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Technology | Mobile Money and Telcos

Steady Rise in Broadband Penetration, Grows by 10.9% YoY in June 2022

Aug 24, 2022   •   by   •   Source: FBNQuest   •   eye-icon 227 views

Our chart today, produced using data from the Nigerian Communications Commissions (NCC), shows that Nigeria’s broadband subscriptions have increased steadily since October ’21, excluding a slight dip in February ’22. Mobile broadband accounts for a dominant share (over 99%) of Nigeria’s broadband connections due to the ease and relatively low cost of acquiring mobile lines as well as the significant investment required for the development of fixed broadband infrastructure. Consequently, the growth in broadband connections broadly mirrors the increase in mobile internet subscriptions, and by extension active mobile subscribers.

According to the data, total broadband connections climbed by 1.5% m/m and 10.9% y/y to approximately 84.6 million in June ‘22, implying a penetration rate of c.44.3%, up from c.43.7% the previous month, and c.40% as at June ’21. 

Given its beneficial effects on economic activity, particularly in sectors like e-commerce and fintech that have recorded robust growth, the expansion of broadband penetration is commendable. 

The International Telecommunication Union (ITU) estimates that a 10% increase in broadband penetration will lead to an additional GDP growth of 2.0% and 1.8% for low- and middle-income countries, respectively. 

Although appreciable progress has been made in enhancing broadband penetration, there remains significant ground to cover in terms of policy implementation targets with respect to coverage, cost, and speed of broadband connection. 

For instance, two of the goals of the national broadband plan are to achieve 90% population coverage and a penetration rate of 70% by 2025. 

Since the plan's inception in 2020, the penetration rate has risen by slightly under 7 percentage points, or c.3 percentage points per year. As such, the 70% goal by 2025, which implies a 26-percentage point increase appears to be challenging. 

Based on the National Broadband Plan, the required investment by industry operators for the plan's attainment is estimated at between USD3.5bn to USD5bn. 

However, we expect the imminent rollout of the 5G network by MTN Nigeria later this quarter, and subsequently by Mafab Communications to help enhance broadband penetration.

 

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