MTN Nigeria, the country’s leading telecommunications company, has called for urgent measures to restore profitability to the telecoms sector in order to sustain its operations in the long term.
According to The PUNCH, this was revealed by MTN’s CEO, Karl Toriola, during a facility tour in Ibeju-Lekki, Lagos, organized for Fellows of the Media Innovation Programme on Monday.
With approximately 78 million subscribers under his management, Toriola expressed concern over the sector’s mounting losses, warning that without decisive steps, the situation could worsen.
He explained that MTN, like others in the industry, has been relying on profits accumulated over the past two decades but can no longer continue this way without substantial reforms.
“We must return the industry to profitability,” Toriola stated, stressing the necessity for prompt action to safeguard the sector’s future.
He emphasized that MTN’s operations are currently being sustained by reserves, which is unsustainable in the long term.
Earlier in 2024, telecom operators, including MTN, renewed their calls for a tariff increase, the first in 11 years, to counter rising operational costs and enhance service quality.
Eithout such a revision, Toriola warned, the industry’s financial health would continue to deteriorate, further affecting service delivery.
Toriola outlined the challenges MTN and other operators face, such as the skyrocketing costs of diesel used to power base transceiver stations.
These increasing costs, he warned, are pushing the sector to a breaking point. “There should be no delusion; if the tariff doesn’t go up, we will shut down,” Toriola cautioned, making it clear that tariff adjustments are critical to keep the sector alive.
MTN, which has historically been one of Nigeria’s largest corporate taxpayers, has seen a decline in its tax contributions due to its current financial struggles.
In its first-quarter results for 2024, MTN reported a staggering loss of N519.1 billion, primarily attributed to foreign exchange losses following the devaluation of the naira and the country’s persistent inflationary pressures.
Other telecom companies in Nigeria, including Airtel, are also adopting a cautious approach to capital expenditures this year in response to these economic challenges.
While 9mobile and Globacom remain unlisted, MTN’s challenges spotlight the overall strain on Nigeria’s telecoms sector.
The company’s 2023 Sustainability Report revealed a corporate social investment of N2.6 billion, reflecting its broader commitment to the country, but this has not insulated it from financial difficulties.
Toriola also highlighted a looming crisis regarding Unstructured Supplementary Service Data banking services, which MTN may suspend unless the N250 billion debt owed by Nigerian banks is resolved.
He reiterated the necessity for tariffs to be adjusted in line with current economic realities, warning that the discontinuation of USSD services would further impact the sector and banking industry.
However, Toriola expressed some optimism, noting that discussions are underway with the new Central Bank of Nigeria Governor, Yemi Cardoso, and the Executive Vice Chairman of the Nigerian Communications Commission Dr. Aminu Maida, to address the crisis.
He concluded by emphasizing the pivotal role the telecommunications industry plays in Nigeria’s economy and urged both the government and regulators to act swiftly to avoid the far-reaching consequences of inaction.
