RE: Post Covid-19 Economy: Quoted tech firms to solidify sector

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Post ‘prefix’ sands as after, subsequent, later, behind, posterior, following after, etc, did not have time line. And again to made statement that Post Covid-19 Economy: Quoted tech firms to solidify sector is like lack of knowledge of the process because the two quoted tech firms as said cannot be taking in isolation of entire telecom industry.To say post covid-19 economy: quoted tech firms to solidify sector by Prince Osuagwu -Hi-Tech Editor of Vanguard newspaper recently is like from fry pan to fire scenarios.  He went further to said that “Despite the ongoing crisis in the local and global markets triggered by coronavirus pandemic and unprecedented plunge in oil prices, the telecommunications industry has been tipped to balance the economy, post-COVID. Knowing well that the telecommunication industry have huge infrastructure deficiencies with weak power supply, it will end up like oil sector.

“In the first two months since the global lockdown went into effect, over 24,000 jobs have been cut in Nigeria. The Nigerian travel industry is said to have lost more than N180 billion and thousands of jobs.

Executive vice chairman, Nigerian Communications Commission (NCC), Professor Umar Danbatta has confirmed that the Nigerian telecommunication sector has so far contributed about N15 trillion to the Nigerian economy since the liberation of the sector and inception of digital mobile communications nearly 17 years. Danbatta speaking in Lagos at a media parley said telecommunications has been a major contributor to Nigeria’s gross domestic product (GDP), adding between N1.4 trillion to N1.5 trillion on a consistent basis in the last one and half years. It has also contributed about nine per cent to the GDP in quarter one of 2017. This he attributes to level sound regulation, provision of playing field for all players which has continued to attract both local and foreign investments. Speaking on the remaining eight slots of the 2.6 GHz spectrum which first auction took place last year June, Danbatta said the regulator would soon announce new winners of the spectrum as it is nearing the conclusion of a process that would see to the sale of the remaining slots. According to him, after MTN Nigeria paid $96 million for the six slots of the 2.6GHz spectrum, the Commission embarked on a post-mortem to find out why other mobile network operators (MNOs) did not effectively participate in the auction.
“The country’s well known economic mainstay, the crude oil, which was predicated on 57 dollars per barrel for the 2020 budget has crashed to below 30 dollars per barrel.

According to him, the International monetary fund, IMF has predicted there may be a global recession after the pandemic. With these available statistics, there’s no gainsaying, Nigeria’s economy may be worst hit after the pandemic.

Healthy telecom sector

Emma Mohr-McClune Technology Service Director at GlobalData, says: In the long-term the outlook remains positive, as reliable connectivity becomes a critical commodity. Emma Mohr-McClune concludes: “Coming out of COVID-19, millions of users worldwide will be more connected and more familiar with digital tools. Telco networks will have gained first-hand experience in dynamic network traffic management while businesses and their telco partners will have a better understanding of the challenges of homeworking. The need for robotic health workers, biometric virus predictors and AI health management tools will provide new use cases and investment justification for 5G. The situation will provide a shot in the arm for telco innovation around AI and machine learning and a catalyst for app and solution innovation ecosystems.”

 

Though, Nairametrics Financial Advocates, a leading financial resource company, with special focus on financial literacy, investor advocacy and business intelligence, says the telecom sector is projected to stay healthier than most other industries that have received heavier blows from the impact of the deadly disease

Although, Analysys Mason tipped that global telecoms operators may suffer a decline of 3.4 per cent, equivalent to  $40  billion in revenue in 2020 due to challenges stemming from the Covid-19 pandemic, Nairametrics, sees the telecoms sector as a bright spot amidst the gloom.

Its conviction that the telecom sector will stay afloat after the pandemic is on three factors- investments made pre-COVID, social media culture and data growths. Another is proactive reactions of some tech firms in listing on the stock exchange.

Nairametric said: “We note that Nigeria’s key telecommunications companies have invested heavily in internet infrastructure in a bid to improve 4GLTE coverage across the country. Furthermore, increased competition among the providers has forced bundle prices lower, making internet usage very attractive to the average Nigerian.

Furthermore, some telecos experts have agreed that the sector have effectively diversified their supply chains. However, some of the current disruption could result in future dips in equipment revenues. Major mobile handset suppliers have significant exposure to slowdowns in Asia. While a number of telcos are trying to stockpile inventory to mitigate impact, that approach has limitations.

