This is an 87% decrease compared to the $113.42 million recorded in the second quarter, according to the latest report from the National Bureau of Statistics (NBS). Year-on-year, the sector experienced a 77% decline from the $64.05 million recorded during the same period in 2023.

This steep decline results from continued challenges in the industry, despite earlier signs of recovery. In the first quarter of 2024, the sector recorded $191.5 million in capital inflow, representing a 769% increase from the $22.05 million received in the first quarter of 2023. However, this initial revenue was not sustained, as foreign investments dropped sharply in subsequent quarters.

Telecom Sector’s $191.57m Q1 2024 FDI Growth Excites Bosun Tijani

Long-standing Issues Affecting Investments

The telecommunications sector, essential to Nigeria’s economy, has been challenged with foreign exchange instability, high operating costs, and infrastructural deficits. Industry stakeholders, including the Association of Licensed Telecommunications Companies of Nigeria (ALTON) and the Association of Telecommunications Companies of Nigeria (ATCON), have repeatedly called for government intervention to address these issues.

ALTON’s Executive Secretary, Gbolahan Awonuga, has noted the adverse effects of multiple taxation, unstable forex rates, and Right of Way (RoW) charges on the sector. He noted, “Until these issues are resolved, we are unlikely to see consistent growth in investments.”

Similarly, Engr Ikechukwu Nnamani, CEO of Digital Reality and former ATCON President, stressed the need for a stable policy environment to attract foreign investors. “Policy consistency and economic stability are key to restoring investor confidence,” he stated, adding that the fluctuating exchange rate has discouraged potential investments.

Declining Telecommunications Investments Over the Years

In 2022, the NBS reported that the telecom sector attracted $399.9 million in investments, a 47% decrease from the $753 million recorded in 2021. While the 2021 figures were a recovery from the COVID-19-induced slump in 2020, they were still lower than the $942.8 million recorded in 2019.

This decline has led to reduced capital expenditure (CAPEX) by telecom operators. In 2022, the industry’s CAPEX fell by 30% to ₦785 billion from ₦1.1 trillion in 2021. Experts warn that without significant investment in network expansion and infrastructure optimisation, the sector’s growth could stagnate.

Nonetheless, the telecommunications sector remains a cornerstone of Nigeria’s economy, highly contributing to the country’s GDP and providing essential services to millions. However, the rising inflation and the lack of adequate investment threaten its sustainability.

Stakeholders are urging the government to create a more conducive environment for business. Measures such as stabilising the forex market, reducing operational bottlenecks, and incentivising infrastructure development are seen as critical to reversing the investment decline.

The drop to $14.4 million in Q3 reveals that without sufficient capital inflow, telecom operators face severe limitations in upgrading networks and expanding connectivity, leaving millions of Nigerians underserved. If urgent measures are not taken, the consequences could extend beyond the telecom sector, affecting the broader economy.

Reversing this trend doesn’t just require policy reforms but also collaboration to create a stable, investor-friendly environment. Failure to address these systemic challenges could result in a stagnated telecom industry, hampered innovation, and diminished service quality.

The new state-of-the-art facility will formally open for service on 24 October and will offer customers an additional one megawatt of IT capacity.

LOS2, located on Medallion’s Victoria Island campus, will be interconnected with Medallion’s existing LOS1 data center, currently rated as the most interconnected facility in the West African sub-region and the top peering point for the region.

This makes the campus an ideal location for subsea cable, metro fiber, mobile services, over-the-top providers, and the country’s internet exchange, the Internet Exchange Point of Nigeria (“IXPN”), to connect efficiently in a low latency environment, enabling these connectivity providers to better serve and grow their customer bases.

According to IXPN, more than 68% of its traffic is exchanged at Medallion’s data centre in Lagos, demonstrating the important role it plays in Nigeria’s connectivity ecosystem.

LOS2 also provides access to the 2Africa subsea cable system through diverse fiber routes to Medallion’s LKK1 facility, the infrastructure supporting the operations of the 2Africa subsea cable system, thereby enabling reliable, high-speed connections to the new cable’s 46 locations across Africa, Europe, the Middle East, and Asia.

For over a decade, Medallion has been at the forefront of the Nigerian digital economy through the provisioning of carrier neutral data centre services in both Lagos and Abuja.

Over that period, the company has solidified its spot as the “go-to” provider for fast, efficient, and cost-effective data centre and connectivity services when time to market and affordability has become essential.

On 27 October 2023, Medallion will formally rebrand its services and facilities to Digital Realty, one of the largest global providers of Carrier neutral datacenter services, colocation, and interconnection solutions, at an event taking place at Eko Hotels and Suites, Victoria Island, Lagos.

