The latest data released by the NCC, the industry regulator, show that internet subscriptions stood at 91.3 million in January, representing a y/y contraction of -4.7%. The figure implies density of 49.3% in a population estimated at 185 million, placing Nigeria well above the African average of around 16% as estimated by McKinsey. Given that mobile internet is still considered a luxury (particularly for low income earners), internet subscription has experienced steady y/y contraction over the past several months. This mirrors the effect of the current macro challenges on consumers’ spending patterns.
Another reason for the slide in internet subscriptions is the clampdown on unregistered SIM cards by the NCC, the industry regulator.
In January, MTN secured the highest number of internet subscriptions via GSM, representing 34% of the total. However, the operator has lost over 7 million internet subscribers, compared with the corresponding period of the previous year.
Globacom, its closest competitor, secured the second largest subscriptions in January, and accounted for 30% of the total. Data plans on this platform are relatively affordable and slightly more flexible.
Aside from the broadband target of 30% by 2018, we gather that the FGN is also targeting an 80% internet penetration in the same year. Given the steady slippage on subscriptions, we are doubtful that the latter will be achieved.
Sources: Nigerian Communications Commission (NCC); FBNQuest Research
Access to the internet has a positive impact on productivity. Not only does it cut costs, it helps to broaden the reach of businesses as far as customers are concerned, boosting sales in the process.
Last year, Nigeria’s telecom’s sector contributed 8.8% to total GDP and grew by 2.0% y/y.