Nigeria’s largest telecom operator, MTN Nigeria, has again called for an upward review of calls and data tariffs, citing high operating costs. The company warned that without an adjustment, it risks shutting down operations.
The call was made by MTN Nigeria’s CEO, Karl Toriola, during a visit by Fellows of the Media Innovation Program to the company’s facility in Ibeju-Lekki, Lagos, on Monday. Mr Toriola expressed concerns over the heavy financial losses the industry is facing, stressing the need for swift action.
Read also: MTN Nigeria calls for tariff hike amid inflation, currency devaluation
Telecom industry in crisis
According to MTN Nigeria’s 2023 Sustainability Report, the company made N2.6 billion in corporate social investments but is now struggling to stay afloat, despite revenues accumulated over the last two decades. Mr Toriola emphasised the importance of immediate reforms, stating, “We must return the industry to profitability.”
Running on reserves
Mr Toriola explained that MTN Nigeria is operating on its reserves, a situation he described as unsustainable. Telecom operators have been pressuring the Nigerian Communications Commission (NCC) to approve a tariff hike, arguing that the sector has not been allowed to adjust its prices to reflect the nation’s current economy beset by soaring inflation, fuel crisis and currency instability.
The operators highlighted that tariffs have remained unchanged for 11 years, and maintaining the old rates has become increasingly difficult in light of Nigeria’s ongoing economic challenges.
According to Mr Toriola, growing operational cost, especially the high cost of diesel required to power base transceiver stations, was putting significant pressure on the industry.
“There should be no delusion; if the tariff doesn’t go up, we will shut down,” he cautioned, highlighting the pressing need for tariff revisions to take economic realities into account.
Decline in tax payments
The financial strain has also impacted MTN’s tax contributions. Once one of Nigeria’s top corporate taxpayers, MTN has been forced to reduce its tax payments due to the ongoing financial difficulties.
Both MTN and Airtel have taken a conservative approach to capital expenditure for 2024 in light of their first-quarter results.
Globacom and 9mobile, the nation’s other two telecom operators, are not publicly listed.
Due to foreign exchange losses brought on by the devaluation of the naira and high rates of inflation, MTN Nigeria recorded an astounding N519.1 billion loss in the first half of 2024.
In addition, Toriola issued a warning that the N250 billion debt owed by Nigerian banks could result in the suspension of Unstructured Supplementary Service Data (USSD) banking services.
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USSD Banking Services at Risk
Mr Toriola also warned that Nigerian banks’ outstanding N250 billion debt could lead to the suspension of Unstructured Supplementary Service Data (USSD) banking transactions.
Until the debt is resolved and tariffs are adjusted, MTN is requesting regulatory approval to discontinue support for USSD services used in banking transactions.
The MTN chief expressed optimism that Dr Aminu Maida, NCC Executive Vice Chairman, and Yemi Cardoso, Governor of the Central Bank of Nigeria, would step in to address the pressing issues before the telecom sector collapses.
In his closing remarks, Mr Toriola emphasised the critical role that the telecom industry plays in Nigeria’s economy and urged policymakers and regulators to take immediate action to prevent severe consequences from further delay.