MTN Nigeria calls for urgent tariff adjustments to tackle losses, warning that unsustainable operations threaten the telecom sector’s future.
[dropcap]M[/dropcap]TN Nigeria, the largest telecommunications operator in the country, has raised alarms about the telecom sector’s profitability, stressing the need for immediate reforms to sustain operations.
The company, which serves over 78 million subscribers, revealed this during a tour of its facilities in Ibeju-Lekki, Lagos, hosted by the Media Innovation Programme.
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Karl Toriola, Chief Executive Officer of MTN Nigeria, highlighted the significant losses the telecom industry has accumulated, attributing them to escalating operational costs and inadequate tariffs. He emphasised that without swift action, the sector’s financial viability could be in jeopardy.
“We must return the industry to profitability,” Toriola stated, stressing the critical nature of reform. He explained that MTN Nigeria is currently operating on its reserves, a situation that is unsustainable for the long term.
The company’s 2023 Sustainability Report showed a corporate social investment of N2.6bn, but Toriola warned that these reserves, accumulated over two decades, cannot support the company indefinitely.
One of the primary challenges the telecom sector faces is the rising cost of diesel required to power base transceiver stations.
Additionally, inflation and the naira’s devaluation have exacerbated operational difficulties, with MTN Nigeria reporting a N519.1bn loss in the first half of 2024. The foreign exchange losses further underscore the company’s need for tariff adjustments.
Earlier in 2024, telecom operators renewed calls for tariff hikes to counter increasing costs—the first proposed increase in 11 years.
Toriola warned, “There should be no delusion; if the tariff doesn’t go up, we will shut down,” underscoring the urgency of revising tariffs to align with economic realities.
In addition to escalating costs, MTN Nigeria faces a substantial debt of N250bn owed by Nigerian banks for Unstructured Supplementary Service Data (USSD) services, a crucial feature in mobile banking transactions.
Toriola indicated that the company is considering suspending USSD banking services unless the debt is cleared and tariffs adjusted.
Despite these challenges, Toriola remains hopeful that interventions from key regulators, including the Central Bank of Nigeria and the Nigerian Communications Commission, will help resolve the crisis.
He praised the leadership of Yemi Cardoso, the new Governor of the Central Bank of Nigeria, and Dr. Aminu Maida, Executive Vice Chairman of the Nigerian Communications Commission, expressing confidence in their ability to facilitate a solution.
Reflecting on MTN Nigeria’s position as one of the country’s leading corporate taxpayers, Toriola noted that the company’s tax contributions have diminished due to these financial pressures.
The telecom giant, along with Airtel, has already adopted a cautious approach to capital expenditure for 2024, prioritising financial prudence amidst the ongoing challenges.
The situation calls for urgent intervention by the Nigerian government and regulatory bodies to stabilise the telecom sector, as it plays a vital role in supporting the nation’s economy.
Failure to act swiftly, Toriola warned, could lead to dire consequences, impacting service quality and the broader economy.
