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Telecoms record steady growth with 5G

Since the beginning of year 2022, there has been new trends in the telecoms industry. The stakeholders are trying to consolidate on the success recorded in 2021 while correcting some negative impacts on the sector to enhance performances. However, the the sector has been growing, contributing more to the nation’s Gross Domestic Product (GDP). In this analysis, ABOLAJI ADEBAYO evaluates the performances of the sector in half year of 2022

The various sub-sectors in the telecoms industry started the year with higher degree of commitment to record more growth in the industry in the year 2022. From January till date, there has been positive impact on the sector, although, there were controversies and confrontations, especially over some policies by government, while the regulatory agency has been making frantic efforts to stabilise the sector. In the last six months, the sector witnessed a slight growth as well as some level of unfavourable trends, which goaded the players in the industry to re-strategise on their operations. Since January, various activities have taken place with their inherent implications on the operation and the subscribers.

5G

One of the discussions that dominated the scene in the telecom industry is the issue of 5G network deployment. Since the successful auction of the 3.5GHz spectrum for the Fifth- Generation (5G) network deployment in December 2021, expectation has been high for its deployment and usage in Nigeria. On February 24, the Nigerian Communications Commission (NCC) confirmed the full payment of $273.6 million each by the two spectrum winners — Mafab Communications Limited and MTN Nigeria — in addition to spectrum assignment fee paid by MTN for the 5G spectrum licence. There were pressures on NCC to make the deployment of the technology a reality as early as possible in the country, hence, on May 4, NCC disclosed that the final letters of awards of 5G spectrum had been given to the two winners. The management of the Commission, led by Prof. Umar Danbatta, the Executive Vice Chairman (EVC), confirmed this to the Board of Commissioners at a special meeting, which took place on Wednesday, April 20 and Thursday, April 21, 2022, where the Board considered updates from management on the status of the spectrum auction. In a statement, NCC indicated that with the issuance of the final letters of awards of 5G spectrum and in line with the Auction’s Information Memorandum (IM), the two licensees are now expected to accelerate deployment of 5G network that will usher Nigeria into a more robust Fourth Industrial Revolution (4IR) and a more digitised Nigerian economy. In line with the terms and conditions of the 5G licence, the licensees are expected to commence roll out 5G services effective from August 24, 2022. It is believed that the 5G network, when deployed, will bring a lot of benefits and opportunities that will engender accelerated growth and smart living in the country. The technology is also expected to bring substantial network improvements, including higher connection speed, mobility and capacity, as well as low-latency capabilities. Earlier on January 25, President Muhammadu Buhari launched the National Policy on 5G Networks, the document was later presented in May. Meanwhile, as momentum gathers for 5G deployments, experts said there should be defined policy and regulatory framework that would allow the small and medium operators to participate in the rollout of the new technology.

Broadband penetration rebounds

Indeed, the advent of 5G is expected to spur a revolution in broadband expansion. As of June 2022, broadband penetration stood at 42.79 per cent. Up till first half of 2022, the sector had witnessed both decline and rise in broadband penetration. On November 28, 2019, the National Digital Economy Policy and Strategy (NDEPS), 2020-2030 was unveiled by President Muhammadu Buhari. This was followed by the launch, in March, 2020, of the Nigerian National Broadband Plan (NNBP) 2020- 2025, among several other digital economy policies. In 2020, a target in the broadband penetration to be achieved in the country by 2025 was set. In its “Nigerian National Broadband Plan: 2020- 2025,” government had disclosed that it intended to increase coverage by 90 per cent by 2025. At the launch of NNBP in 2020, the broadband penetration, which was largely driven by mobile technology, was slightly below 40 per cent. By December 2020, penetration of 45.93 per cent had been attained. However, rather than rise, the broadband penetration fell year-onyear from 80.28 million (equivalent to 42.06 per cent) in February 2021 to 78.08 million (40.91 per cent) in February 2022. It was 45.93 per cent in October 2021, but declined to 42.93 per cent in January 2022. Report from NCC indicated varying degrees of declines in voice subscriptions, teledensity, Internet usage and broadband penetration, affecting the contribution of the sector to the gross domestic product (GDP). However, regardless of all the declines and fluctuations witnessed in the broadband penetration so far, NCC was able to reverse the trend. Nigeria’s broadband penetration rebounded to growth trajectory in June, 2022, based on the regulatory focus of NCC and its commitment to driving various initiatives aimed at deepening broadband penetration. In its data, the Commission stated that the penetration has now increased to 42.79 per cent. This, once again, raised the hope of the industry stakeholders on the achievement of 90 per cent broadband penetration in 2025.

