MTN Nigeria Faces Shutdown Without Urgent Tariff Hike, CEO Warns
Detailed Breakdown:
MTN Nigeria, the largest telecom operator in the country, has raised alarms over the urgent need for tariff increases to sustain its operations. During a tour of MTN’s facilities in Ibeju-Lekki, Lagos, by the Fellows of the Media Innovation Programme, MTN’s CEO, Karl Toriola, emphasized that the telecommunications sector must return to profitability or face severe consequences.
Toriola, who oversees MTN’s operations with a subscriber base of around 78 million, explained that the sector has been incurring heavy losses. He warned that without immediate changes, the company might be forced to shut down operations.
According to its 2023 Sustainability Report, MTN Nigeria has invested about N2.6 billion in corporate social responsibility projects, but the company is now relying on profits accumulated over the past two decades, a situation Toriola described as unsustainable in the long term.
Rising Costs and Tariff Hike Necessity
Earlier this year, telecom operators, including MTN, called for a tariff hike, the first such request in 11 years, citing rising operational costs. The telecom sector is facing increased financial pressure, especially from the soaring cost of diesel, which powers the base transceiver stations.
Toriola made it clear that the survival of the sector depends on a tariff adjustment, stating, “If the tariff doesn’t go up, we will shut down.” This highlights the gravity of the situation and the immediate need to realign telecom prices with current economic realities, such as inflation and currency devaluation.
Impact on Tax Contributions and Investments
The financial strain has also affected MTN’s tax contributions, once among Nigeria’s largest corporate taxpayers. Due to ongoing losses, including a N519.1 billion hit in the first half of 2024 mainly due to foreign exchange losses and the naira’s devaluation, MTN and other operators like Airtel have taken a cautious approach to capital expenditure for the year.
In addition, the two other mobile operators, 9mobile and Globacom, which are not publicly listed, are facing similar financial pressures.
Debt with Nigerian Banks
Beyond the rising operational costs, MTN also faces significant challenges with Nigerian banks over Unstructured Supplementary Service Data (USSD) banking services. Toriola revealed that Nigerian banks owe the telecom company N250 billion. MTN is seeking regulatory approval to suspend USSD banking services unless the debt is cleared and tariffs adjusted.
However, the CEO expressed optimism that regulatory figures like Central Bank Governor Yemi Cardoso and Nigerian Communications Commission Executive Vice Chairman Dr. Aminu Maida would intervene to resolve these issues.
Toriola concluded by stressing the importance of the telecom industry to Nigeria’s economy and urged the government to act quickly to prevent a potential shutdown of MTN’s services.
Detailed Breakdown:
MTN Nigeria, the largest telecom operator in the country, has raised alarms over the urgent need for tariff increases to sustain its operations. During a tour of MTN’s facilities in Ibeju-Lekki, Lagos, by the Fellows of the Media Innovation Programme, MTN’s CEO, Karl Toriola, emphasized that the telecommunications sector must return to profitability or face severe consequences.
Toriola, who oversees MTN’s operations with a subscriber base of around 78 million, explained that the sector has been incurring heavy losses. He warned that without immediate changes, the company might be forced to shut down operations.
According to its 2023 Sustainability Report, MTN Nigeria has invested about N2.6 billion in corporate social responsibility projects, but the company is now relying on profits accumulated over the past two decades, a situation Toriola described as unsustainable in the long term.
Rising Costs and Tariff Hike Necessity
Earlier this year, telecom operators, including MTN, called for a tariff hike, the first such request in 11 years, citing rising operational costs. The telecom sector is facing increased financial pressure, especially from the soaring cost of diesel, which powers the base transceiver stations.
Toriola made it clear that the survival of the sector depends on a tariff adjustment, stating, “If the tariff doesn’t go up, we will shut down.” This highlights the gravity of the situation and the immediate need to realign telecom prices with current economic realities, such as inflation and currency devaluation.
Impact on Tax Contributions and Investments
The financial strain has also affected MTN’s tax contributions, once among Nigeria’s largest corporate taxpayers. Due to ongoing losses, including a N519.1 billion hit in the first half of 2024 mainly due to foreign exchange losses and the naira’s devaluation, MTN and other operators like Airtel have taken a cautious approach to capital expenditure for the year.
In addition, the two other mobile operators, 9mobile and Globacom, which are not publicly listed, are facing similar financial pressures.
Debt with Nigerian Banks
Beyond the rising operational costs, MTN also faces significant challenges with Nigerian banks over Unstructured Supplementary Service Data (USSD) banking services. Toriola revealed that Nigerian banks owe the telecom company N250 billion. MTN is seeking regulatory approval to suspend USSD banking services unless the debt is cleared and tariffs adjusted.
However, the CEO expressed optimism that regulatory figures like Central Bank Governor Yemi Cardoso and Nigerian Communications Commission Executive Vice Chairman Dr. Aminu Maida would intervene to resolve these issues.
Toriola concluded by stressing the importance of the telecom industry to Nigeria’s economy and urged the government to act quickly to prevent a potential shutdown of MTN’s services.