The Telecommunications Sector Remains A Bright Spot


The Telecommunications sector remains a bright spot in an otherwise sluggish Nigerian economy. In 2020, the Nigerian economy recorded a decline of -1.9% as key sectors of the economy fell victim to the devastating effect of the Covid19 pandemic.

However, the Telecommunications sector grew by a whopping 16.0%, vastly outpacing other key sectors such as Financial Services (+9.4%), Agriculture (+2.2%), Manufacturing (-1.5%), Trade (-8.5%), Transportation (-22.3%) and Oil Refining (-62.2%).

The Telecommunications Sector Remains A Bright Spot Brandspurng
Sources: NBS, United Capital Research

The performance of the Telecoms sector is anything but surprising. Prior to the pandemic, the digital transformation of the Nigerian economy was largely underway, albeit at a slower pace compared to advanced economies (which speaks to a massive growth headroom).

According to the National Communications Commission (NCC), broadband penetration increased from 6.0% in 2015 to 45.0% as of Dec2020, with 85.9mn Nigerians now connected on 3G and 4G networks.

The pandemic accelerated this transformation, as evidenced by the necessitated shift in day-to-day business and individual activities to a virtual environment, with heavy reliance on Telecoms providers to bridge the gaps left by the lockdowns.

Over two decades since the Nigerian Communications Commission (NCC) opened Nigeria’s spectrum to private investment and GSM technology, the Nigerian telecom sector remains a high growth market, primarily due to Nigeria’s demographics and low mobile penetration.

The sector will continue to observe substantial growth in smartphone and broadband penetration, mostly due to the influx of cheaper smartphones from China and the increased digitalization of businesses. As such, we expect the sector in 2021 to pick up from 2020’s performance.

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Again, we anticipate listed industry players (MTN Nigeria Plc and Airtel Africa Plc) to report strong Q4-2020 numbers and sustained growth in data, fintech and voice segments.