The Impact of The Ongoing Pandemic On The Nigerian Telecom Industry

The COVID-19 pandemic has had an adverse impact on many sectors and businesses all over the world, and the telecom sector is no exception. Given how the internet has become more of a necessity than a luxury in today’s world, coupled with cheap data plans and smartphones being available, telecom companies have become extremely important utilities.

Additionally, due to the pandemic, there has been a huge increase in the number of people who are staying at home and working, thus requiring more internet bandwidth than ever before.

If we look at the Nigerian telecom sector, it is not surprising to see that there were more than 2.5 million new subscribers in just April 2020 alone. The increased need for the internet during this time can be seen by the fact that the total number of data users crossed 143 million in June 2020, with 7.5 million new internet users being added in Q2 2020, according to a report by the Nigerian Communications Commission (NCC).

However, this has not exactly translated into healthy business for the telecom companies themselves.

Airtel Africa’s data revenue from Nigeria grew only by 1.6% over the previous quarter, to $122 million in June 2020, while MTN Nigeria saw growth of 7.8% over the same period to report revenue of $207 million. This is not too favourable when compared to past quarters, where, for example, Airtel had an increase of $5 million in its data revenue in Q1.

Online entertainment has been thriving over the last few months, with gaming, streaming and even online casinos seeing significant growth.

There are people who are looking out for sites with a list of casino online games and other ways to keep themselves entertained, and this, in turn, helps internet providers and data companies as more and more bandwidth is being used. Many sites have also been offering discounts and other offers to lure new customers during this time.

However, the flip side of all of this is that voice revenues for telecom companies has been declining, as more and more people choose online video calling over traditional phone calls. This fall in revenue has not been offset by the increase in data traffic, which has led to overall profitability falling across the sector.

Even though Nigeria reportedly has the 10th cheapest mobile internet services in sub-Saharan Africa, and the 58th cheapest in the world, it is still proving to be unaffordable for many people due to the difficulties of the current scenario. At the same time, smartphones have also become more expensive, due to scarcity of supply as well as the devaluation of the currency.

The growth in the number of internet users has also caused a decline in the quality of internet services. The average internet speed in Nigeria fell by almost 21% during the lockdown period, which lasted from March till April. This was a trend seen in most African countries, with Angola being the only one where internet speeds actually improved during its lockdown.

There were over 9,000 cases of outages across all Nigerian telecom operators in Q2 2020, with a majority of these triggered by vandalism, as well as damage from construction activities. Operators were often also unable to access telecom sites for maintenance, while thefts of batteries and generators also contributed.

However, there are some reasons to be optimistic for the future.

Seven states in Nigeria have eased charges for telecom companies looking to lay fibre-optic cables, and the impact can already be seen as MTN has requested permission to lay over 160km of cable in the state of Ekiti.

The government has also extended a loan of over $320 million to extend internet cables to the north of the country, which is relatively underserved when compared to the rest of Nigeria. All of these measures point towards a better environment for telcos in Nigeria in the coming months and years.