Mobile broadband distribution

Mobile broadband distribution
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Mobile broadband distribution
SectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Technology and Communications
Internet Media and Services
Business Model Description

Develop mobile broadband infrastructure where assets are built and rented to users.

Expected Impact

Significant effects across many sectors, improving ease of doing business and access to information and services.

Indicative ReturnDescribes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
5% - 10% (in ROI)
Investment TimeframeDescribes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Short Term (0–5 years)
Market SizeDescribes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
> USD 1 billion
Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Direct ImpactDescribes the primary SDG(s) the IOA addresses.
Industry, Innovation and Infrastructure (SDG 9) Partnerships For the Goals (SDG 17)
Indirect ImpactDescribes the secondary SDG(s) the IOA addresses.
Decent Work and Economic Growth (SDG 8) Reduced Inequalities (SDG 10) Sustainable Cities and Communities (SDG 11)
Vanu installation
Photo by BCtA / Vanu
Case Study: Vanu
Vanu, a UNDP Business Call to Action (BCtA) member, is a global provider of turnkey mobile communications solutions that allow mobile network operators to serve off-grid markets. Its innovative technology enables cellular coverage in areas that cannot be covered profitably with existing technology.
Country
Regions
  • Nigeria: Countrywide
SectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Technology and Communications
TC

Development need: Broadband services are crucial for economic growth, security and information dissemination. However, several challenges persist. In 2010, 3G mobile internet services were available in fewer than 20 towns and cities; no broadband infrastructure framework was in place; there were fewer than 15 million internet subscriptions across the country; and about 22,000 km of intercity fibre had been deployed.(1)

Policy priority: Nigeria's telecommunications sector has grown to contribute 10.6% to gross domestic product (GDP). This growth was driven largely by four major mobile network operators (MNOs) who provide services to over 99.5% of 184.7 million active lines (NCC, December 2019), with 126 million of those lines (68%) connected to the internet (2G+/3G/4G).(2)

Gender inequalities and marginalization issues: The proportion of women using the internet was17.3% in 2017, while the proportion of men using the internet was 32%.(11)

Investment opportunities introduction: The information and communication technology (ICT) industry has grown phenomenally, from a teledensity of 1.89% in 1993 to 124.29% in 2018, contributing an annual average of 9% to gross domestic product (GD).(3) With a population of about 200 million, less than 60% of whom are active internet users, the ICT industry presents attractive investment opportunities.(3)

Key bottlenecks introduction: Effective and vibrant telecommunication networks are vital for driving productivity across all sectors. The major challenges stifling the performance of this sector are poor legal and regulatory frameworks, and weak institutional coordination mechanisms prohibiting synergies among ICT-based infrastructure.(4)

SubsectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Internet Media and Services
TC.2

Policy priority: Nigeria's broadband penetration is about only 31.5%. However, the government aims to increase this to 70% by 2021.(5)

IndustriesMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Internet Media and Services
TC-IM
Investment Opportunity Area

Mobile broadband distribution

Business Model

Develop mobile broadband infrastructure where assets are built and rented to users.

Market Size (USD)Describes the value in USD of a potential addressable market of the IOA.
> USD 1 billion
Critical IOA UnitDescribes a complementary market sizing measure exemplifying the opportunities with the IOA.
Government aims to increase broadband penetration from 31.5% to 70% by 2021.

Information and communication technology (ICT) investments in Nigeria have increased significantly from USD 50 million in 1999 to over USD 35 billion in 2016. Similarly, active internet subscriptions are steadily increasing.(6)

Nigeria's broadband penetration is about only 31.5%. However, the government aims to increase this to 70% by 2021.(5)

Teledensity was 96.76% at December 2019. The sector contributed about 9.2% to gross domestic product (GDP) in Q3 2019.(5) Additionally, Nigeria has been ranked as the fastest growing mobile market in the world for five consecutive years.(7)

ROIDescribes an expected return from the IOA investment over its lifetime.
5% - 10%

