MTN Warns of Shutdown Without Tariff Hike Amid Losses

October 22, 2024 EMMANUEL ADEBAYO AJIBOLA

MTN Nigeria, the country’s largest telecom provider, has highlighted the urgent need for the telecoms sector to return to profitability to sustain operations.

MTN’s Chief Executive Officer, Karl Toriola, made the remarks on Monday during a tour of the company’s facilities by Fellows of the Media Innovation Programme in Ibeju-Lekki, Lagos.

With around 78 million members under his control, the MTN boss pointed out that the industry has been suffering notable losses and that quick action is required to turn around this pattern.

According to its 2023 Sustainability Report, the operator is currently subsisting on the profits it has accrued over the past two decades, despite having a corporate social investment of N2.6bn.

“We must return the industry to profitability,” he stated, emphasising the necessity for reform.

He added that the company currently relies on its reserves, which he described as unsustainable in the long term.

Earlier this year, telecom operators reiterated their appeal for a tariff increase—the first in 11 years—to meet growing operating expenses and enhance service quality. They argued that without these changes, financial viability and service standards would suffer.

Toriola highlighted that the sector is under severe pressure from increased operational expenses, especially rising fuel prices necessary to power base transceiver stations.

He warned, “There should be no delusion; if the tariff doesn’t go up, we will shut down,” underscoring the urgent need for tariff adjustments to reflect economic realities.

MTN profit chart — **MTN recorded significant losses in 2023**

Toriola stated that MTN, previously one of Nigeria’s largest corporate taxpayers, has seen its tax contributions fall as a result of these financial difficulties.

Based on their first-quarter performance, MTN and Airtel have taken a conservative approach to capital expenditures in 2024.

Meanwhile, the two other mobile operators in the country, 9mobile and Globacom, are private.

In 2024, MTN Nigeria reported a N519.1 billion loss in the first half of the year, mostly due to foreign exchange losses caused by the naira’s depreciation and high inflation rates.

Toriola further stated that MTN could stop Unstructured Supplementary Service Data Banking services due to the N250 billion debt owed by Nigerian banks.

The mobile network operator requests regulatory clearance to suspend support for USSD services used for banking transactions until the debt is settled and rates are adjusted to reflect economic reality.

Toriola, on the other hand, expressed hope that the new Governor of the Central Bank of Nigeria, Yemi Cardoso, and the Executive Vice Chairman of the Nigerian Communications Commission, Dr Aminu Maida, would step in to help fix the country’s current economic crisis.

In his closing remarks, he emphasised the vital role that the telecom sector plays in bolstering Nigeria’s economy and urged policymakers and regulators to take immediate action to avoid the disastrous effects of delay.