Zedcrest projects $11bn market size for Nigeria's telecoms sector by 2029

Nigeria's telecommunications sector is on the brink of a significant transformation, with analysts at Zedcrest projecting a market size of $11 billion dollars by 2029. This growth is expected to be driven by a combination of factors including rapid smartphone adoption, the rollout of 5G technology, and the increasing demand for data-driven applications. A recent development that could shape the industry's trajectory is the Nigerian Communications Commission's approval of a 50 per cent tariff hike, the first substantial increase in over a decade. To delve deeper into the implications of these changes, Samuel Aladegbaye, Investment Research Analyst at Zedcrest Wealth, provided insights during a recent interview with CNBC Africa. One of the key highlights of the discussion was the projection that smartphone penetration in Nigeria is set to reach 60 per cent this year, a significant milestone that is expected to drive further growth in the industry. The adoption of 5G technology by major players such as MTN, Airtel, and Maffab has also contributed to an increase in market share for 5G technology, indicating a positive outlook for the sector. Additionally, the surge in data demand and the proliferation of AI-driven applications are key factors driving consumer engagement with mobile network operators, further bolstering the industry's prospects. In terms of investments, foreign direct investment in the sector is expected to rebound in 2025, following a lukewarm performance in the third quarter. The industry's liberalization, coupled with efforts to address legacy debts amounting to 250 billion, are set to create a conducive environment for investors. The focus on infrastructure development, including the national broadband plan aiming for 70 per cent coverage by the end of this year, presents significant opportunities for foreign investors looking to capitalize on the sector's potential. The interview also shed light on the importance of addressing challenges such as right-of-way issues between states and telecom companies, as well as the need for improved tariff structures to sustain the sector's growth momentum. Samuel emphasized the significance of data revenue as a primary source of income for telecom operators, with data now surpassing voice revenue in many cases. While exchange rate risks and FX volatility have historically posed challenges for the sector, the recent stability in the exchange rate is expected to provide a more conducive environment for businesses to plan and operate effectively. Looking ahead, Samuel expressed optimism about the industry's profitability outlook, projecting a possible return to profitability by 2025 or 2026. The stabilization of the FX rate, coupled with the anticipated growth in revenue streams, is poised to position Nigeria's telecom sector as a regional leader with the potential to drive further innovation, investment, and digital inclusion. With a buoyant market forecast and a series of strategic reforms underway, Nigeria's telecommunications industry is poised for a period of sustained growth and transformation. As stakeholders navigate the evolving landscape of the sector, the prospects for increased investment, enhanced infrastructure, and expanded digital services signal a promising future for the country's telecom landscape.