The estimated return rate for investors is 7.1% - 9.1%. This rate is a benchmark calculated as a cost of equity, reflecting an average return required by investors active in the subsector.(8)

TimeframeDescribes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Short Term (0–5 years)

Based on studied benchmark projects, investments in mobile broadband services can see cashflow within a year once fibre cables have been installed.(8)

Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Business - Supply Chain Constraints
Lack of backbone fibre infrastructure to take bandwidth from landing points to last mile, poor information and communication technology (ICT) infrastructure, weak institutional frameworks preventing synergies among ICT-based infrastructure
Market - Highly Regulated
Inadequate policies and financing
Sustainable Development Need

The role of broadband services is crucial for economic growth due to the increase in productivity it creates across several sectors including healthcare delivery, education, security and information dissemination. However, challenges persist including lack of a robust fixed infrastructure network.

Metro fibre networks currently account for less than 25% of the total fibre distances in the country. They are concentrated in major cities such as Lagos, Abuja, Port Harcourt, and within Edo and Ogun states. Other areas remain unserved or underserved. (2)

Access to fibre networks within 5 km of the population currently stands at an average of 39% reach, with a high of 85% in Lagos State and a low of 12% in Jigawa State. Last mile FTTx (fibre-to-the-x) connection rate is low and fibre-to-the-tower connection rates are also low compared with other African countries.(2)

Gender & Marginalisation

The proportion of women using the internet was 17.3% in 2017, while the proportion of men using the internet was 32%.(11)

Expected Development Outcome

Investments could increase access to internet services, increase ease of doing business and improve information and communication technology (ICT) infrastructure and close the ICT gap.

Gender & Marginalisation

Investments could help increase women's and female students' access to Internet services. Women and female students have lower broadband subscription than men.

Primary SDGs addressed
9 - Industry, Innovation and Infrastructure
Industry, Innovation and Infrastructure (SDG 9)

9.c.1 Proportion of population covered by a mobile network, by technology

Current Level

52% in 2015.(12)

Target Level

2020 performance benchmark: 100%.(12)

17 - Partnerships For the Goals
Partnerships For the Goals (SDG 17)

17.6.1 Fixed Internet broadband subscriptions per 100 inhabitants, by speed

Current Level

31.96 subscriptions (per 100 population) in 2018.(11)

Target Level

100% (13)

Secondary SDGs addressed
8 - Decent Work and Economic Growth
Decent Work and Economic Growth (SDG 8)
10 - Reduced Inequalities
Reduced Inequalities (SDG 10)
11 - Sustainable Cities and Communities
Sustainable Cities and Communities (SDG 11)
Directly impacted stakeholders
People
General public
Corporates
Companies, industries and small and medium enterprises (SMEs) will all benefit from improved access to information and affordable mobile data.
Indirectly impacted stakeholders
Public sector
Government
Outcome Risks

Investments could increase green house gas emissions because information and communication technology (ICT) infrastructure consume large amounts of electricity and cause environmental hazards linked with radiation from communication infrastructure.

Impact Risks

Unexpected impact risk: In the short run, mobile broadband distribution may focus on urban/semi-urban areas, increasing gaps in access to internet services in rural communities.

Efficiency risk given current poor infrastructure and limited technical know-how as well as high public engagement.

Execution risk if activities are not delivered as planned and do not result in the desired outcomes given poor internet infrastructure.

What

The outcome is likely to be positive because investments in information and communication technology (ICT) will increase access to information, improve infrastructure, contribute to GDP growth and increase employment opportunities.

Who

The entire population will benefit. Rural communities with little or no access to mobile data and connectivity will also benefit significantly .

Risk

Lack of protection of digital rights, exchange rate volatility, right of way issues, fibre cuts

Impact Thesis

Significant effects across many sectors, improving ease of doing business and access to information and services.

