The National Bureau of Statistics (NBS) capital importation data showed the telecoms sector attracted investments worth US$65.05m in Q3 2023 compared to US$77.26m in Q3 2022, a significant decline of 17.10% y/y. Quarter on quarter, foreign capital inflow into the telecoms sector increased by 148.16% in Q3 2023 when compared with US$25.81 million recorded by the sector in Q2 2023. The NBS data also revealed that the telecoms sector accounted for 9.78% of the total capital inflow into the economy in Q3. We note that Nigeria’s total capital importation into Nigeria in Q3 2023 was US$654.65 million, lower than US$1.16 billion recorded in Q3 2022. On a q/q basis, capital importation declined by 36.45% from US$1.03 billion in Q2 2023.
The telecommunications sector has also been affected by current macroeconomic issues, as seen in dwindling industry numbers. In Q3 2023, the sector grew 7.74% compared with 9.74% in Q2 2023, while contributing 15.97% to the aggregate real GDP growth. According to the Nigerian Communications Commission (NCC), teledensity, the number of active telephone connections per 1,000 inhabitants living within an area, declined to 115.63% in August 2023 from 115.70% in July 2023. Broadband penetration also declined to 45.57% from 47.01%, while mobile subscriptions declined to 220.72 million from 220.86 million.
Players in the sector in recent times are being faced with significant growth in OPEX due to the Naira depreciation, elevated inflation and scarcity of FX leading to increased costs of lease rentals and additional site rollout. Also, we note that because of the unification of FX, both MTN and airtel reported significant finance losses. Another major issue affecting players in the sector and discouraging investments is multiple taxation. Telecoms operators are subjected to several formal and informal taxes, impeding industry expansion. According to the Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) Engr. Gbenga Adebayo, telecoms operators are currently paying a total of 39 taxes and levies as governments at different levels in the country continue to introduce various charges.
Source: CSL Research
