MainOne Cable Co Ltd., posted its second annual loss in a row, a signal that increased competition and an economic slowdown in its largest market Nigeria, is crimping the undersea cable business.
The company which operates an undersea cable connecting West Africa to Europe, reported a loss after tax of $7 million (N2.7 billion) in the 2019 financial year.
The poor 2019 performance follows a loss of $7.26 million (N2.8 billion) in 2018, according to a snapshot of the firms financials seen by MoneyCentral.
MainOne’s revenues also fell 25 percent to $43.9 million in 2019, compared to $58.68 million in 2018.
MainOne and other undersea cable operators such as MTN and Globacom are struggling with a slowing Nigerian economy, huge finance costs related to constructing the cables and increased competition from the likes of tech giants Facebook and Google.
Facebook announced in May that it was in partnership with some of the world’s largest telecom carriers including MTN Group Ltd., Telecom Egypt Co. and China Mobile Ltd., to build a $1 billion giant sub-sea cable to help bring more reliable and faster internet across Africa.
The 37,000-kilometer (23,000 miles) long cable — dubbed 2Africa — will connect Europe to the Middle East and 16 African countries. 2Africa is expected to come into operation by 2024 and will deliver more than the combined capacity of all sub-sea cables serving Africa, according to the statement.
Google announced its own sub-sea cable dubbed Equiano last year, which will connect Europe to Africa, using a route down the West African coast.
MainOne which opened a $25 million data center in Nigeria in 2014 may also be burdened by high finance costs as it had signed a $100 million loan facility with a consortium of banks including Standard Chartered Plc, First Bank of Nigeria Plc, and FCMB Group Plc to expand its network.
While demand for data and internet services continue to grow in Nigeria, there has been complaints about cost of data and poor connectivity.
Earlier this year two undersea cables to the continent’s western coast were damaged leading to spotty internet service for customers.
MTN Group Ltd., apologized to customers in Nigeria and Ivory Coast for slow Internet speeds and difficulties in accessing data services in January. The company, in newspaper advertisements and via Twitter, said the problem was beyond its control.
MainOne’s current cable system is a 7,000km submarine cable with landing stations in Nigeria, Ghana and Portugal.