Steady Rise in Active Mobile Subscribers; Increased by 12% MoM to 209m in July 2022

Our chart today, drawn from data from the Nigerian Communications Commission (NCC), shows that the number of active mobile lines and internet connections in Nigeria increased by 1.2% m/m and 0.7% m/m to c.209 million and 152 million respectively as at end-July ’22. These figures imply mobile phone penetration rate and internet penetration rate of c.104.5% and 76% respectively.  The communications sector is one of the fastest growing sectors of the economy and its data series is one of the very few available indicators of consumption patterns.

The latest national accounts for Q2 2022 show that the telecommunication sub-sector, which accounts for over 80% of the ICT sector’s GDP, grew by 7.7% during the second quarter and contributed around 15% of total GDP.

In terms of market share dynamics, MTN Nigeria (MTNN), the nation’s largest network operator recorded net subscriber additions of c.0.39 million subscribers, taking its total subscriber base to 79.4 million. However, its market share declined marginally by c.-30bps m/m to 38.1%.

The major beneficiary was Globacom (Glo), which registered a market share gain of 68bps, taking its share of mobile lines to 28% on the back of net subscriber additions of 2.1 million.

In the absence of a clear explanation, we suspect that Glo was less impacted (relative to peers) from subscriber churn brought on by customers who disconnected their lines because of restrictions on outbound calls stemming from their failure to comply with the NIN-SIM link registration.

Net subscriber additions for Airtel Nigeria (Airtel) was 0.09 million. Regardless, the company’s market share dropped by -30bps to 27.9% due to the strong market share gains by Glo. 9Mobile's market share declined by 10bps to 6% due to a net subscriber loss of 0.064 million.

Despite upward pressure on opex arising from inflation cost increases and a weaker outlook for the naira exchange rate, we still consider this sector to be one of the brightest in our coverage universe.

Within our coverage universe, we have an Outperform rating for MTNN, with a price target of NGN239.6, implying a potential upside of almost 20%.