Data consumption levels for internet connectivity and financial transactions are putting increasing pressure on the telecommunications infrastructure in Nigeria. The growing adoption of smartphones, coupled with the growing demand for high-speed internet, is a challenge for operators to rethink their operations, as it provides business opportunities for existing and new investors.
Absa, one of the leading pan-African corporate and investment banks, notes that low internet penetration rates in Nigeria amid growing demand for data present a huge opportunity to increase investment in the banking industry. telecommunications in Nigeria. The number of active Internet subscriptions has exceeded 143 million in February this year, while the broadband penetration rate stands at 40.9% for a population of about 216 million people.
Sadiq Abu, Managing Director of Absa Nigeria, said, “Growth prospects for the telecommunications industry in Nigeria are strong. Gaps in last mile telecommunications infrastructure are largely untapped. The current momentum of emerging technologies and financial services offers unlimited growth horizons for telecom operators to upgrade their infrastructure and expand their reach. “The telecommunications industry is attracting the interest of local and foreign investors. Telecom operators are already strategically developing useful business vehicles to take advantage of emerging opportunities in the sector. »
The relevance of the telecommunications industry to the economy has become significant during the pandemic, as the offer of connectivity operators has proven to be a key tool for business continuity, fostering human interaction and keeping people aware of vital health and safety information.
People relied on bandwidth-intensive activities for entertainment and learning. Activities around distance learning and games have developed intensively. More and more people have used video conferencing for meetings as well as national, regional and global conferences.
As industry was a major driver of economic growth during this difficult period, the ineptitude of the available infrastructure became glaring as it exposed the huge digital divide and many regions that have no no connectivity.
Africa has the lowest number of internet connections with only 22% of the continent having access, indicating that the continent has the greatest potential for growth, according to International Finance Corporation (IFC).
Hasnen Varawalla, co-head of origin investment banking for Absa, said the listing of two leading telecom companies in Nigeria on the Nigeria Exchange Group (NGX) has boosted the sector and the market for capital and that they both contribute up to 54% of the capital. market basis. He explained that the sector fuels other critical sectors of the economy, boosts fintech companies, supports the government’s revenue collection campaign, security, e-commerce services and smart city plans.
According to him, “Absa is an important provider of capital for the entire telecommunications sector in Africa. Our role, however, is not limited to providing capital; we are among the most active advisers to telecommunications/telecom infrastructure companies and have led and/or been involved in many landmark transactions across the continent, including Airtel’s £595m IPO sterling on the NGX, the sale of 9mobile to Teleology, the IPO of Vodacom on Tanzanian stocks. Exchange, IHS’ IPO for $378 on the NYSE, IHS’ acquisition of MTN’s tower portfolio in South Africa, among others.
“We continue to make our deep telecommunications industry expertise available to help telecom operators take advantage of emerging opportunities that will accelerate the timely realization of their growth aspiration,” Varawalla said.
With the ongoing implementation by the Nigeria Communication Commission of the Nigerian National Broadband Plan (NNBP) 2020-2025, which aims to increase broadband penetration to 70% by 2025, now is the time for investors to s align with this plan, take informed risks on innovation, network expansion and infrastructure upgrades.
Internet traffic is on the rise, with more than 70 percent from mobile devices, making the switch from 3G to 4G and 5G inevitable. Additionally, many of the technologies that will rely on the infrastructure in the future are limitless.
Adopting 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 registered huge reach with mobile financial services in the continent due to their large customer base, existing distribution network and mobile phone penetration. The telecommunications services sector holds potential for fiber, telecommunications towers, active networks, mobile and fixed broadband, data centers and investor in e-commerce, among others.
Indeed, Absa’s invaluable role in providing capital for telecommunications expansion in Africa and offering advisory services has led to many landmark innovations and 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.