Streaming swells monthly internet spend to N216bn

Nigerians are consuming content on the internet at an unprecedented pace, with monthly usage up by more than 501.99 percent since 2019. This surge has been fueled by the growing appetite for streaming services and other online activities, accessible primarily through smartphones.

According to data from the Nigerian Communication Commission (NCC), monthly internet usage grew from 125,149.86 terabytes (TB) as of December 2019 to 753,388.77 TB as of March 2024. Also, an analysis by BusinessDay shows that the monthly amount spent on internet access has risen to N216.59 billion from N35.98 billion, with the average price of 1GB at N287.5.

The analysis was based on findings that revealed the average cost of 1GB in the country. 1GB onAirtel was N350, N200 on MTN, N300 on Glo, and N300 on 9mobile, bringing the average cost of 1GB to N287.5.

The COVID-19 pandemic accelerated internet consumption. Lockdowns and social distancing measures forced people to work, learn, and socialise virtually, leading to a reliance on video conferencing, online education, and other internet-based activities.

According to the International Telecommunication Union (ITU), the United Nations specialised agency for information and communication technologies, global internet traffic has grown by an average of 30 per cent.

In its 2020 industry report, the NCC said, “The year 2020 witnessed a significant surge in data usage… The increase in data usage is directly linked to the outbreak of the COVID-19 pandemic which disrupted normal activities and most functions had to be held virtually including schools, corporate meetings, etc.”

This shift, along with the vast library of free content available on the internet, has sustained this significant increase.

“We have a lot more users coming online and consuming more content… Trends are changing; digital is here to stay… For instance, more Nigerians are watching Nollywood movies on YouTube,” said Adetutu Laditan, Senior Product Marketing Manager for Sub-Saharan Africa at YouTube.

Karl Toriola, the chief executive officer of MTN Nigeria, said, “A lot of people are shifting their consumption from traditional voice and circuit switch services to data services…”

85 percent of Nigerians on the mobile internet use it to make or receive video calls, 75 percent use it to watch free-to-access online videos, and 54 percent use it to listen to free music online, GSMA disclosed in a recent report on Nigeria.

“Streaming is what is driving this surge. Today, conference meetings on platforms like Zoom, Teams, and Meet are commonplace,” asserted Adeolu Ogunbanjo, the president of the National Association of Telecoms Subscribers (NATCOMS).

“I use a smart TV, so I just stream whatever I want to watch,” said Oluwasegun Adebiyi, a fashion entrepreneur.

“I stream more now. Since COVID, I stream prayers in the morning and every other thing really,” added Atinuke Akintola, a data analyst.

The Nigerian streaming market is a mix of exciting and engaging content in Nollywood, music, comedy skits, and religion, among others. The market has quickly become the darling of many investors, including Spotify, Netflix, Showmax, Red TV, BoomPlay, etc. The country has recently ranked among the top nations on Spotify’s daily streaming data.

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Relatively cheap data costs have also played a role in boosting usage. “Data costs are marginally cheap in the country,” highlighted Ogunbanjo, the president of NATCOMS. The ITU estimates that data cost in Nigeria (as a % of Gross National Income per capita) for a basic data-only package is the lowest in West Africa and well below the average across Africa.

The increasing uptake in data consumption has ensured that the country is above the regional average, with about 29 percent of Nigerians (about 58 million) using the internet, according to GSMA. In August 2023, Umar Danbatta, the former executive vice chairman of the NCC, disclosed that Nigeria accounted for 29 percent of Africa’s internet consumption.”

This increase in usage has also translated to benefits for telcos and the Gross Domestic Product (GDP). The information and communications technology sector did not contract during the 2020 recession and expanded by 10.3 percent year-on-year because of increased data service consumption by households and businesses and higher subscriber numbers, the World Bank said in one of its reports on Nigeria.

The global bank disclosed that improved access to internet coverage over three years reduced extreme poverty in Nigeria by seven percent.

MTN Nigeria’s data revenues have risen from N102.99 billion in the six months ending June 2019 to N349.51 billion in the three months ending March 2024. Airtel Nigeria’s data revenues have grown from N28.81 billion ($80 million at N360.06/$) as of the three months ended June 2019 to N151.15 billion ($116 million at N1,303/$) as of the quarter ended March 2024. Average data usage per customer has grown from 1.63GB to 6.3 GB per month on Airtel. MTN’s average data usage per customer rose to 8.6GB as of the end of Q1, 2024.

This growth is expected to be sustained. Ericsson predicts that mobile data traffic will grow by 37 percent annually between 2022 and 2028 in Nigeria and Sub-Saharan Africa. GSMA expects the increased rollout of technologies such as 4G network to help mobile data traffic growth in the country. “The increase in data traffic will be driven mainly by the growing usage of data-heavy services, primarily video streaming and online gaming,” the industry body said.

Despite these strides, challenges persist. Broadband penetration, which refers to high-speed internet access, remains below 50 percent. A vast digital urban-rural gap exists, fluctuating internet speeds and quality frustrate users, and the high cost of smartphones is a barrier to many Nigerians.

“Probably the biggest barrier to that (an uptake in digital consumption) is the cost of handsets,” Toriola, the CEO of MTN Nigeria, recently noted.

According to the ITU’s Measuring Digital Development Facts and Figures 2022 report, only about 23 percent of Nigerians and other Africans in rural areas used the Internet in 2022.

The NCC said about 27 million Nigerians lack access to telecom services. Huge infrastructural deficits exacerbate this gap, with the country needing 95,000 km more of fibre optic cables to ensure access to all. Bosun Tijani, minister of Communications, Innovation, and Digital Economy, said the country needs about $3 billion to fund this.

Expanding internet access presents an opportunity for economic growth, Andrew Dabalen, World Bank Chief Economist for Africa, argued in a brief titled ‘Digital transformation drives development in Africa.’

However, internet coverage expansion in the country may slow down as telcos hit the brakes on investments due to worsening macroeconomic conditions, which may also affect internet usage.

“They (telcos) are likely to cut back on either capital or operating expenditure or both. This results in a shrinking sector, which leads to subscribers receiving a poorer quality of service and delays in coverage expansion,” GSMA said.

Credit: BusinessDay

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