According to Punch newspaper, the increased 5G rollout and 4G expansion contributed to the increase in foreign investments (up 325.12%) into the telecommunications sector in 2022. The capital importation data from the National Bureau of Statistics (NBS) showed that the telecoms sector attracted US$456.82m in 2022 compared to US$107.46m in 2021. The sector continues to retain its foreign investment appeal despite the country’s challenging economic environment. Though the telecoms sector recorded an increase in foreign investments in 2022, the total foreign investments into the country fell by 20.47% to US$5.33bn in 2022 from US$6.7bn in 2021.
The ICT sector has been one of the bright lights in the rather gloomy Nigerian economy. In Q4 2022, the sector contributed 56.27% to the aggregate GDP of the services sector. The telecoms sector is the major sub-sector of the ICT sector, contributing 82.17% to the sector’s output in 2022. According to the Nigerian Communications Commission (NCC), Teledensity, the number of active telephone connections per 1,000 inhabitants living within an area, grew
to 119.01% in February 2023 from 97.45% in January 2020. Broadband penetration also grew to 48.49% from 38.49%. Mobile Internet subscriptions rose to 156.42 million from 128.37 million while mobile subscriptions grew to 226.84 million from 185.74 million..
Despite the array of challenges the economy currently faces, the telecoms sector has retained its appeal to foreign investors. This could be attributed to the successful rollout of the 5G network and the ongoing 4G expansion program. The two major players MTN and Airtel) announced heavy investments in 5G and 4G expansion in 2022. In 2022, MTN capital expenditure spending was up by 23.5% to N504.3bn due to acceleration in coverage expansion with a focus the 4G and 5G networks, while Airtel noted that the company spent close to US$490m on 4G and 5G spectrums in 2022. We believe that the growing shift to a digital economy, increasing smartphone usage, rising digital consciousness, rapid 4G expansion, and the recent rollout of the 5G spectrum will continue to drive increased foreign investments in the sector.
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CSL Research
