Telcos lose N485m as subscribers cut living costs, prioritise survival above luxuries
By Jeph Ajobaju, Chief Copy Editor
Mobile phone subscriptions decreased by 6.1 million in the second quarter of the year to June (Q2 2023) as economic hardship forces Nigerians to cut the cost of living by prioritising basic necessities above luxuries.
MTN and Airtel declared a total loss of N485.69 billion revenue, with the subscriber base dropping from 225.82 million in December 2022 (Q4 2022) to 219.77 million in Q2 2023), as shown in data compiled by the Nigerian Communications Commission (NCC).
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Mixed fortunes spread across the four major carriers – MTN Nigeria, Airtel Africa, Globacom, and 9mobile.
MTN shed 6.89 million subscribers to reduce its total numbers to 84.66 million, and Airtel (37,828) to close the quarter with 60.19 million.
Both Glo and 9mobile gained subscriptions, with Glo netting 533,582 to reach 61.33 million, and 9mobile adding 437,823 to clinch 13.58 million.
Teledensity, the number of active telephone connections per 100 residents of an area, declined from 118.48 per cent in Q1 2023 to 115.30 per cent in Q2 2023.
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Factors contributing to decline
Experts and industry players blame the decline on the impact of economic crisis, naira scarcity, and decline in purchasing power, according to The PUNCH.
“We continued to experience headwinds in our operating environment in the first quarter of 2023,” MTN Chief Executive Officer Karl Toriola said of the company’s Q1 2023 report.
“The impacts of the ongoing global macroeconomic and geopolitical developments on energy, food, and general inflation were exacerbated locally by petrol and cash shortages experienced during the period.
“This placed additional pressure on economic activity, consumers, and businesses.”
The NCC raising the minimum age to own a telephone handset from 16 to 18 years also affected the active subscriber base.
“In Q2, we implemented the minimum age requirement for SIM registration from 16 to 18 years, which impacted the run rate of gross connections and active data subscribers in the quarter,” MTN explained in its financials.
MTN and Airtel disclosed in their second quarter/half-year reports they lost a combined N485.69 billion to the fall in naira value.
They said the steep devaluation of naira following the attempt by the Central Bank of Nigeria (CBN) to close the gap between the official and parallel rates also negatively impacted their businesses.
Naira value has taken a beating since the CBN directed banks to remove the rate cap on the currency at the official Investors’ and Exporters’ (I&E) Window of the foreign exchange (forex) market.
“The Central Bank of Nigeria wishes to inform all authorised dealers and the general public of the following immediate changes to operations in the Nigerian Foreign Exchange Market: Abolishment of segmentation. All segments are now collapsed into the Investors and Exporters Window,” the CBN said.
This was to allow for a free float of naira against the dollar and other global currencies.
Volatile forex market
On June 14 when the CBN made the announcement, naira closed trading at 664.04/dollar on the I&E window from 471/dollar the previous day. Since then, naira has fluctuated heavily, but trading consistently above N700/dollar.
According to MTN, there was a 60 per cent movement in the exchange rate, which led to a N131.50 billion forex loss for the firm.
“Net finance costs increased by 164.3 per cent due to increased borrowings and an unrealised forex loss of N131.5bn (H1 2022: N13.6bn) on our net foreign currency liabilities following the significant devaluation of the naira,” MTN explained.
“Overall, profit after tax (excluding non-controlling interest) declined by 29.3 per cent but would have been up by 13.4 per cent excluding the forex loss.
“These policy reforms are expected to be positive for the economy in the medium to long term.
“However, in the short term, they have created additional financial burdens on consumers and businesses, and these will be fully reflected in the pressures on our margins in H2.”
Airtel declared N354.19 billion ($471 million) in forex loss and another loss of $151 million.
“Profit after tax was negative ($151m) driven largely by a foreign exchange loss of $471m recorded in finance cost before tax and $317m after tax because of the devaluation of the Nigerian naira in the month of June 2023,” the network explained.
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