MTN Nigeria, the country’s largest telecom operator, has stressed the urgent need for the telecommunications sector to return to profitability to sustain its operations.
The Chief Executive Officer of MTN, Karl Toriola, made this
known on Monday during a tour of MTN’s facilities by Fellows of the Media Innovation
Programme in Ibeju-Lekki, Lagos.
The MTN chief, who has about 78 million subscribers under
his watch, pinpointed that the sector has been accumulating significant losses
and that immediate action is necessary to reverse this trend.
The operator with a corporate social investment of N2.6bn,
according to its 2023 Sustainability Report, is now surviving on the profits it
accumulated in about two decades.
“We must return the industry to profitability,” he stated,
emphasising the necessity for reform.
He further elaborated that the company is currently
operating on its reserves, which he described as unsustainable in the long run.
Earlier this year, telecom operators renewed calls for a
tariff hike—the first increase in 11 years—to address rising operational costs
and improve service quality. Without such adjustments, they argued, financial
viability and service standards will continue to decline.
Toriola reiterated that the sector faces critical pressures
from rising operational costs, including escalating diesel prices required 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.
Toriola noted that MTN, once one of Nigeria’s top corporate
taxpayers, has seen its tax contributions decline as a result of these
financial challenges.
Reflecting on their first-quarter results, MTN and Airtel
have adopted a cautious approach to capital expenditure for 2024.
Meanwhile, the two other mobile operators in the country,
9mobile and Globacom, are not publicly listed.
In 2024, MTN Nigeria reported a staggering N519.1bn loss in
the first half of the year, primarily due to foreign exchange losses stemming
from the naira’s devaluation and high inflation rates.
Speaking further, Toriola also warned that it may suspend
Unstructured Supplementary Service Data banking services due to the N250bn debt
owed by Nigerian banks.
The mobile network operator is seeking regulatory approval
to halt support for USSD services used for banking transactions unless the debt
is resolved and tariffs are adjusted to reflect the economic realities.
However, Toriola expressed optimism 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 intervene to
help resolve the ongoing financial crisis.
He concluded by stressing the critical role the telecom
industry plays in supporting Nigeria’s economy, urging the government and
regulators to act quickly to prevent the dire consequences of inaction.
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