Recession cuts telecoms operators’ earnings by N31b in Q2 – Guardian

The harsh economic climate in the country is having its toll on the telecommunications sector. The earnings of telecommunications operators dipped significantly as over 60 million telephone lines became inactive at the end of the second quarter.

The Guardian learnt that the fall in the industry’s Average Revenue Per User (ARPU), among other factors, might have contributed to the slide in service providers’ earnings within the period.

ARPU is a measure used primarily by consumer communications and networking companies. It is defined as the total revenue divided by the number of subscribers.

The index, according to a source in the Ministry of Communications, who spoke to The Guardian anonymously, dropped sharply from N3,000 in 2001 to N500 in 2016, due mainly to the dwindling disposable income of subscribers amid the harsh economic climate.

This figure was corroborated yesterday by an official of a leading telecommunications company, who disclosed that ARPU has been on the decline in the last one year.

The official said: “For instance, in January and July 2015 it fell by 21.7 per cent and 15.7 per cent, a pattern that repeated itself in 2016.”

As a result, the about 62 million lines, which went dead, due to current economic challenges, might have cost the quartet of MTN, Globacom, Airtel and Etisalat a revenue of about N31 billion within the period under review.

According to the telecommunications source, in response to economic realities, subscribers are generally spending less than they used to. “Unfortunately, operational and capital expenditure required to support that user base has not declined in proportion and is actually on the rise, as a result of the same economic realities. The industry therefore, requires understanding and support to ensure we are sustained.”

While many telephone lines are becoming inactive, the operators are also losing subscribers to one another. For instance, for the period under review, about 60,356 subscribers ported out of the various networks over complaints of poor service quality.

The figure represents an increase of 13.94 per cent, relative to the 52,973 outgoing porters recorded in the previous quarter, and an increase of 10.58 per cent, relative to the 54,581 outgoing porters recorded the previous year.

Statistics from the National Bureau of Statistics (NBS) for the second quarter showed that Airtel, Etisalat and Globacom each contributed to the increase, and recorded relatively large growth rates both year on year and quarter on quarter. MTN was the exception; it recorded decrease over both periods.

According to NBS, the largest increase in outgoing activity was by Globacom, which had an increase of 76.37 per cent, from 7,152 in the first quarter to 12,614 in the second quarter of 2016. Year on year, the increase was lower at 47 per cent, from 8,581 outgoing porters in the second quarter of 2015.

Etisalat recorded the second largest increase of 59.44 per cent or from 4,800 to 7,653 between the first and second quarters, and by 28.88 per cent from 5,938 in the second quarter of 2015.

The number of outgoing porters recorded by Airtel was 13,192, which was 32.12 per cent higher than the 9,985 recorded in the previous quarter, and 26.06 per cent higher than the 10,465 recorded in the second quarter of 2015.

The report noted that by contrast, MTN recorded 26,897 outgoing porters in the second quarter of 2016, which represents a 13.34 per cent decline, relative to the 31,036 recorded in the previous quarter and a decline of 9.25 per cent, relative to the 29,637 outgoing porters recorded in the second quarter of 2015.