In this report, we took a look at the Nigerian telecommunications sector and analyzed what shaped the space in 2022. We also gave our views on the performance of MTN Nigeria and Airtel Africa.

Executive Summary

2022FY in the global economy was pervaded by uncertainties as the Russian-Ukraine conflict persisted, causing supply-chain disruption and rising energy costs globally. We witnessed the pass-through effect on energy costs in Nigeria, and the telecommunications sector was not spared from the unfortunate incident. However, the industry still recorded decent growth, as evidenced by their most recent financial results and contribution to the nation’s GDP numbers.

Coming to the peculiar development in the sector, in 2021, the telco players took some heat in their voice revenue as the Government introduced the critical linkage of NIN to customers’ SIM. As a result, the companies had to stop SIM sales in the period, impacting subscribers’ growth. In 2021, total subscriptions declined by 4.47% Furthermore, in April 2022, the Federal Government directed the telcos to ban SIMs without NIN linkage.

Given the Nigerian Telecommunications sector resilience and the country’s favorable demography, we witnessed a surge in Data Revenue in 2022. This boosted the industry’s total revenue in the period. Furthermore, it was an eventful year for the sector, as the media was laced with news of 5G deployment, final PSB license awards, Elon Musk’s Starlink entrance into the market and Google’s Submarine cables. Considering these developments, we are optimistic of the growth in the sector and its overall impact on the economy in 2023FY.

Across the companies under our coverage, we issue a ‘STRONG BUY’ rating on MTNN and a ‘SELL’ rating on Airtel Africa. We opine that Airtel Africa is overvalued at the current market price of NGN1,548.7 as of 16th March 2023.

Click here to read the report.