Economy
Nigerian Telecoms Sector Viable for More Operators, Investments
The consumption levels of data for Internet connectivity and financial transactions are increasingly mounting pressure on telecoms infrastructure in Nigeria.
The growing smartphone adoption coupled with increasing demand for high-speed Internet is a challenge for operators to reimagine their operations as it holds business prospects for existing and new investors.
Absa, a leading pan-African Corporate and Investment Bank notes that the low Internet penetration rates in Nigeria in the midst of rising demand for data present a huge opportunity for increased investment in Nigeria’s telecoms industry.
The number of active Internet subscriptions has exceeded 143 million as of February this year, as broadband penetration stands at 40.9 per cent for a population of about 216 million people.
Sadiq Abu, CEO of Absa Nigeria, said, “The outlook for growth in Nigeria’s telecoms industry is strong. The gaps in last-mile telecoms infrastructure are largely untapped. The current momentum of emerging technologies and financial services delivers boundless growth horizons for telcos to upgrade their infrastructure and expand their reach.
“The telecommunications industry is generating interest from local and foreign investors. The telcos are already strategically developing useful business vehicles to take advantage of emerging opportunities in the industry.”
The relevance of telecoms industry to the economy became prominent during the pandemic as the connectivity operators offer turned out to be a key tool for business continuity, driving human interaction and keeping people up-to-date on vital health and safety information.
People relied on bandwidth-heavy activities for entertainment and learning. Activities around remote learning and gaming grew intensely. More people used videoconferencing for meetings as well as national, regional and global conferences.
In as much as the industry was a major driver of economic growth during that challenging period, the ineptitude of the available infrastructure became glaring as it exposed the huge digital divide and many regions that have no connectivity.
Africa has the lowest number of Internet connections with only 22 per cent of the continent having access, indicating that the continent has the largest potential for growth, according to the International Finance Corporation (IFC).
Hasnen Varawalla, the Co-head of Investment Banking Origination for Absa, said the listing of two prominent telecommunications companies in Nigeria on the Nigeria Exchange Group (NGX) has boosted the sector and the capital market and they both contribute 54 per cent to the capital base of the market.
He explained that the sector powers other critical sectors of the economy, drives fintech businesses, supports government revenue collection drive, security, e-commerce services and smart city plans.
According to him, “Absa is a significant capital provider to the entire telecoms sector in Africa. Our role is not limited to providing capital though; we are amongst the most active advisers to telco/telco infrastructure companies having led and/or participated in many landmark transactions across the continent, including the £595 million Airtel IPO on the NGX, the sale of 9mobile to Teleology, Vodacom IPO on the Tanzania Stock Exchange, the $378 IHS IPO on the NYSE, the acquisition by IHS of MTN’s tower portfolio in South Africa, amongst others.
“We continue to make available our deep telecoms sector expertise to help telcos take advantage of emerging opportunities that will fast track the timely achievement of their growth aspiration,” Varawalla said.
With the Nigeria Communication Commission’s ongoing implementation of the Nigerian National Broadband Plan (NNBP) 2020-2025, which aims to increase broadband penetration to 70 per cent by 2025, now is the time for investors to align with this plan, take informed risks on innovation, network expansion and infrastructure upgrades.
Internet traffic has been on the rise, with more than 70 per cent coming from mobile devices, making the switch from 3G to 4G and 5G inevitable. Also, many technologies that will ride on the infrastructure going forward are limitless.
Embracing new business models and expanding into new industries, such as fintech, TV and the stock market will accelerate operators’ growth aspirations. Many mobile network operators in Africa have already recorded tremendous reach with mobile financial services on the continent due to their large customer base, existing distribution network and mobile phone penetration. The telecommunications services industry hold potential for fibre, telecommunications towers, active networks, mobile and fixed broadband, data centres and e-commerce investor, among others.
Indeed, Absa’s invaluable role in providing capital for telecoms expansion in Africa and offering advisory services has led to many innovations and landmark transactions across the continent.
Absa offers investment banking and market products through various Nigerian registered subsidiaries, namely Absa Representative Office Nigeria Limited, Absa Capital Markets Nigeria Limited, and Absa Securities Nigeria Limited.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange dropped for the third consecutive session on Wednesday, March 18, by 0.39 per cent due to continued sell-offs.
In what would be the final trading session of the week due to public holidays on Thursday and Friday for Eid-el-Fitr, the NASD Unlisted Security Index (NSI) further dipped by 16.14 points to 4,114.75 points from 4,130.89 points, and the market capitalisation lost N9.66 billion to close at N2.461 trillion versus the previous day’s N2.471 trillion.
FrieslandCampina Wamco Nigeria Plc depreciated by N10.32 to sell at N112.00 per share versus N122.32 per share, NASD Plc dropped N4.50 to finish at N41.50 per unit compared with the previous session’s N46.00 per unit, and Geo-Fluids decreased by 9 Kobo to N3.02 per share from N3.11 per share.
On the flip side, Air Liquide Plc improved by N2.23 to N24.57 per unit from N22.34 per unit, Central Securities Clearing System (CSCS) Plc advanced by 90 Kobo to N76.33 per share from N75.43 per share, Food Concepts Plc rose by 24 Kobo to N3.30 per unit from N3.06 per unit, UBN Property Plc surged by 20 Kobo to N2.18 per share from N1.98 per share, Impresit Bakalori Plc jumped 16 Kobo to N1.83 per unit from N1.67 per unit, and First Trust Mortgage Bank Plc added 14 Kobo to trade at N1.89 per share versus N1.75 per share.