The event will host leaders from Nigeria’s telecom and IT industry to celebrate Medallion’s customers, the opening of the new data centre and the rebranding.

The acquisition of Medallion in 2021 marked a significant milestone in Digital Realty’s Pan-African expansion strategy.

Since then, the company has committed to invest more than US$2bn over the next decade in Africa’s technology infrastructure and has already progressed acquisitions and expansions aimed at delivering on this commitment, most recently with the acquisition of Teraco in August 2022, South Africa’s leading carrier-neutral data centre and interconnection services provider.

More about Digital Realty

Digital Realty brings companies and data together by delivering the full spectrum of data center, colocation and interconnection solutions.

PlatformDIGITAL, the company’s global data center platform, provides customers with a secure data meeting place and a proven Pervasive Datacenter Architecture (PDx) solution methodology for powering innovation and efficiently managing Data Gravity challenges.

Digital Realty gives its customers access to the connected data communities that matter to them with a global data center footprint of 300+ facilities in 50+ metros across 25+ countries on six continents.

The transaction valued Teraco’s datacentre assets at $3.5bn. This represents the biggest datacentre transaction in the continent.

Teraco is the largest and most densely interconnected datacentre platform in Africa, with seven state-of-the-art facilities strategically located in the key South African metros of Johannesburg, Cape Town and Durban.

Teraco serves over 600 customers, including more than 275 connectivity providers, over 25 cloud and content platforms and approximately 300 enterprises.

Teraco facilitates approximately 22,000 interconnections between customers and its Isando campus in Johannesburg is one of the most densely interconnected sites in the world, with over 13,000 cross-connects.

Teraco also hosts seven on-ramps to leading global cloud service providers in Johannesburg and Cape Town and currently provides direct access to seven subsea cables in Durban on the east coast and Cape Town on the southwest coast

It is worth noting that in October 2021 the Austin Texas, USA based Digital Realty also announced the acquisition of the datacentre assets of Medallion Communications Limited in Nigeria.

That  marked the first time a global pure real estate investment trust (REIT) will be entering the country and beats rivals including Equinix (NASDAQ: EQIX), CyrusOne (NYSE: CONE), and CoreSite Realty (NYSE: COR) on entrance into the market. With the additional acquisition of Teraco, Digital Realty now controls the two most important datacentre assets in the continent.

The Medallion Data Centres Limited  is the number 1 peering and connectivity datacentre in Nigeria and Teraco represents the same in South Africa, two of the largest economies in the continent.

The combination of Teraco’s leading position in South Africa with Digital Realty’s leading connectivity hubs in Nigeria on the west and Kenya on the east coast – along with Digital Realty’s strategic Mediterranean interconnection hubs in Marseille and Athens – is expected to significantly strengthen Digital Realty’s leading pan-African position, enhancing the ability to serve local as well as multinational enterprises and service providers.

When reached for comment on the development, Engr. Nnamani stated the investment into Teraco by Digital Realty is a further testament that Digital Realty is fully commitment to grow the digital economy in not only Nigeria and the West African sub-region but also the whole of Africa.

This he stated will lead to significant foreign direct investment into the economy, boosting the GDP of the African countries, creating employment, and improving the quality of the lives of the citizens in the areas of education, healthcare, e-commerce, entertainment, security, governance, and agriculture amongst others.

With the digitization of the economy and implementation of Internet of Things services, datacentres are essential to support these emerging services.

Digital Realty is the largest global provider of cloud- and carrier-neutral datacentres, colocation and interconnection solutions.

Digital Realty supports the world’s leading enterprises and service providers by delivering the full spectrum of data centre, colocation and interconnection solutions.

PlatformDIGITAL, the company’s global data centre platform, provides customers a trusted foundation and proven Pervasive Datacenter Architecture (PDx) solution methodology for scaling digital business and efficiently managing data gravity challenges.

Digital Realty’s global data center footprint gives customers access to the connected communities that matter to them with more than 280 facilities in 48 metros across 24 countries on six continents.

Medallion Data Centres Limited Lagos campus is the leading connectivity hub in Western Africa with approximately 70 carriers and internet service providers, over 80 percent of the public peering traffic of the Nigerian Internet Exchange takes place at the carrier neutral datacenter.

Medallion Data Centres Limited offers access to all the exiting sub marine cables in Nigeria and additional subsea cables scheduled to be in operation in Lagos by 2023 are all expected to use Medallion as a peering point for content and bandwidth distribution.