Co-head of Investment Banking Origination for Absa Nigeria, Hasnen Varawalla has said Nigeria’s telecommunications sector is one of the largest sectors on the continent and can serve as a strong driver for employment generation, financial inclusion and robust foreign direct investment (FDI).
Absa, a pan-African bank, also highlighted the opportunities for new businesses in the telecoms sector as well as its growth potential.
Speaking during a media roundtable in Lagos, themed: ‘’The Nigeria telecoms sector: Exploring the opportunities’’, Varawalla said two of the telcos listed on the Nigeria Exchange (NGX) form 54 per cent of the capital base of the NGX and as of last year, the sector contributed around 17 per cent of the nation’s Gross Domestic Product.
He explained that the sector drives financial inclusion, supports fintechs, aids the growth in e-Commerce and integrates cities. He said some of the attractive propositions in the industry include telecoms infrastructure (data centres, fibre networks, etc), the gradual rollout of 5G technology combined with the new interest in digital work tools to meet the demands for work arrangements, as well as the emerging trends in fintech.
“Absa is a significant capital provider to the entire telecoms sector in Africa. Our role is not limited to providing capital though; we are among the most active advisers to telco/telco infrastructure companies having led and/or participated in many landmark transactions across the continent, including the GBP 595m Airtel IPO on the NGX, the sale of 9mobile to Teleology, Vodacom IPO on the Tanzania Stock Exchange, the US$ 378 IHS IPO on the NYSE, and the acquisition by IHS of MTN’s tower portfolio in South Africa.
‘’We continue to make available our deep telecoms sector expertise to help telcos take advantage of emerging opportunities that will fast track the timely achievement of their growth aspiration,” Varawalla said.
The Chairman, Absa Nigeria, Adedotun Sulaiman, also spoke on the potential of the telecoms sector and its implication for the economy. He promised that Absa will be available to provide perspectives on key sectors of the economy.
The bank said the opportunities and the growth potential remain strong, in spite of the challenges in the sector, and, therefore, called on investors and entrepreneurs to tap into the opportunities and expected growth.
The banking group, which operates two subsidiaries, Absa Capital Markets Nigeria Limited and Absa Securities Nigeria Limited, has expertise in advising and financing telecoms, media and technology transactions across the continent.
The Chief Executive Officer, Absa Nigeria, Sadiq Abu, said the factors plaguing the smooth operations of telcos include power deficit, vandalism of transmission infrastructure assets, theft, and multiple taxation.
He said despite the challenges, the sector continues to present enormous opportunities for growth, especially in relation to broadband internet, last mile connectivity and telco infrastructure (data centres, fibre optic networks, etc). There remains a vast and growing demand for data, despite the apparent maturity of voice revenue streams.
“The telecommunications industry is generating interest from local and foreign investors.This is because the capacity for growth in the industry is limitless. And telcos are already strategically developing useful business vehicles to take advantage of emerging opportunities in the industry.
“Meanwhile, the various challenges that are bedeviling the smooth operations of telcos provide expansive opportunities for smart entrepreneurs who possess an innovative and unerring vision of what can be done to help the players maintain cost advantage or protect critical transmission infrastructure assets through the provision of services that hedge against disruption in the supply chains.”