SIM-NIN linkage

Another trend that rocked the telecom industry in the last six months is the issue of NIN-SIM linkage. After some months of the policy, the Federal Government, in April 2022, ordered mobile operators to bar all outgoing calls of all Subscriber Identification Module cards not yet linked with the National Identification Number effective from April 4, 2022. The Federal Government had mandated telecommunications subscribers to link their SIMs with their NINs in December 2020, as part of the regime’s “security and social policies,” but many Nigerians have faulted the effectiveness of the NIN-SIM linkage as kidnappers of Abuja-Kaduna train passengers and others still call victims’ families on the phone to demand ransom and go scot-free, untraced, despite the NIN-SIM linkage policy. The new government order threw many subscribers into confusion as many were running helter skelter to get their NINs and link it to their SIMs to be able to make calls. Some affected subscribers recounted their experiences and they counted their losses. The officials of the Nigerian Identity Management Commission (NIMC) also leverage the situation to milk the victims as they charged huge amount to get them registered.

Tariff review

While battling the NIN-SIM linkage, the mobile network operators (MNOs) introduced 40 per cent increase in their tariffs. The operators under the aegis of Association of Licensed Telecommunication Operators of Nigeria (ALTON) presented a proposal to NCC, seeking hike in the tariffs of data, voice calls and SMS. In the letter titled: ‘Impact of the Economic and Security Issues on the Telecommunications Sector,’ the telcos said the decision to hike charges was based on an increase in energy costs, which has raised their operating expenses by 35 per cent. This happened in May. Their proposal was to raise phone call charges from N6.4 to N8.95, while SMS costs would also increase from N4 to N5.61. However, the decision hit the rocks as both NCC and subscribers rejected the proposal, forcing the telcos to shelve the decision.

New telecoms tax

Meanwhile, despite opposition to the ALTON’s proposal, the Federal Government, later in the same May, announced additional one kobo per second tax on phone calls. The information was contained in the National Health Insurance Authority Bill 2021 signed by President Muhammadu Buhari. The new telecom tax is said to be meant to boost sources of funds required to finance free healthcare for the vulnerable group in Nigeria. The act includes a provision under Section 26 sub-section 1c, which states that the source of money for the Vulnerable Group Fund includes telecommunications tax, not less than one kobo per second of GSM calls. The new tax was scheduled to commence on June 1, 2022. Meanwhile, the telecoms companies, the subscribers and other stakeholders kicked against the decision and asked government to look for fund for the scheme elsewhere, saying that telecom sector is already over taxed.

Financial Inclusion

In 2022, financial technology (Fin- Tech) ecosystem witnessed great growth as the sector also boomed. This was made possible with the licensing of more fintech startups and mobile payment service banks, especially the mobile telecoms. For instance, MTN Nigeria got the final approval to start MoMo PSB in April from the Central Bank of Nigeria (CBN). The permit allows the payment unit to offer several services provided by commercial banks, the notable exceptions being disallowance from issuing credit and processing foreign exchange deals. MTN MoMo started operation in May, 2022.

Policies

Since the beginning of 2022, industry players and stakeholders have been agitating for favourable policies to drive the required growth of the sector as well as creation of conducive business environment to attract foreign investors. According to them, it is also pertinent to bridge the gap between smaller industry operators and the tier one players. This, they said, requires people-friendly policies and regulations. They also advocated the need to encourage Nigerians to participate fully in the ICT/telecoms sector for efficiency.

Last line

There is need for government to sustain the growth so far recorded in the sector while working towards its expansion, especially as the country deploys 5G technology.

 

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