Unpacking Nigeria’s telecom sector performance in H1'24

Nigeria's telecommunications sector has been making significant strides, with data from the National Bureau of Statistics revealing that the sector attracted $191 million in foreign direct investments in the first quarter of this year. The Nigerian Communications Commission is working in collaboration with the Ministry of Communications, Innovation, and Digital Economy to implement policies aimed at boosting the telecom sector's contribution to the gross domestic product to meet a target of 25 per cent. Gbenga Adebayo, Chairman of the Association of Licensed Telecoms Operators of Nigeria, shed light on the key developments that have shaped the sector's performance in the first half of the year and what lies ahead. The telecom sector in Nigeria has shown promise in terms of investment appetite, with foreign direct investments on the rise. Adebayo highlighted that the industry has been proactive in tackling challenges, leading to improved stability and attracting investments. He commended stakeholders, including the Minister and the regulator, for their efforts in addressing key issues and fostering a conducive environment for investment. Adebayo expressed optimism about the sector's trajectory, especially with promising policy initiatives in place. Despite the progress, challenges such as currency volatility, high operational costs, and multiple taxes persist. The industry is grappling with economic headwinds and escalating expenses, impacting capital expenditure deployment. Adebayo emphasized the need for sustained efforts to address these challenges, particularly regarding infrastructure development and tax reforms. While the sector faces hurdles, government interventions are seen as crucial for ensuring sustainability. One recurring issue discussed was the debt owed by banks to telecom operators, amounting to over 200 billion Naira. Adebayo stressed that while the debt remains a significant burden, banks have a moral obligation to settle the payments. Resolving this debt is seen as vital for the growth of the digital economy and fostering better industry relations. Looking ahead, infrastructure development remains a focal point for the telecom sector's growth. Discussions around a special purpose vehicle (SPV) to facilitate the delivery of a 90,000km fibre optic cable are underway. Adebayo commended the initiative, highlighting its potential to revolutionize connectivity in underserved areas. The project aims to bridge the gap between coastal capacities and inland regions, enabling enhanced internet access for remote communities and sectors like agriculture and digital economy initiatives. In conclusion, Nigeria's telecom sector is on a transformative path, marked by increased investments, policy reforms, and infrastructure advancements. While challenges persist, collaborative efforts between industry players and government stakeholders are vital for driving sustainable growth and ensuring that Nigeria's telecom sector continues to thrive.