Report: Telecoms Remains Resilient Amid Regulatory Challenges, COVID-19 Pandemic

Emma Okonji

A recent report released by Agusto and Co, has placed the telecommunications sector as the most resilient sector, despite regulatory challenges and COVID-19 effect in the last two years.

The 2021 report provides a comprehensive view of the industry including the impact of the macroeconomic environment and COVID-19 on the industry’s performance.

The report covers recent developments in the regulatory environment and the attendant impact on the competitive landscape. Agusto and Co’s 2021 telecommunications report highlights key risks and challenges of the industry and provides a SWOT analysis, covering Strengths, Weaknesses, Opportunities and Threats (SWOT).

In the area of smartphone revolution, report said the use of mobile phones grew exponentially due to the smart phone revolution, a continuous upgrade of network infrastructure and improving quality of service.

It explained that the latest technology – the Fifth Generation (5G), despite launch drawbacks due to the COVID-19 pandemic, became commercially available in about 40 countries so far including Kenya and South Africa.

Agusto and Co, in the report, expects that the 5G technology will be commercially available in Nigeria by mid-2022.

It cited the International Telecommunications Union (ITU), which earlier said that global mobile phone subscriptions were expected to grow from 8.2 billion in 2020 to about 10 billion by 2025, driven by increasing affordability of smartphones and accelerating technological adoption in sub-Saharan Africa. The report said growth in the use of mobile phones should also be supported by population growth in the Asia-Pacific continent.

In the area of connectivity, the report said telecoms provided key connectivity platforms, following the pandemic-induced movement restrictions
“The COVID-19 pandemic posed an extraordinary test for the entire global community considering several social isolation measures mandated to curb the spread of the coronavirus. For this reason, the telecommunications industry provided businesses and individuals with connectivity, which fostered resilience as the world grappled with the pandemic.

“At the peak of the isolation, internet traffic in Europe increased by about 70 per cent, while demand for streaming services grew by at least 12 per cent, with some of the streaming service providers having to lower video quality to manage the rise in internet traffic. In Nigeria, the proportion of mobile internet users to mobile phone subscriptions increased from 69.1 per cent in January 2020 to 75.4 per cent as at December 2020,” the report said.
Agusto and Co expects the country’s telecommunication consumption pattern to be sustained in the near-term given lingering concerns around the emergence of COVID-19 variants.

It said Nigeria’s telecommunications industry remained strategically important amid regulatory changes and a fragile economy, adding that the Nigerian telecoms industry has continued to thrive on the back of the liberalisation in the early 2000’s.

“Between 2015 and 2020, foreign investments, attributable to the telecommunications industry amounted to $3.9 billion, an average of 7 per cent of Nigeria’s total capital importation during the same period. The industry has consistently remained one of the top five ranking economic sectors for foreign investments during the period,” the report said.

Agusto and Co believes the imminent deployment of 5G technology and the Federal Government of Nigeria’s target broadband penetration rate of 70 per cent by 2025, will support substantial additional foreign investments in the near to medium term.

“Due to key connectivity support the industry provides, telecommunications was one of the economy’s few bright spots in 2020, along with sectors such as financial institutions, agriculture and health services. Despite the aforementioned positives, the unstable macroeconomic environment in Nigeria poses a huge threat to successfully harnessing the vast potential the telecommunications industry,” the report added.