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5G and new technologies in telecommunication have helped to increase investment in the sector by 273.16 per cent year-on-year to $211.29m in the first half of 2022.
This is according to capital importation data from the National Bureau of Statistics. In the first half of 2021, investments into the sector totaled $56.62m, with the second quarter particularly put at $342,105.
At the time, a source in the Association of Licensed Telecommunication Operators of Nigeria blamed the fall in capital inflows into the sector on foreign exchange scarcity and inconsistent government policy.
The source said, “The lack of forex has impacted on how we can import equipment into the country. This has reduced investments too.
“There is also the issue of end-user certificates. This is so because for us to import some equipment into the country, we need the certification of the security agencies, especially the National Security Adviser’s office.”
However, with the anticipated launch of 5G services in August and a surge in Internet demands in the nation, telcos have increased investment in the sector.
According to the Global System for Mobile Communications Association, telcos would need $500m and 6,000 base stations to roll out 5G in the top 10 cities in the nation.
Also, data consumption has since grown from 68,154.12 terabytes in 2018 to 350,165.39 terabytes in 2021, indicating an increasing reliance on internet-based services in the nation.
Within the first six months of the year, MTN Nigeria and Airtel disclosed that they invested N443.30bn in 4G and 5G. In their financial reports for 2022, MTN revealed that it had invested N311.6bn and Airtel said its invested N131.70bn ($307m).
MTN said, “Capital expenditure in the period was N311.6bn, up by 67.1 per cent, due to accelerated coverage expansion, focusing on the 4G and 5G networks as well as our rural telephony programme.
“Core capex, excluding the right of use assets, increased by 78.6 per cent to N204.5bn. We frontloaded some of our planned capex for the year in H1 to capture growth opportunities while mitigating foreign exchange and supply chain disruption risks as well as the impact of rising inflation.”
Airtel said, “The Group continued to invest in the expansion of our 4G network, adding significant data capacity to the network at only marginal cost, expanding both home broadband and enterprise business services to greater leverage the 4G network capacity; growing data ARPU and data revenue.”
Commenting on the increase in investments into the sector in 2022, the Chief Operating Officer, Association of Telecommunications Companies of Nigeria, Ajibola Olude, said, “It will continue to increase. Policy is driving this increase. That is policy from the government and the regulator.
“For instance, with the mobile virtual network, the NCC has opened a new investment option for capital importation because companies that are going to get those licenses will need to import capital into the country. The MVN is part of what will drive new investment into the nation too.
“When you look at it, it means the consumer will have more options. Policy and regulation are what is driving new investment into the space. 5G is also driving new investment in the space because there is need for a new level of investments to match 5G expectation. You cannot provide 5G at the level of initial investment, there is need for further capital to come in for operators to be able to provide 5G.”
In preparation for its 5G launch, MTN said it had deployed 127 5G sites. Mafab Communications Limited is yet to roll out its 5G network after it was granted a five-month extension because of delays in getting its Unified Access Service Licence and Numbering plan. Experts expect more investment in the space especially when commercial 5G rollout begins.
Recently, the NCC published an advertorial for companies to apply for its Mobile Virtual Network Operators license. When operational, these operators will offer mobile services like MTN, Airtel, Globacom, and 9mobile by leveraging existing network infrastructure across the country.
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