• Data expenses N42b higher than quarterly IGRs of 36 states, FCT
• NCC puts data consumption at 753,388 terabytes
• ‘Work from home, switch to 4G and 5G responsible for high usage’
• GSMA claims only 29% of Nigerians are on regular mobile Internet
• FG urged to address industry risks
Despite the rising misery owing to the escalating cost of living and dwindling incomes, Nigerians manage to reserve a large portion of their earnings for data services, spending over N500 billion on data in three months alone.
The figure captures the budgets of subscribers of the two biggest telecommunications companies alone as sourced from the Q1 financial reports. Globacom and 9mobile, which are not statutorily required to release their report to the public, as well as other Internet service providers’ (ISPs) data not included.
That means the actual amount spent could be much higher than N500 billion. This also means the total spending of Nigerians on data services in the year would surpass N2 trillion.
In 2023, MTN alone raked in N1.07 trillion from data subscriptions, representing a 39.8 per cent growth from N764.82 billion in 2022. Similarly, active data users on the network of MTN jumped by 12.7 per cent to 70.66 million in 2023, rising by over five million.
While Airtel puts its average revenue per user (ARPU) at $3.8, MTN said as of 2023, it was $5.03. This puts ARPU in the sector at $4.4 according to available data.
This means that a subscriber spends $4.4 monthly on telecoms services. By the current NAFEX rate of N1,467 (as of the weekend), it means N6,454 is spent monthly on telecoms service, of which data services take 70 per cent.
Airtel in its financial statement for the fiscal year ending March 31, 2024, puts data revenue for the quarter at $116 million (N151.15 billion) using the closing NAFEX rate of N1,303 per dollar as of March 31, 2024.
Airtel said data revenue grew by 32.1 per cent in constant currency, as a function of both data customer and data ARPU growth of 14.9 per cent and 14.0 per cent, respectively. It said data usage per customer increased by 25.4 per cent to 6.3 GB per month (from 5.0 GB in the prior period).
Largely, it can be deduced that for the first quarter 2024, MTN and Airtel earned N500 billion in revenue from Nigerians. MTN recorded N349.5 billion and Airtel N151.1 billion. While MTN and Airtel results are open because they are listed, no information from Globacom and 9mobile, however, Glo currently services 62.1 million and 9mobile, 11.6 million users in the country. Estimates, based on their market reach suggest data consumption on these two networks should be around N120 billion.
According to checks by The Guardian, the over N500 billion generated from data sales by the telcos is N42 billion higher than the combined amount generated internally by all Nigerian states in Q1, which amounted to N457.9 billion.
MTN said 4G accounted for 81.9 per cent of its total traffic and 5G at 6.4 per cent. The total subscriber base of the telco grew by 1.3 per cent to 77.7 million, despite reporting a two million decline in active subscribers in Q1 after implementing the Nigerian Communications Commission (NCC) SIM-NIN directive.
According to data from the NCC, Nigerians consumed 753,388 terabytes of data in March as against 694,804 terabytes in February whereas there were 164 million Internet users as of January.
Analysts noted that the move to the new normal, where companies activated a work-from-home model, which was accentuated by the COVID-19 pandemic, triggered data usage globally in the last four years.
Besides, the International Telecommunication Union (ITU), the United Nations specialised agency for information and communication technologies, informed that global Internet traffic has grown by an average of 30 per cent in the last year.
According to them, in Nigeria, the surge in data consumption is driven largely by an increase in the number of Nigerians switching to 4G and 5G connections, which offer faster speeds, thus increasing the megabytes of data consumed by the users.
While NCC’s data showed that most connections in Nigeria are still on 2G, 4G subscriptions have been rising steadily. In January, 4G subscriptions increased from 31.33 per cent in December 2023 to 32.74 per cent in March 2024. 5G, which is the fastest technology being deployed by the telecoms operators in Nigeria has also been growing in subscriptions.
As of March 2024, 1.24 per cent of all connections in Nigeria were on 5G, up from 1.04 per cent recorded in December 2023.
Accordingly, data consumption by Nigerians also rose due to streaming services as users preferred to stream films, documentaries and football matches rather than paying exorbitant rates to access PayTV services such as DStv, GOtv, owned by MultiChoice and Startimes, among others.
