MTN Nigeria has warned that the company may be forced to shut down if the country’s policies are not adjusted to allow for tariff increases. The telecommunications giant stressed the urgent need for the sector to return to profitability in order to sustain operations.
MTN’s CEO, Karl Toriola, conveyed this message on Monday during a visit to the company’s facilities in Ibeju-Lekki, Lagos, by participants of the Media Innovation Programme.
Toriola, who oversees around 78 million subscribers, emphasized that the telecom industry has been experiencing significant financial challenges, and immediate action is required to address these issues.
According to MTN’s 2023 Sustainability Report, the company, which has invested ₦2.6 billion in corporate social responsibility projects, is currently surviving on profits accumulated over the last 20 years.
“We need to bring the industry back to profitability,” Toriola stressed, underscoring the necessity of policy reforms.
He further explained that the company is relying on its reserves to stay afloat, but warned that this is not a sustainable solution in the long run.
Earlier this year, telecommunications companies renewed their calls for a tariff increase, the first in over a decade to cope with rising operational costs and improve service quality. Without such changes, they argued, the sector’s financial stability and service quality would continue to decline.
Toriola highlighted the growing strain on the industry, particularly due to escalating operational expenses like the surging cost of diesel to power base transceiver stations.
“There should be no illusion; if tariffs do not increase, we will be forced to shut down,” he warned, emphasizing the critical need for adjustments to reflect current economic conditions.
Toriola also noted that MTN, which was once one of Nigeria’s top corporate taxpayers, has seen a decline in its tax contributions due to its ongoing financial difficulties.
In light of their first-quarter performance, both MTN and Airtel have adopted a cautious approach regarding capital expenditures for 2024.
Meanwhile, the other two mobile service providers in Nigeria, 9mobile and Globacom, remain privately owned and are not publicly listed.
In the first half of 2024, MTN Nigeria reported a significant loss of ₦519.1 billion, largely driven by foreign exchange losses due to the naira’s devaluation and rising inflation.
Additionally, Toriola warned that the company may suspend its Unstructured Supplementary Service Data (USSD) banking services due to a massive ₦250 billion debt owed by Nigerian banks.
The telecom provider is currently seeking regulatory approval to halt its USSD banking services unless the debt is cleared and tariffs are adjusted to align with the economic reality.
However, Toriola expressed optimism that newly appointed Central Bank Governor Yemi Cardoso, along with Nigerian Communications Commission Executive Vice Chairman Dr. Aminu Maida, would take steps to ease the sector’s financial burdens.
He emphasized the vital role of the telecommunications industry in supporting Nigeria’s economy and urged the government and regulatory bodies to act swiftly to prevent serious consequences from continued inaction.