Policy Environment

Economic Recovery and Growth Plan: This plan prioritizes investment in cutting-edge information and communication technology (ICT) standards and has encouraged ICT penetrations among all socio-economic levels.(4)

Economic Recovery and Growth Plan: Policy priorities also include expanding current coverage of active mobile broadband subscription per 100 from 20.95% to 50%.(4)

National Broadband Plan: This plan also government's priority to expand broadband connectivity across the country.(2)

Financial Environment

Financial incentives: The Nigerian Investment Promotion Commission (NIPC) has released new guidelines for applying for Pioneer Status Incentives in Nigeria, to attract investments to the information and communication technology (ICT) sector.(9)

Fiscal incentives: Certain benefits are provided including 3-year tax holidays, tax-free dividends and capital allowances.(9)

Regulatory Environment

Nigerian Communications Commission is the independent national regulatory authority for the telecommunications industry. It is responsible for creating an enabling environment for competition among operators while ensuring provision of qualitative and efficient telecommunications services.(7)

Nigerian Communications Act 2003 (NCA) 2003: Under section 70 of the NCA 2003, the Commission is empowered to make and publish regulations on matters such as, but not limited to, written authorizations, permits, assignments and licenses and so on.(7)

Private Sector

Y Combinator Continuity, Y Combinator Continuity, Lynett Capital, Social Capital, Western Technology Investment, Friále, Golden Palm Investments, IHS Towers, MTN, GLO, AirTel, 9Mobile, Microsoft, Cisco, Smile, Ntel

Government

Galaxy Backbone, Nigerian Communications Satellite (NigComSat), Nigerian Space Research and Development Agency (NSRDA)

country static map
semi-urban
Nigeria: Countrywide
Metro fibre networks currently account for less than 25% of the total fibre distances in the country. They are concentrated in major cities such as Lagos, Abuja, Port Harcourt, and within Edo and Ogun states. Other areas remain unserved or underserved.
Sector Sources
  • 1) Nigerian Communications Commission (2017). https://www.ncc.gov.ng/thecommunicator/index.php?option=com_content&view=article&id=965:n400b-broadband-bourse&catid=25&Itemid=179 2) Federal Republic of Nigeria (2020). Nigerian National Broadband Plan 2020 – 2025. 3) Nigerian Investment Promotion Commission (2020). Opportunities - services. https://nipc.gov.ng/opportunities/services/ 4) Federal Republic of Nigeria (2017). Economic Recovery and Growth Plan 2017 - 2020. Abuja: Ministry of Budget and National Planning. 5) Nigerian Communications Commission (2020). Invest in ICT Nigeria - a world of limitless possibilities. https://www.ncc.gov.ng/documents/765-invest-in-ict-nigeria-a-world-of-limitless-possibilities/file
IOA Sources
  • 6) Nigerian Investment Promotion Commission (2020). Nigeria targets $50 billion ICT investment by 2018. https://nipc.gov.ng/2016/10/28/nigeria-targets-50-billion-ict-investment-2018/ 7) Nigerian Communications Commission (2017). https://www.ncc.gov.ng/thecommunicator/index.php?option=com_content&view=article&id=965:n400b-broadband-bourse&catid=25&Itemid=179 8) PwC analysis based on Prof. A. Damodaran data, 2020. 9) Perchstone & Graeys (2018). Nigeria: Tech start-ups - understanding the ICT tax regimes. https://www.mondaq.com/nigeria/corporate-tax/691392/tech-start-ups-understanding-the-ict-tax-regimes 10) Globacom (2021). https://www.gloworld.com/ng 11) Federal Republic of Nigeria (2020). Integration of the SDGs into National Development Planning: A Second Voluntary National Review (2020). https://sustainabledevelopment.un.org/content/documents/26309VNR_2020_Nigeria_Report.pdf 12) Federal Republic of Nigeria (2017). Implementation of the SDGs: a national voluntary review. https://sustainabledevelopment.un.org/content/documents/16029Nigeria.pdf 13) Sachs, J., Schmidt-Traub, G., Kroll, C., Lafortune, G., Fuller, G., Woelm, F (2020). The Sustainable Development Goals and COVID-19. Sustainable Development Report 2020. Cambridge: Cambridge University Press. https://dashboards.sdgindex.org/profiles/NGA