Foreign investment in Nigeria’s telecom dips 77% YoY
By Jeph Ajobaju, Chief Copy Editor
Foreign investment in the telecom sector dropped 77.35 per cent year-on-year (YoY) in the first half of the year (H1 2023) despite MTN having rolled out 5G services in the country for more than a year.
Total capital importation into telecom was $47.86 million in H1 2023, a huge slide compared with $211.29 million in H1 2022.
The H1 2023 figure represents a four-year low since the sector rebounded from $36.85 million in H1 2019.
National Bureau of Statistics (NBS) data shows a sustained slowdown of telecom foreign investment with the total dipping 30.42 per cent to $2.16 billion in the period under review from $3.11 billion in the preceding period.
“In Q2 2023, total capital importation into Nigeria stood at US$1,030.21 million, lower than US$1,535.35 million recorded in Q2 2022, indicating a decrease of 32.90 per cent.
“When compared to the preceding quarter, capital importation fell by 9.04 per cent from $1.13bn in Q1 2023,” the NBS said, per The PUNCH.
Growth in foreign investment in telecom is hampered by insecurity challenges, geographical problems, and more.
Former Nigerian Communications Commission (NCC) Executive Vice Chairman Umar Danbatta recently lamented how insecurity impacts long-term planning and investment in the sector.
When 5G was rolled out in August 2022 it was predicted to headline network investment and drive foreign investment into the sector. This has not been the case.
The NCC recently disclosed 5G subscription has grown to 500,000.
According to the GSMA, telecom firms would need to invest about $500 million to build 6,000 base stations to roll out 5G in the top 10 cities in Nigeria.
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Low smartphone ownership, poor infrastructure drag full digital inclusion
Low smartphone penetration and poor infrastructure combine to drag full digital inclusion in Nigeria as telecom operators say they lack the huge investment required to extend coverage to rural areas.
The NCC announced last month that 2G is the dominant technology in the mobile market with 60.32 per cent of Nigeria’s 220 million mobile subscriptions on 2G network in August 2023.
The NCC breaks down the subscriptions as 4G being at 28.07 per cent, 3G (10.78 per cent), and 5G (0.83 per cent) – showing low smartphone ownership despite investments by network carriers.
Statista says only about 10 to 20 per cent of the Nigerian population owns smartphones, and Alliance for Affordable Internet estimates the number with access to smartphones at 44 per cent.
However, MTN disclosed the number of smartphones on its network increased by 1.8 million, bringing its smartphone penetration to 53 per cent in the first half of 2023 (H1 2023).
It said it grew data revenue 34.9 per cent due to increased usage supported by network expansion and smartphone penetration.
MTN attested its 4G network covers 80 per cent of the population, and competitor Airtel claimed almost 100 per cent of its sites in Nigeria currently deliver 4G.