MTN Nigeria, the country’s largest telecom operator, has raised alarms about the sector’s financial struggles, warning of potential shutdowns if tariff adjustments are not made immediately.
Speaking during a tour of MTN’s facilities by Fellows of the Media Innovation Programme in Ibeju-Lekki, Lagos, MTN CEO Karl Toriola noted the critical need for the telecommunications industry to return to profitability.
Toriola, who oversees about 78 million subscribers, stated that the sector has been operating at a loss and urgent action is required to reverse this trend.
“The industry must return to profitability,” Toriola was quoted as saying by The Punch.
He pointed out that MTN has been surviving on the profits it built up over two decades, adding, “We are currently operating on reserves, which is unsustainable.”
Earlier in 2024, telecom operators, including MTN, called for a tariff hike, the first in 11 years, citing the rising costs of operations and a decline in service quality.
Without these tariff increases, Toriola warned, the financial viability of the telecom sector and service standards would continue to deteriorate.
“There should be no delusion; if the tariff doesn’t go up, we will shut down,” he said, emphasizing the need for the government to take swift action to adjust tariffs to match the current economic realities.
MTN Nigeria’s financial challenges have been exacerbated by surging operational costs, including soaring diesel prices required to power base transceiver stations. The company, once among Nigeria’s top corporate taxpayers, has seen its tax contributions dwindle as a result of these financial pressures.
In 2024, MTN reported a staggering N519.1 billion loss in the first half of the year, primarily due to foreign exchange losses following the naira’s devaluation and high inflation rates.
Both MTN and Airtel have responded by taking a cautious approach to capital expenditures for the year.
Toriola also flagged the company’s potential suspension of Unstructured Supplementary Service Data (USSD) banking services due to the N250 billion debt owed by Nigerian banks.
He revealed that MTN is seeking regulatory approval to halt support for USSD services unless the debt is settled and tariffs are adjusted to reflect economic conditions.
Despite the challenges, Toriola expressed optimism that the new Central Bank Governor, Yemi Cardoso, and Nigerian Communications Commission (NCC) Executive Vice Chairman, Dr. Aminu Maida, would step in to help resolve the crisis.
He ended by underlining the essential role the telecom industry plays in driving Nigeria’s economy and urged the government and regulators to act quickly to avoid dire consequences.