Meanwhile, the GSMA has disclosed that only 29 per cent of Nigerians have regular access to mobile Internet.
This means some 71 per cent of Nigerians are currently missing.
GSMA, the global umbrella body for mobile operators, in its Digital Economy Report with a focus on Nigeria, blamed this gap on several industry challenges.
The GSMA noted that Nigeria would need to put in place an enabling policy and regulatory framework that will be critical to realizing the full potential of the country’s digital transformation, as recognized in the country’s Strategic Plan 2023 – 2027 as well as the Federal Ministry of Communication’s National Broadband Alliance for Nigeria (NBAN).
With the right policies, GSMA noted that Nigeria could add 15 million internet users by 2028.
“While 29 per cent of Nigerians are regularly using mobile internet, there remains untapped potential, 71 per cent are not accessing these services regularly.
“An improved policy environment has the potential to help the industry boost coverage and adoption, resulting in 15 million additional internet users by 2028. However, the sector faces challenges to infrastructure deployment,” it stated.
The report informed that the challenges include the complex and costly process of securing Rights of Way (RoW), significantly increasing the time and costs associated with rolling out infrastructure.
GSMA also noted that the complex tax environment in Nigeria provides for high and increasing costs of tax compliance because of the complex and overlapping tax structure within the country.
“Increasing costs are making it difficult for the industry to maintain sustainable levels of investment. The primary driver of this has been increases in the cost of power for sites due to the rapid increases in the price of fuel, increased government fees and levies, and increased demand for forex, in an import-dependent environment, due to contractual obligations for network infrastructure and services that are denominated in USD,” it stressed.
GSMA noted that the mobile industry is a key partner for the government in achieving its objectives. It recommended initiatives to support policymakers in creating an economic and regulatory environment that supports growth, investment, and competition.
According to the report, the initiatives include implementing a legal framework for Critical National Infrastructure to address challenges in building network infrastructure; simplifying and improving the process for issuing RoW and standardizing it across the country; reducing the industry’s tax burden to help cut operating costs; and creating a regulatory environment that supports sustainable investment.
Commenting on the report, the Head of Sub-Saharan Africa at the GSMA, Angela Wamola, said, “High-speed connectivity is the bedrock of any digital nation, and the Nigerian government recognizes the mobile industry’s role in laying key foundations on which digital transformation is built.
“Future policies should be geared towards reducing the cost and complexity of infrastructure rollout to encourage investment and boost the adoption of mobile broadband. The impact of such actions would go far beyond mobile, driving productivity gains across the economy and creating millions of new jobs in Nigeria.”
MEANWHILE, MTN disclosed that in implementing the NIN-SIM directive, it has fully barred 8.6 million lines from the network.
On the other hand, Airtel said it has complied with the directives issued and barred all customers without NINs as well as customers with more than four active SIMs which had a very negligible impact on revenue.
The telco said it is currently engaging with approximately 5.7 million customers, whose NINs are yet to be verified. It revealed that since the directive was issued in December 2023, 7.9 million customers have already been verified.
“We continue to engage with the NCC and work closely with the relevant authorities to facilitate and accelerate the verification process to minimise the risk of service disruption to these customers, whilst also limiting the revenue impact from our compliance to the directive issued,” it stated.
Further, on the Airtel result, the firm explained that during the period, the Nigerian naira devalued significantly from 461 per U.S dollar in March 2023 to 1,303 per U.S dollar in March 2024. It said the impact of the Nigerian naira devaluation on reported revenue and EBITDA for the year ending March 31, 2024 was $1,042 million and $554 million respectively.
It explained that as the currency devaluation occurred at various stages during the year, revenue and EBITDA in the reporting period do not reflect the full-year impact.
As a result, Airtel said the next financial year’s reported currency results will continue to reflect the currency headwinds experienced during FY’24. If the closing rate of N1,303/USD were to be used to consolidate the results of the Group for the year ended March 31, 2024, reported revenue would have declined further by $603 million to $4,376 million (16.7 per cent YoY decline) as opposed to the 5.3 per cent decline reported.
