Acquisitions, equity listing, 4G infrastructure aid telecoms’ 725% FDI growth

• As sector attracts‭ $‬944m foreign capital in 12‭ ‬months

By Omobayo Azeez

Olusola Teniola, president of Association of Telecommunications Companies of Nigeria (ATCON) has explained the impetus that propelled a 725 per cent growth in foreign direct investment into the telecoms sector in 2019.

His explanation came as a reaction to report by the National Bureau of Statistics (NBS) that FDI into the sector increased tremendously by 725 percent last year to hit $944.05 million up from $114.43 million recorded in 2018.

He said the sudden attraction of foreign capital into the sector was driven by some acquisitions that occurred in the sector during the year, listing of companies for equity input, operators’ aggressive drive on improving 4G infrastructure, among others.

“The recent injection of capital importation has been used to acquire ownerships in certain companies that have been put in the market for equity input or outright sale. I cannot name the companies because of confidentiality and commercial interests,” Teniola told business a.m.

“But some of the companies have gone public and use the opportunity to acquire different shareholders to redress and rebalance their debt to equity ratio. So, that has increased the level of capital importation,” he further explained.

The ATCON boss also highlighted Airtel Africa’s acquisition of an additional 10MHz of spectrum in the 900MHz band which cost it $96 million as another factor that boosted FDI inflow during the period under review.

“Again, another reason has to do with acquisition of infrastructure in terms of improving 4G penetration which in the last quarter of 2019 was increased significantly by some of the major MNOs. There has been a trend of pumping in more FDI to facilitate capital expenditure (CAPEX) investment for 4G,” he said.

The NBS noted in its latest capital importation report that foreign capital investment in the sector grew by $829.62 in the year under review from $114.43 million in 2018.

The government statistician showed that aggregate amount was attained as the foreign investors pitched in the sector $32.35 million, $4.5 million, N886.03 million and $21.17 million in the first, second, third and fourth quarters, respectively.

This is in contrast with the 2018 record when capital inflow into the sector was estimated at $87.25 million, $11.12 million, $11.42 million and $4.64 million in the first, second, third and fourth quarters of the year in that order.

In 2018, telecoms sectors dropped to the ninth place in terms of the value of investment it attracted as more funds were pitched into shares, banking, financing, services, production, agriculture, trading and oil and gas sectors.

The sector, however, climbed up to the fifth-highest investment destination in the country in 2019 after the banking sector, which had $7.659 billion; financing which attracted $6.281 billion; stocks with $5.335 billion and production sector which attracted $1.297 billion in the same year.