5G facing slow growth in Nigeria

I was going through some of my old writings last week and I chanced on a few of them focused on 5G technology. I was still nearly overwhelmed by the great expectations, the amount of euphoria and excitement that heralded the coming of the technology to our nation. It was almost attributed as a silver bullet that could resolve nearly all the problems facing the country.

It will resolve security challenges. It will unleash new businesses and show up very strongly in the development of smart cities and smart ecosystems. Even machines will be able to whisper to each other in conspiratorial relationships and technological advancements. It will provide big pipes for data and pictures, and subscribers can literally do anything with a 5G phones, mind you only 5G devices, including some people that may be encouraged by Elon Musk to take a vacation at the International Space Station and be watched on earth by proud members of their families. Oh, remember Elon Musk and his Space Exploration Technologies Corporation (SpaceX)?

Even our taciturn President at the time, Muhammadu Buhari, not known for exhibiting any emotions, waxed lyrical for 5G. “5G technology is significantly faster than earlier digital technologies and it provides near real-time communication. This can play a key role in boosting our efforts towards enhancing security across the nation. It will enable our security institutions to effectively deploy robotics, autonomous vehicles, augmented and virtual reality to address any security challenges that we face. To this end, I hereby direct all the security institutions to immediately leverage 5G when deployed in order to beef up security in the country,” the President said.

This was early 2022. Since then three operators, MTN, Mafab and Airtel have rolled out 5G services and the impact of their efforts on life and businesses cannot be said to be noticeable. Or so it seemed to me last week when I did a little evaluation of the process and couldn’t really nail down anything positively significant.

In March 2024, the Nigerian Communications Commission (NCC) released the industry Percentage Share by the Generations of mobile technology as follows: 2G – 56.97 percent, 3G – 9.04 percent, 4G – 32.74 percent and 5G stands at 1.24 percent. Active mobile subscriptions within the period stood at 219m of which 5G contributed 2.7m.

The mobile technology is categorised in Generations (G). 1G was for voice services only, analogue and wasn’t interoperable across platforms. It couldn’t even be used in a different state without roaming, not to talk of being used in another country. 2G which came with GSM in 2001, introduced digital features and, since then, there has been significant improvement from one Generation to another, with 3G introducing video capabilities and fast data transmission while 4G has taken the process a notch higher. 5G is seen as the esoteric high end with super features to enhance smart life, smart homes and machine to machine communications, among others.

This is how the ITU captures 5G technology. “The fifth generation of mobile technologies – 5G – connects people, things, data, applications, transport systems and cities in smart networked communication environments. The networks transport a huge amount of data much faster, reliably connect an extremely large number of devices and process very high volumes of data with minimal delay.”

ITU further submits that 5G technologies support applications such as smart homes and buildings, 3D video, work and play in the cloud, remote medical services, virtual and augmented reality, and massive machine-to-machine communications for industry automation, far above and beyond the capacity of 3G and 4G.

While ITU informs that global 5G coverage has nearly hit 40 percent by September 2023, it says that distribution is uneven. In high income countries, 89 percent of people are covered by 5G networks, but in low-income countries, the service is nearly absent.

The telecommunications dashboard in Nigeria is pretty clear. From the NCC presentation, it is clearly obvious that 2G enjoys market dominance, meaning that for operators to continue to make money, 2G will remain their coveted honeypot into the foreseeable future at a time the technology is being scrapped in some parts of the world.

The ITU observation resonates loudly in Nigeria. While 5G has slowly been introduced to a few major cities, it is very unlikely that some other big cities will see the technology soon, much more,  some less developed  environments whose turn doesn’t appear on the horizon. The joy and great expectations that greeted the coming of the technology are fast fading away. Even the operators are beginning to see 5G as a business for the long haul instead of something that can yield immediate profits.

This is quite opposite of the global trends. Informa, quoting a research from InterDigital and ABI Research, says that 5G is outstripping its predecessors in growth, adding that by 2030, the technology could contribute a hefty sum of $7trillion to the global economy because of overwhelming connections of machines to machines, devices, smart cities, industries, healthcare and hospitality businesses,  and in nearly all aspects of life.

GSMA Intelligence informs that by September 2023, 27 operators had launched 5G services in 16 markets in Africa while some operators were revving up to launch in another 10 markets. North Africa enjoys superior coverage with Morocco projected to do 70 percent (45m connections), Algeria – 45 percent (31m), and Egypt 33 percent (47m) by 2030. South Africa is projected to have 43 percent coverage (58m connections) while coverage in Nigeria will hover at 26 percent which translates to 72m connections.

How much share Nigeria can have of the global 5G pie remains seriously in doubt as the market doesn’t seem to be doing well at all. Prevailing economic realities also don’t even give any reasons for high expectations. Since 2022, as stated earlier, the country has had about 2.7m uptakes with the future not looking much brighter.

An industry source told this writer that even with the above development, most subscribers in Nigeria are on the 2G network which remains a primary source of revenue for the operators. While the source estimated that about 30 cities may have been reached by 5G, it confirmed that rollout remains slow because of cost, while uptakes are limited by the challenging ecosystem which includes high cost of handsets and devices.

The source reviewed the state of the telecommunications industry and the economy, and confirmed that at the moment, operators are losing money. For example, MTN reported a whopping N740bn loss last year, and this writer gathered that the story may not be any different in the current year. The volatility in the Forex market is dealing the operators a heavy blow with some of them scaling down their capital expenditure (CAPEX).

The operating environment is very challenging. The service quality is deteriorating, the source informed, as Tower Operators, who provide strategic services to the operators, are shutting down some sites because of inability to fuel them with diesel as a result of crippling cost. Some of the operators are introducing green energy to power their operations but the process is slow because capital outlay is huge.

Understandably, 5G rollout plans and service uptake are severely challenged. Costs are high on either end and the economy continues to hit with a humbly hammer, making it difficult for people to make purchase decisions. Another industry source lamented that there seems to be general confusion at the moment in the telecommunications industry. “What do they want us to do,” the source queried.

Under the circumstances, 5G is struggling. The source noted that after paying hefty licence fees ($273.6m per operator), no Nigerian 5G operator can make good returns on investment in the next five to six years, and “that depends if we are able to find appropriate pricing for devices and services because current ones are  not reflective of cost at all.”

5G is like the meat of the antelope that needs proper cooking in order to achieve tasty results. While so many possibilities and revenue yields have been attributed to the technology, an expert suggests that the Nigerian Government needs to provide a good policy and regulatory environment in order to reap from such overwhelming advantages and be part of the global community.