Foreign investment in the telecommunications sector increased sevenfold in Q1

Foreign investment in the telecom sector increased by 768.79 per cent to $191.57 million in the first quarter of 2024, compared with $22.05 million in the same quarter of 2023.

This means a return of foreign capital to the sector, which could attract only USD 134.75 million in 2023, which is 42.17 percent less than the amount raised in the first quarter of 2024 (and 239.02 percent less than the USD 456.83 million raised in 2022), according to data on capital imports from the National Bureau of Statistics.

Telecom companies have struggled to attract foreign investment in 2023 due to economic uncertainty. However, the harmonization of the currency market, settlement of currency arrears, devaluation of the naira and high interest rates (after rising inflation) have sent positive signals to investors, according to analysts.

Karl Toriola, CEO of MTN Nigeria, in the company’s 2023 financial report stated that “2023 was characterised by a very challenging operating environment, characterised by rising inflation, currency devaluations and foreign exchange shortages.”

Also read: Telecom investment reached $75.56 billion in 2021

To cope with foreign exchange shortages and slowdown in foreign investment, operators in the sector relied on commercial paper, letters of credit and new debt to fund their capital expenditure. MTN Nigeria’s total debt rose 70.69 percent to N1.18 trillion from N689.67 billion.

The new investments are expected to accelerate broadband expansion in the country, which aims to improve connectivity by bridging the 90,000-km fiber gap. Industry experts have said the telecom industry needs at least $3.4 billion in fiber infrastructure investment to achieve the 70 percent internet coverage target.

The mobile industry is capital intensive, according to the GSMA, the global body for telecommunications operators. “A more financially sustainable environment would lead to increased investment in network coverage and capacity. This would accelerate investment in network upgrades for the latest generations of mobile technologies, particularly for smaller operators in the Nigerian market,” the GSMA said in its latest report on Nigeria.