage, as lockdowns and social distancing measures compelled individuals and businesses to rely heavily on online platforms for work, education, and social interactions.

Video conferencing, online learning, and virtual events became the norm, driving up demand for internet access across the country.

“The year 2020 witnessed a significant surge in data usage… The increase in data usage is directly linked to the outbreak of the COVID-19 pandemic, which disrupted normal activities, and most functions had to be held virtually including schools, corporate meetings, etc.,” stated the NCC in its 2020 industry report.

Streaming services emerged as a major driver of internet consumption, with platforms like YouTube, Netflix, and Spotify experiencing a surge in users.

Adetutu Laditan, Senior Product Marketing Manager for Sub-Saharan Africa at YouTube, noted, “We have a lot more users coming online and consuming more content… Trends are changing; digital is here to stay… For instance, more Nigerians are watching Nollywood movies on YouTube.”

The shift towards digital consumption was further fueled by the availability of a vast library of free content on the internet.

Nigerians, both young and old, have embraced online platforms for entertainment, education, and communication, contributing to the exponential growth in internet usage.

Karl Toriola, the CEO of MTN Nigeria, highlighted the changing consumption patterns, stating, “A lot of people are shifting their consumption from traditional voice and circuit switch services to data services…”

According to GSMA, 85% of Nigerians on mobile internet use it for video calls, 75% for watching online videos, and 54% for listening to music online.

The surge in internet consumption has not only transformed the way Nigerians interact with the digital world but also presented significant opportunities for economic growth.

The information and communications technology sector, buoyed by increased data service consumption, has remained resilient even during periods of economic uncertainty.

Despite the growth in internet usage, challenges persist, including broadband penetration below 50%, urban-rural disparities in internet access, and fluctuating internet speeds.

Also, the high cost of smartphones remains a barrier to many Nigerians, hindering widespread adoption of digital technologies.

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Samed Olukoya

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

Telecom Firms Face N56 Billion Monthly Diesel Bill Amid Power Woes

Published

3 days ago

September 25, 2024

Samed Olukoya

The Association of Licensed Telecommunications Operators of Nigeria (ALTON) has said telecommunication companies spend 35 percent of their operating expenses on diesel due to the unreliable electricity supply in Nigeria.

According to industry estimates, telecom operators use an average of 40 million liters of diesel per month to power their sites. The price of diesel jumped to N1,406.05 per liter in August 2024, representing a 64.58 percent increase from N854.32 per liter in August 2023, according to the National Bureau of Statistics (NBS).

This implies that the cost of powering Nigeria’s communication infrastructure surged from N34.17 billion in August 2023 to N56.24 billion in August 2024.

Gbenga Adebayo, President of ALTON, confirmed the current diesel consumption, stating, “It will be over that now.” According to Harmanpreet Dhillon, Airtel Nigeria’s chief technical officer, the telco spent N28 billion on diesel in May 2024.

During a media roundtable, Dhillon said that the company was exploring hybrid solutions—lithium batteries and solar—to lower its energy bill.

McKinsey recently noted that companies could save up to 30 percent on energy costs by adopting renewable energy solutions and other technologies.

“The biggest constraint in the telecom industry is high energy cost. If the government had continued to fulfill its part of the bargain it made in the early 2,000s to provide 18 hours of electricity, the heavy logistics and the capital we spend today from powering sites would not be there,” said Adebayo of ALTON.

Telecommunications

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

Published

1 month 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

1 month 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.