Telcos explain 3.21% fall in sector’s contribution to Q3 GDP

• Blame drop in consumer purchasing power, drop in ArPU

Telecom operators have said the drop in consumer purchasing power and the Average Revenue Per User (ArPU) rates were responsible for the downward trend the sector’s contribution witnessed in third quarter of 2019, in its contribution to the country’s Gross Domestic Product (GDP).The Nigerian Bureau of Statistics (NBS) report has shown that the contribution of the telecom industry to the country’s GDP decreased in Q3.

According to the NBS figures, the industry’s contribution fell by 3.21 per cent from 14.55 percent contributed in Q2 to 11.34 percent in Q3 of 2019. However, the contribution was 0.79 per cent higher when compared with 10.55 per cent contributed to the country’s GDP last year.

But the operators, under the aegis of Association of Telecommunications Companies of Nigeria (ATCON), noted that the GDP in 2018 was lower compared to 2019, and although 2019 suggests a pickup in the final GDP growth rate, “this is albeit from a low base in 2018. The actual contribution of ICT to GDP is still predominated by the telecoms sector in the back of mobile money, content and steadiness in both voice and data services.

“Increase competition in data bundled product offerings will be a major factor in ICT GDP contribution going forward and the overall ICT contribution will normalise itself by the end of this financial year,” said ATCON President, Olusola Teniola. From his perspective, the Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo, said the slide in sector’s GDP contribution, reflects investors’ concerns on the state of affairs as well as the uncertainties surrounding policy issues in the sector.

Adebayo posited that huge fines and penalties against operators for minor infractions are also another source of deterrent to foreign investors amongst others. which are currently impacting the performance of the sector. Teniola further called for collaboration among stakeholders, especially in tackling issues confronting the industry growth.

According to him, there are challenges related to End User Certificates (EUC), multiple taxes, and illegal shutdown of towers housing these BTS(es), security and protection of facilities and a lack of power.Adebayo said all telecom facilities must be treated as a Critical National Infrastructure (CNI) with immediate effect “before we can be serious about developing a Digital Economy in its true sense.”
Meanwhile, despite the decrease in sector GDP contribution in Q3, the NBS report showed a growth rate of the sector rose to 9.88 per cent.