Foreign investments in the telecommunications sector for the first quarter of 2024, surged 768.79 per cent to $191.57 million, up from $22.05 million in the same quarter of 2023.
This indicates a return of foreign capital to a sector that could only draw $134.75 million in 2023, 42.17 percent less than what was raised in Q1, 2024 (and 239.02 percent less than the $456.83 million raised in 2022), according to capital importation data from the National Bureau of Statistics.
Economic instability made it difficult for telecommunications companies to attract international investment in 2023. However, economists believe that the harmonization of the foreign currency rate market, the clearing of forex backlogs, the devaluation of the naira, and rising interest rates have given good signals to investors.
MTN Nigeria’s CEO, Karl Toriola, stated in the company’s financial report for 2023 that it “witnessed a very challenging operating environment characterized by rising inflation, currency devaluation, and foreign exchange shortages, according to Businessday.
To negotiate these FX constraints and a slowdown in foreign investment, telecom operators used commercial papers, letters of credit, and new borrowing to pay capital expenditures. MTN Nigeria’s total debt increased by 70.69 percent, reaching N1.18 trillion from N689.67 billion.
These additional investments are intended to accelerate broadband rollout in a country looking to increase connectivity by closing a 90,000-kilometer fiber gap. According to industry experts, the telecom industry will need to invest at least $3.4 billion in fibre infrastructure to fulfill the 70% broadband target.
According to the GSMA, the worldwide telco association, the mobile industry is capital-intensive.
In its latest report on Nigeria, GSMA said “The consequence of a more financially sustainable environment would be increased investment into network coverage and capacity. It would accelerate investment into upgrading networks for the latest generations of mobile technology, particularly for the smaller operators in the Nigerian market.”
