Inactive SIMs: Telcos’ monthly revenue losses hit N156.6bn

Estimated revenue losses being recorded by telecoms operators in Nigeria as a result of rising inactive lines on their networks, has increased to N156.6 billion monthly, New Telegraph investigation has revealed.

The analysis, which produced the potential revenue losses, was based on the latest monthly subscriber data released by the Nigerian Communications Commission (NCC) for the month of March 2017 and the monthly Average Revenue Per User (ARPU) value, as obtained from the telecoms companies,The development is coming just as Internet subscriptions in the country consistently crashed from 97 million in December 2015 to 89 million as at the first quarter of 2017,representing a fall of 8.2 per cent.

According to the data, while the total connected telephone lines on mobile networks stood at 240 million as at March, only 154.4 million were active, leaving 85.6 million dormant. The number of inactive lines in the industry also represents 35 per cent of the total connected telephone lines of 240 million in the country.While the 85.6 inactive lines should be generating revenue for the telcos, provided they are active and are being used by the subscribers that own them, the reverse is the case, as potential revenue to telcos is lost monthly on the account of their not being used.

A subscriber line is technically categorized as inactive or dormant if the user fails to use it to either make calls or receive calls for 90 days. Meanwhile, average monthly spending by subscribers in Nigeria is currently put at N1, 830, according to the Average Revenue Per User (ARPU) figure provide by telecoms companies for Nigeria. As such, the dormancy of 85.6 million telephone lines on various mobile networks including MTN, Globacom, Airtel, Etisalat, among others, given the potential revenue of N1,830 for each subscriber, shows telcos are losing an estimated N156.6 billion monthly.

ARPU is the financial performance benchmark in the telecoms industry that measures the average monthly revenue generated by operators from telecoms subscribers. Last January, the estimated revenue loss resulting from inactive lines was N152.8 billion, but it increased to over N154 billion last February. Commenting on the potential losses, Vice President, Medallion Communications, Mr. Ike Innamani, said, “If a subscriber abandoned his or her registered line instead of using same to access mobile services, the affected operator is losing potential revenue and this, I believe, runs into billions of naira monthly.”

“Competition in the telecoms sector is getting keener by the day and this makes subscribers have the tendency to change their existing line for another preferred network, since they now have multiple options.

“If subscribers find better tariff plans or a more quality service on a new network, they can switch freely and then keep the old line in inactive mode, if they choose to,” said President, Association of Telecoms Companies of Nigeria (ATCON), Mr. Olusola Teniola. President, National Association of Telecoms Subscribers (NATCOMS), Mr. Deolu Ogunbanjo, also explained that: “If a telecom operator sells a Subscriber Identity Module (SIM) to a customer and gets him connected on its network, the intention is to start generating revenue from the subscriber anytime the subscriber loads its account with airtime to access services.”

He, however, noted that in a situation, where the subscriber, for one reason of the other, does not load the line with airtime for a specified period of time, thereby rendering the telephone line redundant, the network is definitely losing some potential revenues.” Sources from the NCC told New Telegraph that increases in the number of inactive lines was due to the current general economic situation, which has reduced the purchasing power of an average telecoms subscriber.

“What do you expect in an economy where the purchasing power of an average Nigerian is waning by the day? Rationalism in spending is the new strategy. So, instead of using multiple SIMs and spending money on them to receive telecoms services, it is wiser to use one or two, dropping other lines, which subsequently constitutes inactive category of SIMs,” one of the sources at the Commission said. Meanwhile, ongoing economic recession in the country has also triggered a decline in the number of Internet users in the country from 97 million to 89 million currently, according to the NCC data.

According to the NCC, from December 2015 and last February, Internet subscriptions have crashed from 97 million to 89.9 million. Statistics from the telecoms regulator shows that the number of people using Internet started falling, and sometimes fluctuates, from January last year till date. According to the details of the NCC data from 97 million in December 2015, the number of Internet users dropped to 95.7 million; 93.6 million; 92.2 million; 91.1 million in January, February, March and April respectively. In March 2016, the figure slightly bounced back to 92.2 million and in the following months, the downward trend continued, as subscriptions dropped to 91.1 million in April.

Internet subscriptions also moved to 92.2 million in May, while in June, July, August, September, October, November and December, the figure stood at 92.2 million; 92.1 million; 93.3 million; 93.5 million; 93.1 million; 92.4 million; 91.8 million in that order. The drop in Internet subscribers continued as the figure, which dropped to 91.2 million in January 2017 further sank deeper to 89.9 million in February this year.