The manufacture and delivery of network equipment will likely be delayed, slowing 5G and fiber network builds.

Excessive demand on mobile and communications networks — including temporary suspension of data caps — could affect service quality, creating a ripple effect as companies across various sectors implement remote-work plans.

Communications providers are dependent on large call center operations to perform critical functions, such as sales and customer service. The majority of retail locations are now shut down, forcing a huge spike in volume through call centers, testing their ability to adjust at scale.

In addition, increasing smartphone penetration, increasing digitisation of the Nigerian economy and a fledgling social media culture are among many factors driving internet penetration within the country”.

According to the report by deloitte, a research professional services company saying “COVID-19 is also leading to collaboration which might have been unthinkable weeks ago. For example, operators across the US are increasing capacity by borrowing spectrum from competitors

“Telecommunications companies (“telcos”) are focused on increasing network resiliency and looking at how COVID-19 impacts their planned investments, particularly in 5G. Telcos are also making changes to benefit customers, who during this time need networking services more than ever

“In China, due to its vast landscape and large, highly mobile population, the effectiveness of communication and data exchange has been essential in screening for infected individuals and controlling the outbreak.

“It is likely that more countries will use cellular data to track the spread of the virus, which may raise questions about data privacy in the future

Data surge

It added that “considering the COVID-19 pandemic ravaging the country which has led to movement restrictions in various states and with key population centres like Lagos and Abuja seeing its citizens forced to stay at home, we expect a surge in data usage among the populace.

We consequently expect better numbers from the telecom companies in the months ahead. In light of this, we see key telecom stocks like MTNN and Airtel Africa as good defensive stocks in this pandemic.

And I cited this pieces which seem to be differ from prince and Nairametric says “For some technology and telecommunication companies in Nigeria, the coronavirus pandemic is a period to increase their market share but the same cannot be said for others. In that report IFE OGUNFUWA cited the opportunities and negative impact of COVID-19 on Nigeria’s telecom sector titled Boom, loss for telecom, tech firms as COVID-19 rages published in punch newspaper

While in other part of the globe, some internet service providers in some countries have waived data fees and internet data cap for home broadband internet users during covid19lockdown

“As the head of digital innovation for an education technology firm in Lagos, Idris Oladipo, is saddled with the responsibility of developing tech solutions for clients.

“However, in the telecommunications/Information and Communications Technology industry, this is a period of boom for some operators who are tapping into the opportunities in the pandemic.

“While some ICT companies are making great gains during this pandemic when the global economy has slowed down, others are losing.

 

Internet service providers

Telecoms companies that are providing data services are some of the top gainers, raking in millions of naira from data subscriptions.

While telcos have historically been less affected by recessions, some telcos may face issues with cash flow in the long term, similar to other industries

The writer back up saying “Indeed, the Director of Public Affairs, Nigerian Communications Commission, Dr Henry Nkemadu, in a statement on Monday, attested to the fact that there had been a large amount of voice and data traffic in the past weeks.

This, according to him, has necessitated the installation of more fibre cables in certain areas in the country to provide the needed capacity.

 

“As a result of the lockdown, the amount of voice and data usage has increased by huge amounts and there is a need to expand the network to provide optimum quality of service to users sitting at home.  Telecom is also critical for information dissemination during the lockdown,” Nkemadu said.

 

I also urge Prince to understand defensive stock as it regards to telecom which has been a more defensive sector, with less sensitivity to market moves, while communication services where (MTN fall into) will likely be more cyclical, with higher volatility relative to the broader market.

Many telecos companies across the globe are looking at long-term investments in their networks, and in some cases, pulling forward investment in 5G because of its increased reliability and speeds. The two quoted, MTN and Airtel tech firms to solidify sector, if so? are they taking a variety of measures to improve the customer experience and give people access to networking services? Because, reliability and speeds of networks are the keys that attracts customers and generate revenue for the company.

 

So, defensive stocks tend to be in industries not company like utilities, personal care, healthcare and other consumer staples. The products and services offered by these companies usually have stable, if not growing demand, regardless of economic conditions.

