The largest telecom provider in the nation, MTN Nigeria, has emphasized how critical it is to sustain continuing profits in the telecom industry to continue operating.
This was revealed by MTN CEO, Karl Toriola on Monday when Fellows of the Media Innovation Program toured MTN’s facilities in Ibeju-Lekki, Lagos. He oversees over 78 million users, identified the industry’s recent large losses, and stated that quick action is required to buck the trend.
According to its 2023 Sustainability Report, the operator has made N2.6 billion in corporate social investment and is currently making ends meet with the revenues it has amassed over the last 20 years.
Toriola emphasised the need for reform by saying: “We must return the industry to profitability.” He went on to explain that the business is now running on its reserves, which he said is not long-term viable.
Telecom companies reaffirmed their demands earlier this year for a rate raise, the first in eleven years, to combat growing operating expenses and enhance service quality. They contended that service standards and financial sustainability would keep deteriorating in the absence of such changes.
The MTN CEO reaffirmed that growing operational expenses, such as the increased cost of diesel needed to power base transceiver stations, are putting significant pressure on the industry.
Continuing, he cautioned: “There should be no delusion; if the tariff doesn’t go up, we will shut down,” highlighting how urgently tariffs must be changed to match current economic conditions.
He pointed out that these financial difficulties have caused MTN, formerly one of Nigeria’s largest corporate taxpayers, to reduce its tax payments.
MTN and Airtel have taken a conservative approach to capital expenditure for 2024 in light of their first-quarter results. Globacom and 9mobile, the nation’s other two mobile providers, are not publicly traded.
Due mostly to foreign exchange losses brought on by the devaluation of the naira and high rates of inflation, MTN Nigeria recorded an astounding N519.1 billion loss in the first half of 2024, BrandSpur telecom and IT news reports.
In addition, Toriola issued a warning that the N250 billion debt owed by Nigerian banks could result in the suspension of Unstructured Supplementary Service Data banking services. Until the debt is settled and tariffs are changed to reflect the current state of the economy, the mobile network operator is requesting regulatory authority to stop supporting USSD services used for banking transactions.
He did, however, voice hope that Dr. Aminu Maida, the Executive Vice Chairman of the Nigerian Communications Commission, and Yemi Cardoso, the recently appointed Governor of the Central Bank of Nigeria, would step in to help address the ongoing financial 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.
