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Technology | Mobile Money and Telcos

Introducing Nigeria to Quality Internet: 5G Broadband Penetration

Dec 26, 2022   •   by Busola Olufowora   •   Source: Proshare   •   eye-icon 450 views

Tech sector growth will pull up Nigeria’s gross domestic product (GDP) but a lot will depend on the development of overall infrastructure and public policy. The federal government’s recent tax decision on tech-related services may prove to be a drag but increased digital penetration may counter tax effects.

 

Analysts note that although 5G has emerged in 2022, 4G technology remains king. 4G is Nigeria's dominant mobile technology, supporting 77.24% of internet connectivity, and it's expected to continue to grow over the coming years. The percentage of 4G coverage across the country also increased from 23% in 2019 to 77.52% in 2022. In terms of density, 4G allows connection to about 1 million devices in 500 square kilometres, but 5G will allow the same number of devices in just 1 square kilometre. Thus, investors are investing heavily in 5G technology for its service quality and efficiency. Globally, mobile operators are expected to spend $1.1trn between 2020 and 2025 in mobile CAPEX, roughly 80% of which will be on 5G networks.

 

The SVP and the Broadband Outlook

The Nigerian Communications Commission’s  Strategic Vision Plan (SVP) 202 2025 intends to deepen broadband penetration and encourage fair competition in the rollout of 5G servicesThe fifth generation (5G) technology is expected to bring many benefits and opportunities that will engender accelerated growth and smart living in the country when fully deployed. While it is projected to contribute US$2.2trn to the global economy by 2034, Nigeria has generated US$547m so far this year from the 5G auction in addition to other revenue heads from the industry. As of Q3 2022, the Nigerian telecom sector contributed 7.79% to GDP, driven largely by the four major Mobile Network Operators who provide service to over 214.3 million active lines (see chart 1 below).

 

Chart 1:

In line with the SVP, the NCC, in December 2021, auctioned two slots of the 3.5GHz spectrums in a bid process among internet service providers. The auction saw MTN Nigeria and Mafab emerging as the winners. This development led to MTN's commercial launch of the 5G network in Nigeria. In contrast, the launch by Mafab hangs in the balance, the company has until January 2023 to launch its 5G. For the last two lots, Airtel Nigeria emerged as the sole bidder for one of the spectrum licenses, despite MTN Nigeria and Standard Network expressing interest in the auction. As of December 5, only Airtel Africa has deposited 10% of the license fee (US$ 27.36) as payment for the intention-to-bid deposit (IBD) as stipulated in the information memorandum (IM). 

 

The Adoption Slow Coach

Although broadband has increased in Nigeria with the development of 3G and 4G coverage, end-user adoption is yet to match expectations due largely to socio-economic constraints. To expand broadband penetration, the Federal Government signed the Artemis Accord with Elon Musk's internet satellite company SpaceX to provide broadband connectivity in Nigeria ahead of the 2025 timeline targeted by the National Broadband Plan. Amidst the many plans to deepen penetration, Nigeria's broadband coverage has improved from 41.61% to 45.55% in the year 2022 alone (see chart 2 below).

 

Chart 2:

 

Though the pace of adoption may have been slow the prospect of growth remains strong.

 

 

 

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