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Nigeria’s mobile subscriber base is growing at around the fastest pace since the advent of GSM technology at the start of the decade, but average revenue per user is tailing off, industry analysts said on Wednesday.
The number of mobile subscribers in Africa’s most populous nation rose to 68 million by the end of the first quarter, five million more than at the end of last year, said Thecla Mbongue, senior research analyst at Informa Telecom and Media.
Nigerian operators added 7 million new subscribers in the last quarter of 2008 alone, the highest number of net additions since GSM was introduced in 2001, according to Informa data.
But Mbongue said average revenue per user (ARPU), a key gauge of telecoms firms’ competitiveness as well as of consumer spending trends, had started to decline.
“ARPU going down is a normal trend. Once you connect the high-end users and you begin to connect people who spend less, it dilutes ARPU,” Mbongue said at an industry conference in the Nigerian capital Abuja.
She said the increase in subscribers was partly due to Nigerians buying SIM cards from multiple operators and to flexible disconnection policies, which meant subscriptions remained active even if users stopped making calls.
That implied that the real penetration rate in Nigeria, a country of 140 million people and the continent’s biggest mobile telecoms market, was below the 42 percent figure usually quoted by the industry.
PRESSURE ON MARGINS
Mbongue said Informa research showed that ARPU at South Africa’s MTN, the biggest mobile phone operator in Nigeria, had declined to $13 in the first quarter of 2009 from $16 in the same period a year earlier.
One of MTN’s main rivals, Zain — previously known as Celtel and owned by Kuwait’s Mobile Telecommunications Co — saw ARPU fall to $7 in the first quarter from $10 a year earlier, according to Informa’s research.
MTN Nigeria’s Chief Executive Officer Ahmad Farroukh declined to comment on specific ARPU figures but told Reuters he believed the apparent fall in dollar terms was due to the depreciation of the naira.
“So far, the first quarter has been quite a good quarter for MTN Nigeria and we anticipate the trend will continue though we believe the last two quarters of this year would have a little bit of slowdown as compared to the previous year,” he said.
Devine Kofiloto — senior consultant at Teleplan Consulting, a privately-owned global telecoms and IT consultancy — said the focus for telecoms firms in Nigeria until now had been aggressively growing market share.
But he said the next wave would be one of consolidation, with operators trying to find ways to reduce spending as revenues and profit margins decline.
“As they begin to expand into the rural areas they have to provide transmission lines, generators and infrastructure, which increases the cost of doing business,” Kofiloto told Reuters.
“Going forward it’s difficult to sustain the kind of EBITDA margins that we have today,” he said, adding that average EBITDA margins in the Nigerian industry were above 35 percent.