February 2, 2022/CSL Research

In our last report on the country’s broadband penetration (See CSL Nigeria Daily 04 October
2021 – Can Nigeria achieve 50% broadband penetration in 2021?), we wrote on the impact of the ongoing SIM-NIN integration exercise, resulting in broadband disconnections and limiting penetration rate. Based on the recent data by the Nigerian Communications Commission (NCC), the broadband penetration declined to 40.9% in December from 42.9% in January 2021, which was in line with our expectation that achieving a 50% broadband penetration in 2021 would be a cold day in July. Accordingly, the total number of broadband subscriptions declined to 78.04m subscriptions from 81.95m subscriptions in January 2021.

However, the subscriptions increased on a m/m basis (+2.3%) in December 2021, showing a gradual recovery from a low of 75.6m subscriptions in May 2021 with a related penetration rate of 39.6% within the period. We attribute this m/m growth to the continued efforts by the industry players in improving the turnaround time for the NIN-Integration process for its subscribers as the previous deadline of 31 December 2021 put them at possible risk of disconnection should it had prevailed.

That said, looking at the factors that could shape broadband penetration in the year, we believe that the narrative for 2022 will be better than 2021, indicating that broadband penetration would rise in the year but at a slower pace. One, the proposed launch of the 5G network in the country will come with faster download speeds, low latency, higher bandwidth, enabling the expansion of broadband services. However, given the limited readiness of the network providers as MTNN is the only player partly ready for the launch of the 5G network as of the time of writing, the pace of penetration may be slow.

Also, we have seen states like Lagos, Ekiti, Kaduna and Kwara reducing right of way charges to encourage investments in broadband infrastructure in the states with the most recent being the partnership between Kaduna State and Airtel Nigeria to deepen 3G and 4G network coverage by the end of the 2022 including deployment of fibre network access. In essence, we believe the growth in penetration rate will be gradual as issues such as existing poor fibre optics in the suburban and rural areas, unaffordability of 5G enabled phones, etc will hinder rapid growth.