A few days ago, Nigeria’s largest telecom provider, MTN Nigeria, published its financial report for Q1 2020 when it amassed revenues of ₦329.2 billion ($845.4 million), up 16.7% from Q1 2019, and profits after tax hit ₦51.02 billion ($131.1 million), a 5.3% increase.
As one of the foremost telecom providers in Nigeria, according to the Nigerian Communications Commission (NCC), MTN accounts for 38% and 43% of Nigeria’s GSM and Internet subscribers, respectively.
Nigerian telcos have always had to power through the Nigerian terrain amidst high operating costs. These range from basic services such as power and security, to various forms of levies and charges at different levels of government.
Relatively slower growth in data usage
Over the past few years, Internet subscribers have been on the increase, and MTN largely won the data war of 2019 by a landslide. The continued growth of Internet subscribers continued in Q1 2020.
In the same period, the company’s active data subscribers increased by 1.7 million to 26.8 million, a 6.6% increase, while data revenue witnessed a 59.2% growth.
While MTN gained an impressive 1.7 million active data subscribers, by comparison, at the end of 2019 (PDF), it gained 2.9 million to reach 25.1 active data subscribers, up 13% from Q3 2019, a slightly higher growth rate.
In total, MTN has 55.53 million subscribers, but with just 26.8 million of them active, there are 28.73 million inactive subscribers — those who bought less than 5mb or didn’t subscribe in 90 days — casting further doubts on the actual size of Nigeria’s addressable Internet market.
Data may not replace dwindling voice revenue
However, according to MTN, the onset of the pandemic and the subsequent lockdown have had an almost immediate negative impact on voice traffic and voice revenues. MTN linked this decline to a drop in economic activities and a reduction in purchasing power.
According to the telecom giants, though a decline in voice revenue was partially offset by increased data revenue, it will not fully make up for the voice services which have been the mainstream source of revenue. The reasons for this are well documented.
While the use of various data channels might be on the increase, voice revenue remains the main cash cow for MTN. As the company revealed during its 5G trial in Abuja last year, despite the expected massive impact of 5G, voice is still expected to be the main revenue source.
According to MTN’s report, about 4.2 million new subscribers were added in Q1 2020, bringing its total subscriber base from 64.3 million in 2019 to 68.5 million. Following this, voice revenue grew by 7.2% (a 3.2% QoQ growth) and accounted for 69.1% of the company’s revenue.
In Q1 2020, MTN raked in ₦227.6 billion from voice calls and SMS, almost five times the amount generated from data (₦46.6 billion), within the same period.