MTN Nigeria has stated that the company will fold up if the country’s policies are not reviewed to allow it to increase tariffs.
MTN stressed the critical necessity for the telecommunications industry to regain profitability and maintain its operations.
Naijaonpoint reports that the Chief Executive Officer of the leading telecommunications provider in Nigeria, Karl Toriola, conveyed this message on Monday during a visit to MTN’s facilities by participants of the Media Innovation Programme in Ibeju-Lekki, Lagos.
Toriola, overseeing approximately 78 million subscribers, highlighted that the sector has been facing substantial financial losses and that prompt measures are essential to reverse this situation.
According to its 2023 Sustainability Report, the operator, which has invested ₦2.6 billion in corporate social initiatives, is currently relying on profits accumulated over the past two decades.
“We must return the industry to profitability,” he stated, emphasizing the necessity for reform.
He further explained that the company is presently relying on its reserves, which he characterized as unsustainable over the long term.
Earlier this year, telecommunications providers reiterated their requests for a tariff increase—the first in over a decade—to tackle increasing operational expenses and enhance service quality. They contended that without these adjustments, both financial stability and service standards would persist in their downward trajectory.
Toriola emphasized that the industry is under significant strain due to rising operational costs, particularly the surging prices of diesel needed to operate base transceiver stations.
The MTN chief 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.
Toriola observed that MTN, which was once among Nigeria’s leading corporate taxpayers, has experienced a decline in its tax contributions due to ongoing financial difficulties.
In light of their first-quarter performance, both MTN and Airtel have taken a prudent stance regarding capital expenditures for the year 2024.
Conversely, the other two mobile service providers in Nigeria, 9mobile and Globacom, remain privately held and are not listed on the stock exchange.
In the first half of 2024, MTN Nigeria reported an alarming loss of ₦519.1 billion, primarily attributed to foreign exchange losses resulting from the devaluation of the naira and elevated inflation rates.
Additionally, Toriola cautioned that the company might suspend its Unstructured Supplementary Service Data (USSD) banking services due to a substantial debt of ₦250 billion owed by Nigerian banks.
The mobile operator is currently seeking regulatory approval to discontinue support for USSD services utilized for banking transactions unless the outstanding debt is addressed and tariffs are revised to align with current economic conditions.
Nevertheless, Toriola expressed hope that the newly appointed Governor of the Central Bank of Nigeria, Yemi Cardoso, along with the Executive Vice Chairman of the Nigerian Communications Commission, Dr. Aminu Maida, would take action to alleviate the ongoing financial challenges.
He emphasized the vital importance of the telecommunications sector in bolstering Nigeria’s economy, urging both the government and regulatory bodies to act swiftly to avert severe repercussions from inaction.