During the trading day, the volume of securities went up by 43,404.4 per cent to 400.8 million units from 921,265 units, the value of securities grew by 2,108.7 per cent to N1.2 billion from N54.7 million, and the number of deals soared by 23.7 per cent to 47 deals from 38 deals.
CSCS Plc ended the day as the most traded stock by value (year-to-date) with 38.7 million units valued at N2.4 billion, followed by Infrastructure Guarantee Credit Plc with 400 million units exchanged for N1.2 billion, and Okitipupa Plc with 6.4 million units traded for N1.2 billion.
Resourcery Plc finished the session as the most traded stock by volume (year-to-date) with 1.1 billion units worth N415.7 million, trailed by Infrastructure Guarantee Credit Plc with 400 million units sold for N1.2 billion, and Geo-Fluids Plc with 131.1 million units valued at N505.6 million.
By Dipo Olowookere
The Nigerian Exchange (NGX) experienced a pullback of 0.69 per cent as a result of profit-taking by investors, with shares in the banking and energy sectors mostly affected.
Data harvested by Business Post showed that the energy index was down by 4.58 per cent during the session, and the banking space lost 2.14 per cent.
They brought down the All-Share Index (ASI) by 1,402.56 points to 201,156.85 points from 202,559.41 points and shrank the market capitalisation by N900 billion to N129.126 trillion from N130.026 trillion.
Customs Street ended in red at midweek despite three of the five key sectors finishing in green. The consumer goods counter expanded by 1.19 per cent, the industrial goods index improved by 0.46 per cent, and the insurance sector grew by 0.43 per cent.
Red Star Express declined by 9.98 per cent to N25.70, Aradel Holdings went down by 9.68 per cent to N1,210.30, Presco lost 9.30 per cent to trade at N1,701.10, Living Trust Mortgage Bank crashed by 8.40 per cent to N4.80, and DAAR Communications dropped 7.50 per cent to end at N1.85.
On the flip side, Secure Electronic Technology gained 10.00 per cent to settle at N1.32, Guinness Nigeria rose by 9.92 per cent to N423.20, John Holt increased by 9.72 per cent to N11.85, Sovereign Trust Insurance surged by 9.57 per cent to N2.06, and Linkage Assurance chalked up 9.33 per cent to trade at N1.64.
Investor sentiment was weak yesterday after the bourse registered 33 price gainers and 38 price losers, indicating a negative market breadth index.
Market participants bought and sold 6.1 billion stocks valued at N130.1 billion in 58,562 deals compared with the 1.8 billion stocks worth N88.1 billion traded in 62,654 deals on Tuesday, representing a shortfall in the number of deals by 6.53 per cent, and a spike in the trading volume and value by 238.89 per cent and 47.67 per cent apiece.
The most active equity on Wednesday was eTranzact with 5.2 billion units sold for N24.3 billion, Wema Bank exchanged 111.4 million units worth N3.1 billion, Coronation Insurance transacted 96.4 million units valued at N303.9 million, Dangote Cement traded 75.2 million units for N56.5 billion, and Access Holdings exchanged 61.5 million units valued at N1.6 billion.
By Adedapo Adesanya
The Naira stumbled against the Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Wednesday, March 18, by N8.96 or 0.67 per cent to trade at N1,353.00/$1, in contrast to the previous day’s rate of N1,344.04/$1.
Also, the local currency weakened against the Pound Sterling in the spot market at midweek by N6.06 to sell for N1,801.93/£1 compared with Tuesday’s value of N1,795.87/£1, and lost N4.75 against the Euro to quote at N1,556.22/€1 versus the preceding day’s N1,551.46/€1.
However, the Nigerian currency gained N2 against the greenback yesterday at the GTBank forex desk to close at N1,363/$1 versus the N1,365/$1 it was exchanged for a day earlier, and traded flat in the parallel market at N1,395/$1.
Nigeria’s external reserves fell by $178 million over three consecutive international payments recorded by the Central Bank of Nigeria (CBN), settling at $49.83 billion from $50.008 billion, indicating that there have been some interventions in the FX market for stability and liquidity.
While the wider outlook for the Naira is positive, potential disruptions to global oil supply have increased volatility in energy markets and could spike inflation with higher oil prices.
In the cryptocurrency market, Bitcoin (BTC) slipped below $71,000 on Wednesday as Federal Reserve Chair Jerome Powell flagged rising oil prices amid the war in Iran as a new inflation risk. It sold at $70,538.58.
The US central bank held interest rates steady as expected, but during his post-meeting press conference, Mr Powell acknowledged that the recent surge in energy prices is already feeding into the central bank’s outlook.
He said rising oil prices “for sure showed up” in policymakers’ higher inflation outlook for this year, lifting their forecast to 2.7 per cent from 2.4 per cent.
Further, Ethereum (ETH) lost 6.3 per cent to trade at $2,178.56, Cardano (ADA) fell by 6.1 per cent to $0.2714, Dogecoin (DOGE) dropped 5.7 per cent to close at $0.0096, Solana (SOL) dipped 4.8 per cent to $89.83, Ripple (XRP) slumped by 3.8 per cent to $1.46, and Binance Coin (BNB) declined by 3.7 per cent to $648.61.
However, TRON (TRX) appreciated by 0.4 per cent to $0.3037, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 each.
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