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Alhaji Ibrahim the former rich man

The bank manager had called to ask if everything was okay because the bank balance of his high-net-worth client was close to the bottom. Alhaji Musa Ibrahim is considered one of the luckiest people in Kaduna. He is wealthy, accomplished and is the envy of most of the residents in the pristine GRA of Kaduna.

In recent weeks he has been very irritable and grumpy. When accosted by his relatives at his family gathering recently, he was able to outpour his frustrations. He became philosophical and quoted Geoffrey Chaucer who said, “All good things must come to an end.”

He sulked to his family and explained that he exercised an option to buy the MTN-linked notes in a private placement two decades ago. From the initial year of the investment, he received hefty dividends like an annuity. Total dividends distributed between 2019 and 2022 for quoted telcos was N892.87bn and corporate income tax paid was in excess of N679.88bn. The number of shareholders of Airtel & MTN was in excess of 20 million.

Alhaji Musa Ibrahim was regarded as blessed, he had paid the school fees of two kids through an Ivy League education at Yale and Upen. He had also amortized his mortgage for a well-appointed luxury home in Abuja.

Then in 2023, the cash cow had turned into a dog. The two telco investments had declared huge losses as a result of forex translations. Both companies have warned that there is little hope of a change in the situation until 2026.

The fate of Alhaji Ibrahim is the same as over 20 million shareholders who had lived on the assumption that an investment in a telco is a defensive stock that withstands all shocks.

The telco investment multiplier is massive

The reason for this short story is to draw the attention of investors, regulators, and policymakers to the danger facing the telco industry and the risk of dragging the Nigerian economy down the tube with it. The linkage factor analysis shows that for every 1% increase in investment in the telco industry, there will be a 0.057% increase in GDP. This means that a 5.7% increase in investment in the telco industry in 2025 will increase GDP by $23.2bn in 2026 and beyond.

AI and the digital revolution hold infinite promise

According to the Economist Intelligence Unit (EIU), there are major opportunities for extending the frontiers of the telco industry.

• Global mobile subscriptions are projected to grow at an average rate of 3% annually, nearing 8.4 billion by 2028.
• Increased investment in mobile infrastructure and wider adoption of budget smartphones will raise mobile penetration to 127.8 per 100 people by 2028.
• Digital transformation will be a key driver in sustaining confidence in the industry’s long-term growth.

Lightening is likely to strike twice at the same place

Nigeria’s telco industry is at a point of rediscovery. Recent technological developments, such as remote monitoring systems improve cost management and foster high-quality service. Consumer protection policies are also in place to ensure consumers are not gouged. This is the ideal time to invest in the technological and digital revolution critical to the telecom industry’s strategic objectives.

The slides detail the analysis and remarks presented by Bismarck Rewane at the recently concluded Telco Industry 2.0 town hall forum coordinated by Financial Derivatives Company.

Enjoy your read!