Tariff Hike Critical for Industry Survival
MTN Nigeria’s CEO, Karl Toriola, has raised concerns over the increasing financial pressures within the telecom industry, citing a need for immediate tariff reforms to avoid an industry-wide shutdown. Speaking during a facility tour in Ibeju-Lekki, Lagos, Toriola emphasised that the industry’s current trajectory is unsustainable without significant tariff adjustments.
Unsustainable Financial Burden
Toriola highlighted that the telecom sector, including MTN Nigeria, is facing enormous financial strain due to escalating diesel prices, inflation, and operational costs. He stated, “The sector is currently running on accumulated profits from the last two decades, but this model cannot sustain the future.” The CEO warned that without a tariff increase, the telecom industry risks severe disruptions.
Diesel Costs Threaten Operations
A key factor driving the financial crisis is the rising cost of diesel, which is critical for powering base transceiver stations across Nigeria. Toriola stressed that the burden of these costs, without a corresponding tariff hike, threatens the continuity of telecom services. “There should be no illusions; if tariffs don’t rise, we will have no choice but to shut down,” he remarked.
Declining Profitability Amid Forex and Inflation Woes
MTN Nigeria reported a significant loss of ₦519.1 billion in the first half of 2024, largely attributed to foreign exchange losses following the naira’s devaluation and inflationary pressures. As one of Nigeria’s largest corporate taxpayers, MTN’s declining profitability has further aggravated the financial situation within the telecom sector.
USSD Services at Risk
In addition to operational challenges, Toriola pointed out the potential suspension of MTN’s Unstructured Supplementary Service Data (USSD) banking services. The company is owed a staggering ₦250 billion by Nigerian banks, and unless this debt is settled and tariffs adjusted, MTN may be forced to withdraw USSD support.
Calls for Regulatory Intervention
Toriola expressed hope that regulatory authorities, including the Central Bank Governor Yemi Cardoso and the Nigerian Communications Commission’s Executive Vice Chairman Dr. Aminu Maida, would intervene to provide a lasting solution to the financial challenges facing the telecom industry.
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