Nigeria’s “Broadband penetration remains weak at 37.8 percent as Experts calls for 4G network infrastructure upgrade

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Even with $70 billion total investment in Nigerian telecom industry in 2019. Nigeria’s “Broadband penetration remains weak at 37.8 percent as Experts urges Nigeria to upgrade to 3G and 4G network infrastructure to attract moree investment to be able to compete with Peers in Africa

According to Afrinvest report, titled ‘A Transformative Past, Resilient Future’, said despite the significant progress made in the industry, there is still space for strong growth in the future.

The Nigerian Communications Commission estimated that These investments have driven growth within the sector as the NBS data on GDP revealed the telecoms sector contributed about N7.4trn in 2019, an 11.4 percent year-on-year growth, indicating a very fast-growing and resilient sector within the economy.

The report, however, said these investments are inadequate for one of the fastest growing telecoms markets in Africa at 11.4 percent.

“In order to sustain this momentum, more investments would be required to upgrade and maintain the current 3G and 4G network infrastructure,” the report said.

The report said that the rapid explosion of digital economy has led to even greater competition and shifting customer needs, with operators having to expand their service portfolios and sustaining capital expenditure for facility and network upgrades to boost capacity and meet demand.

Nigeria’s telecom industry has leveraged on the country’s huge population (over 200.0m people) with total subscribers at 184.7m in 2019 from 2.3m in 2002, reflecting an 18-year Compound Annual Growth Rate estimated 27.7percent, while the penetration rate measured by teledensity increased from 1.9 percent in 2002 to 96.8 percent in 2019.

The report noted that regulation has restricted the expansion into other business lines with strong prospects such as financial services, unlike in markets like Kenya and South Africa.

“We believe the speed and flexibility of regulation would shape the trajectory of growth and investment in the sector,” it said.

Currently, the average revenue per user (ARPU) of Nigerian companies is very weak relative to levels in other peer countries such as South Africa and Egypt.

“We believe platforms of operators can be leveraged to catalyse change in other sectors, especially financial services, and deliver enhanced earnings performance,” the report noted.

MTN and Airtel have continued to invest in telecommunications infrastructure to boost capacity and deliver superior services to customers, with annual CAPEX at around N617.4bn and N580.7bn, respectively, over the past three years.

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