MTN Nigeria Communications Plc and Airtel Africa have ramped up core capital expenditure to match high data usage in the country.
The Nigerian Communications Commission (NCC) reported in February that monthly internet usage soared by 93.35 percent to an all-time high of 1,000,930.6 terabytes (TB) in January 2025 from 517,670.15 TB in January 2023.
This surge has been fuelled by the increased adoption of digital services, especially streaming and social media platforms.
“Social media and streaming content have been crucial in driving data consumption,” said Karl Toriola, chief executive officer of MTN Nigeria.
On the back of this, MTN’s data traffic rose by 42.9 percent, with the average data usage per subscriber growing by 33.6 percent to 11.2GB (with a 37.9 percent increase to 13.2GB) in the fourth quarter (Q4) of 2024.
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Airtel Africa’s average data usage per customer has increased by 37.2 percent to 8.4 GB per month from 6.2 GB. Smartphone data usage per customer reached 11.2 GB per month from 8.8 GB per month.
To accommodate this growth, telecom companies increased their capex spending in the Q4 of 2024, intending to spend more in 2025.
“We accelerated capex deployment in Q4 to accommodate the stronger-than-expected data traffic growth on our networks,” MTN stated in its financial statement.
MTN spent N225.85 billion on capex in Q4 of 2024, accounting for 50.93 percent of its total N443.48 billion core network investment for the year. Although this marked a 1.30 percent decline year-on-year, the telco stated that it is increasing investments in its network infrastructure to support future growth.
Airtel Africa, which serves 57.67 million Nigerian subscribers, allocated $456 million for capex in the nine months ending December 2024, a 7.8 percent y-o-y decline. However, it intends to spend an extra $294 million before March 2015 to take total spending to $750 million.
Sunil Taldar, CEO of Airtel Africa, said, “We remain committed to investing for the future by expanding our distribution and network to ensure that we capture this significant growth opportunity on offer.
“The scale of data traffic growth across our markets – an increase of 49 percent over the last year – is testament to the investments we have made and the relentless focus on our strategy to create value for all our stakeholders.”
For much of 2024, MTN and Airtel slowed down network investments due to economic pressures and efforts to reduce their foreign debt burdens. The two telcos collectively repaid $1.2 billion in foreign loans, redirecting funds that could have gone into infrastructure expansion.
This decline in investments, coupled with an associated reduction in real revenue, impeded operators’ ability to expand their network capacity, worsening service quality across the country.
“At the end of the day, no cash was left to pay our bills. No cash is left in the account. We were burning 120 percent of our cash flow,” Toriola of MTN noted.
“Deteriorating network quality is due to declining investments in the sector,” echoed Gbenga Adebayo, chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON).
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Data tariff hike
To address this issue, the NCC recently approved its first tariff hike since 2013, noting that “these adjustments will support the ability of operators to continue investing in infrastructure and innovation, ultimately benefiting consumers through improved services and connectivity, including better network quality, enhanced customer service, and greater coverage.”
The regulator has now given operators a three-month deadline to improve network quality or face consequences. In a meeting with publishers, Toriola explained that the recent 50 percent increase would unlock more cash for telcos to invest in their network.
“Based on our projections, there would be more cash flow, meaning additional funding to expand and provide quality of service, redundancy, and better customer experience,” he said.
“The price increase will enable us to continue investing in network infrastructure, expanding coverage, and delivering improved products and services that meet the evolving needs of our customers,” echoed Dinesh Balsingh, CEO of Airtel Nigeria.
MTN has already outlined an improved capex deployment strategy for 2025, aimed at enhancing network capacity and customer experience.
“In 2025, we plan to accelerate capital expenditure to improve network capacity, promote digital inclusion, and enhance customer experience,” added Toriola of MTN.