…Telcos Investments in Infrastructure Rises by 14.19%
Investments in infrastructure by MTN Nigeria and Airtel Africa rose to N613.13 billion in 2022, underpinned by capital expenditure in 5G and 4G network rollout, the financial statements of the two telcos have shown.
MTN spent N504.33bn on network rollout in 2022, while Airtel invested N108.79bn ($236m) during this period.
Total investment in network rollout in 2022 from the two telcos was a 14.19 per cent increase from the N536.91bn spent in the prior year.
MTN said, “Capital expenditure was N504.3bn, up 23.5 per cent, due to acceleration in coverage expansion, focusing on the 4G and 5G network rollout and our rural telephony programme.
“We deployed 9,027 4G sites, 588 5G sites and 778 rural sites. 4G accounted for approximately 76 per cent of the total sites deployed during the year. Core Capex, excluding the right-of-use assets, increased by 18.6 per cent to N361.0bn, slightly above plan to enable us to capture growth opportunities.
“Our accelerated Capex investments allowed us to capture growth opportunities in the data space while mitigating foreign exchange and supply chain disruption risks and the impact of rising inflation. Notwithstanding, the Capex intensity of 17.9 per cent was in line with our target levels, reflecting our disciplined approach to capital allocation. Free cash flow was up by 20.7 per cent to N566.0bn.”
Commenting on the group’s investment strategy, Airtel Africa’s Chief Executive officer, Segun Ogunsanya, stated, “Over the last nine months we have spent almost $490m on 4G and 5G spectrum across key markets to improve network capacity and quality, future-proof the company for continued growth opportunities and facilitate economic progress in all our markets.”
5G is expected to headline network investment in Nigeria for the next couple of years.
In 2021, the Nigerian Communications Commission auctioned its first two 5G licences, with MTN and Mafab Communications emerging as winners.
In 2022, Airtel got a 5G licence after it emerged as the sole bidder in a new NCC 5G auction. Since 5G was commercially launched in the country, MTN and Mafab have announced rollouts in nine states. The states include Lagos, Abuja, Kano, Enugu, Port Harcourt, Kaduna, Ibadan, Owerri, and Maiduguri.
According to the NCC, 5G would improve the telecoms network by enhancing connection speed, mobility, and capacity.
Recently, the NCC Executive Vice Chairman, Prof. Umar Danbatta, said, “Though the deployment will start from the state capital and gradually extends to other areas across the state, it is important to state that the 5G network will bring substantial network improvements, including higher connection speed, mobility and capacity, as well as low-latency capabilities to communications services in Nigeria.”
According to the Global System for Mobile Communications Association, telcos would need to invest $500m to rollout 5G network in 10 major cities in the country.
Ericsson recently stated that 5G subscriptions would only constitute around 14 per cent of mobile subscriptions in Nigeria by 2028.
The Economist Intelligence argued that returns on 5G investment would be low in the short term.