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Nigerian Telecoms Sector Viable for More Operators, Investments

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Nigerian telecoms sector

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.

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Economy

Sterling Bank Assures Shareholders More Value With New Structure

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sterling bank logo

By Aduragbemi Omiyale

Recently, shareholders of Sterling Bank Plc authorised the board of the company to transform its organizational structure into a holding firm to be known as Sterling Financial Holdings Company.

A holding company or Holdco is a company set up for the purpose of making and managing, for its own account, equity investment in two or more companies, being its subsidiaries, engaged in the provision of financial services, one of which must be a bank.

The Chief Executive of Sterling Bank, Mr Abubakar Suleiman, said with the new arrangement, shareholders would have value for their money as the company would have the opportunity to increase its income streams because of its involvement in new ventures.

He disclosed that the advantages of the newly formed holding company include value creation to maximise earnings through new businesses, agility to optimise for opportunities and adapt to a rapidly changing market, maximise current and future talent potential with opportunities within the group and subsidiaries to nurture and engage its wealth of young and innovative talent.

According to him, the holding company also affords Sterling another opportunity to leverage its successful HEART strategy, which has seen the bank make consolidated investments in the Health, Education, Agriculture, Renewable Energy and Transportation sectors, growing the company’s year-on-year profits to record highs despite strong economic headwinds.

With the adoption of a Holdco structure, Sterling now possesses the latitude to make inroads into other sectors within financial services, such as pensions, asset management, payment services, real estate, and different verticals, along with the current banking licenses held by the commercial and non-interest banking subsidiaries, Sterling Bank and The Alternative Bank.

In recent times, the bank has doubled down on digitisation with specialised products through the development and introduction of Specta, OneBank, I-invest, Gazelle and Omni X to fulfil the market’s needs for innovative retail and commercial banking solutions.

On his part, the Chairman of Sterling Bank, Mr Asue Ighodalo, said, “Following the implementation of the scheme, shareholders will exchange their shares in the Bank for shares in HoldCo in the same proportion as their current holdings in the Bank, which will be a regulated entity for CBN purposes.”

He added that the scheme would provide several benefits to the shareholders of the bank, some of which include facilitating diversification into other permissible business lines, thereby promoting growth and enhancing shareholder value and facilitating a consolidated financial strength of the group, which will improve access and ability to raise capital.

It was gathered that upon the final ratification by the regulators, the commercial banking subsidiary of the holding company, Sterling Bank; will continue to operate with its current name as a limited liability company, with shares transferred from the publicly traded company transferred to the newly formed Sterling Financial Holdings Company.

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Economy

Friesland Extends NASD OTC Securities Growth by 0.98%

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Friesland shares

By Adedapo Adesanya

FrieslandCampina WAMCO Nigeria Plc extended the bulls’ presence at the NASD Over-the-Counter (OTC) Securities Exchange by 0.98 per cent on Tuesday, September 27.

This expanded the market capitalisation of the bourse by N9.38 billion to N963.94 billion from N954.56 billion and jerked the NASD Unlisted Securities Index (NSI) up by 3.19 basis points to end the day at 762.12 points as against the 765.31 points it recorded in the previous session.

FrieslandCampina WAMCO Nigeria Plc appreciated yesterday by N4.90 to sell at N78.00 per unit compared to the N73.10 per unit it was transacted a day earlier.

Despite the growth posted yesterday by the NASD OTC securities, there was a price loser and it was Niger Delta Exploration and Production (NDEP) Plc, which declined by N1.00 to settle at N199.00 per share compared with Monday’s value of N198.00 per share.

During the session, there was a rise in the volume of securities traded by 408.8 per cent to 189,296 units from the 37,205 units transacted by market participants in the preceding session.

In the same pattern, there was a rise in the value of shares traded by 129.1 per cent to N6.2 million from the N2.7 million recorded on Monday.

These transactions were completed in 18 deals, the same amount of deals carried out in the previous trading session.

At the close of trades, AG Mortgage Bank Plc was the most traded stock by volume (year-to-date) with the sale of 2.3 billion units valued at N1.2 billion, Central Securities Clearing System (CSCS) Plc stood in second place with 687.6 million units worth N14.3 billion, and Mixta Real Estate Plc was in third place with 178.1 million units worth N313.4 million.

The most traded stock by value on a year-to-date basis was CSCS Plc with the sale of 687.6 million units worth N14.3 billion, VFD Group Plc was in second place with 27.7 million units valued at N7.4 billion, as FrieslandCampina WAMCO Nigeria Plc was in third place with 14.3 million units valued at N1.7 billion.

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Economy

Naira Appreciates at P2P, Falls at I&E, Stable at Black Market

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Naira devaluation

By Adedapo Adesanya

The value of the Naira appreciated against the United States currency in the Peer-to-Peer (P2P) segment of the foreign exchange market on Tuesday by N2 to close at N740/$1 compared with the previous day’s value of N742/$1.

However, it depreciated against the American Dollar at the Investors and Exporters (I&E) window of the FX market yesterday by 33 Kobo or 0.08 per cent to trade at N436.33/$1 in contrast to Monday’s value of N436.00/$1.

Data from the FMDQ Securities Exchange disclosed that the value of forex transactions recorded at the spot market yesterday went up by 27.31 per cent or $21.33 million to $99.43 million from the $78.10 million reported a day earlier.

In the interbank segment of the market, the Naira closed flat against the Pound Sterling at N463.96/£1 and against the Euro, it also remained unchanged at N416.15/€1 on Tuesday.

In the same vein, the exchange rate of the local currency paired with the greenback closed flat at the parallel market yesterday at N722/$1.

Meanwhile, the digital currency market was bearish yesterday, with Bitcoin (BTC) falling below the $20,000 mark again after it managed to rise above that level a day earlier.

On Tuesday, its value went down by 6.5 per cent to close at $18,765.50 as Ripple (XRP) recorded a 10.1 per cent slump to trade at $0.4282.

Ethereum (ETH) saw its value go down by 6.9 per cent to sell at $1,284.29, Solana (SOL) recorded a 6.5 per cent slide to quote at $32.44, Cardano (ADA) recorded a 5.6 per cent decline to settle at $0.4312, Binance Coin (BNB) shed 5.1 per cent to sell for $270.03, Litecoin (LTC) went down by 5.0 per cent to trade at $52.07, and Dogecoin (DOGE) saw a 4.5 per cent slump to trade $0.0594.

But Binance USD and the US Dollar Tether (USDT) closed flat at $1.00.a

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