How healthy are Nigeria's telcos?

Nigeria's telecommunications sector has been a significant contributor to the country's GDP, with 1.5 trillion Naira added in the second quarter of 2017. Olusola Teniola, President of the Association of Telecommunications Companies of Nigeria, shared insights on the sector's health and the challenges it faces. Despite the positive contribution to the GDP, Teniola acknowledged that the growth of the sector has slowed down due to various obstacles. One of the key challenges mentioned was the impact of the country's reduced GDP size and lower oil output, affecting the overall economic landscape. The telecommunications industry, like many others, is navigating hurdles and headwinds in the current environment. Teniola emphasized the importance of investment in infrastructure, innovation, and skills development to sustain growth and maximize the sector's contribution to the economy. He highlighted the shift from voice to data as a significant trend, with data playing a key role in driving future growth. The emergence of over-the-top players and their investment in infrastructure across Nigeria and West Africa is seen as a positive development, providing greater access to content for consumers. Despite the potential for growth, investors remain cautious due to currency risks and uncertainties in the market. The case of Etisalat (now 9mobile) grabbing headlines underscores the challenges faced by investors in the sector. The fluctuating Naira-US dollar exchange rate has impacted returns on investment, requiring a reassessment of expectations and risk appetite. While there are no special provisions for the telecommunications sector regarding foreign exchange issues, Teniola remains optimistic about the industry's prospects for new investors. Looking ahead, he believes that leveraging big data, artificial intelligence, and partnerships with over-the-top players will be crucial for the sector's evolution. With 145 million active subscribers generating significant amounts of data, analyzing consumer patterns and behaviors presents new opportunities for differentiation and revenue growth. Additionally, the Internet of Things (IoT) holds promise for infrastructure development, but it will require substantial investments to support its expansion. As Nigeria's telecommunications sector continues to evolve, strategic investments, policy support, and technological innovation will be essential to drive sustainable growth and contribute positively to the country's economy.