 

A defensive stock is a stock that provides consistent dividends and stable earnings regardless of the state of the overall stock market should not be confused with rich stocks like MTN and others. For instant, how long MTN operation in the capital market as a quoted company and has been paying consistent dividends to shareholders as per defensive stock character? You recall that the said company was listed on the floor of the Nigerian Stock Exchange (The NSE) in 2019, just last year, how come it has assumed the title of defensive stock with consistent (reliable or in agreement) characters.

A research showed consistent company like Nestle, Nigerian Breweries, Dangote, First Bank among others over decade operations with history of consistent dividends payout policy. They provide consistent dividends and stable earnings regardless of the state of the overall stock market.

Though I agreed with expert saying confirming that the data surge prediction has already come to reality, Chief executive officer, Internet Exchange Point of Nigeria (IXPN), Muhammed Rudman, recently, said a surge in Internet traffic was noticed immediately the lockdown took effect in selected states. He added that Internet traffic has increased at least by 10 per cent every week.

But it is not to said that investors’ favourite stock on the NSE after MTN listed on the NSE premium board on May 16, 2019, as the first telco to do so, with 20.35 billion share units and market cap of N1.8 trillion on the Nigerian Stock Exchange (NSE), MTN Nigeria’s stock has been described as one of telecos investors’ favourites at the Exchange not entire investors.

Though the company meant listing segment for the elite group of issuers that meet the Exchange’s most stringent corporate governance, listing standards and immediately, joined other elite stocks such as Dangote Cement Plc, FBN Holdings Plc, Zenith International Bank Plc, Access Bank Plc, Lafarge Africa Plc, Seplat Petroleum Development Company Plc and United Bank for Africa Plc it does not make MTN stock a defensive stock yet.

Recall that at listing, Chief Executive Officer of the NSE, Oscar Onyema, and many capital communities described MTN’s listing as a promising development in the country’s telecommunications sector and capable of encouraging other players in the sector to explore the different opportunities in the capital markets for raising long term capital.

The NSE CEO, Onyema said: “As a listing platform of choice, today’s listing will add to our bouquet of diverse investment offerings to the public. Having MTN Nigeria listed in our market is a testament of The Exchange’s commitment to building a dynamic and inclusive market and creating channels for sustainable investment.

“This listing will promote liquidity for MTN Nigeria, enhance its value and increase transparency, as our platform remains one of the best avenues for raising capital and enabling sustainable growth for national development,” he said.

Danbatta’foresight role in the listing of MTN on NSE is highly commendable by cross section capital community and the economy operators, which was the irony of the telco’s presence in the domestic capital market is that it was not on its volition but as part of obligation mandated on it by the Nigerian Communications Commission (NCC), as atonement for SIM card registration infractions.

You recall that in October 2015, NCC imposed a fine of N1.04tn on MTN for irregular registration of 5.2 million subscribers.

However, after prolonged negotiation with both the regulatory agency and the Federal Government, the company had the fine reduced to N330bn.

Public listing was one of the conditions arrived at with the telecommunications company before the Federal Government agreed to reduce the penalty to N330bn.

Telecom experts have described NCC’s role in MTN’s listing as unprecedented, patriot and creative; exploiting the then controversial situation to create investment opportunities for local and foreign investing communities.

Seeing how stocks of listed telecoms companies are creating values for capital gains and wealth creation in the market, they are encouraging the Commission to make listing on NSE a precondition for issuing operating license to players in the telecoms industry.

A telecom engineer, Basil Nwanokwuru told Hi-Tech that “hearing that the telecommunications companies listed in the Nigerian stock exchange are touted to have the capacity of providing stability to the entire economy after COVID-19 is cheery news.

I totally agreed with the submission saying “It means that the foresight Prof Danbatta exhibited in exploiting the moment of MTN’s infraction to ask them to list is yielding dividends. Now, we need to take it a step further, by making it a precondition for issuing a new telecom license in this country” he added.

The further steps should be of that Corporate Affairs Commission (CAC) which duties and responsibilities of Companies and Allied Matter (CAMA) functions are strictly follows by any new not only in telecos but all other newly companies operating in the country. For instant, research showed that nobody directed MTN South Africa before listed on JSE and Kenya respectively.

The Captioned Photo: The Nigerian Communications Commission (NCC), Executive vice chairman, Professor Umar Danbatta

 


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