Telecom Stocks Raises Market Capitalisation By N2.83tn Amid Tariff Reform

Investors in Nigeria’s telecommunications sector reaped significant gains in the first half of 2025, as shares of MTN Nigeria Plc and Airtel Africa Plc rallied on the back of recent tariff adjustments, improved macroeconomic indicators, and sustained investor confidence.

Data from the Nigerian Exchange Limited (NGX) showed that both companies recorded a combined capital gain of ₦2.834tn during the six-month period ending June 30, 2025, representing a 21.22 per cent increase in market value.

The gains are driven largely by a re-pricing of telecom stocks in response to regulatory changes and market resilience despite a volatile economic landscape.

MTN Nigeria emerged as the standout performer, closing the half year at ₦357.50 per share and a market capitalisation of ₦7.5tn, up from ₦250.00 per share and ₦5.249tn at the start of January.

This represents a ₦2.257tn or 43 per cent increase in market capitalisation within six months.

Airtel Africa also recorded steady gains, rising to ₦2,310.50 per share and a market capitalisation of ₦8.683tn, compared to ₦2,156.90 per share and ₦8.106tn in early January — an increase of ₦577bn or 7.12 per cent.

Industry analysts have attributed the bullish momentum in the telecom segment to the tariff hike approved by the Nigerian Communications Commission (NCC) in early 2025.

The regulatory decision permitted telecom operators to increase charges for data, voice, and SMS services by as much as 50 per cent, marking the first major tariff adjustment in over a decade.

According to Nnamdi Chidi, a telecom analyst, the tariff hike was instrumental in reversing years of suppressed pricing and margin pressure.

“For over a decade, telecom pricing in Nigeria was kept artificially low, despite mounting operational pressures. The 2025 adjustment gave companies like MTN and Airtel the breathing room to price more realistically,” Chidi told THE WHISTLER.

He added that the new pricing regime helped the telcos offset rising costs driven by energy price shocks, forex volatility, and regulatory levies, noting that MTN Nigeria’s revenue jumped over 40 per cent year-on-year in Q1 2025 as a direct result.

“Investors quickly priced in the stronger cash flow and improved earnings outlook, which led to the significant market capitalisation gains,” he said.

Chidi also noted that the continued expansion of digital services — such as mobile money, fintech, and enterprise connectivity — is adding layers of growth resilience for both companies.

Speaking from a capital market standpoint, Temitope Balogun, Equity Strategist, highlighted that regulatory clarity and a more stable macroeconomic environment were pivotal to the telcos’ market rally.

“The NCC’s willingness to approve long-overdue pricing adjustments reflected regulatory pragmatism. This sent a strong signal to the market about government support for sector sustainability,” Balogun noted.

She also pointed to foreign exchange stability in Q2 2025 as a major factor that eased investor fears.

“Telcos had suffered significant FX losses in previous quarters due to dollar-denominated obligations. But with a relatively calmer naira, the downside risk to earnings has reduced considerably. That’s a key reason these stocks outperformed,” she explained.

Balogun emphasized that Nigeria’s demographic advantages, such as a large youthful population and growing data consumption, provide long-term tailwinds for the telecom sector. She said institutional investors are now treating telco equities as “defensive plays” in a high-inflation environment.

Echoing similar sentiments, Executive Vice Chairman of Hicap Securities Limited, David Adonri said the performance of MTN and Airtel highlights a shift in investor strategy in response to broader market conditions.

“In periods of rising interest rates, investors often migrate to fixed income. However, they also take positions in sectors that are elastic in demand, such as telecoms, consumer goods, and banks,” Adonri told THE WHISTLER.

He explained that despite political uncertainties and monetary tightening, investors are forward-looking, betting on sectors that can thrive in a volatile environment.

“Telecom stocks have shown pricing power and demand stability. They are becoming preferred choices for yield-seeking investors,” he added.

Adonri also noted that the timing of corporate earnings releases during the first half further buoyed investor sentiment, as most listed companies — including the telcos — reported solid results.

With a combined half-year gain of ₦2.834tn, MTN Nigeria and Airtel Africa have solidified their position as cornerstone stocks in the Nigerian equities market.

Analysts say continued regulatory support, efficient pricing structures, and growing digital demand will be key to sustaining this momentum through the second half of 2025.