The telecommunications sector in Nigeria is currently facing a deep crisis, according to Karl Toriola, the CEO of MTN Nigeria. Speaking at a telecom investment forum in Lagos, Toriola expressed concerns over the rising costs and unsustainable pricing that are threatening the industry’s viability. Despite significant growth in the sector over the past two decades, the financial returns have become so low that they now pose a serious risk to its survival.
In its audited financial report for 2023, MTN Nigeria reported a loss after tax of ₦137.0 billion, a stark contrast to the ₦348.7 billion profits recorded in 2022. The company attributed this significant financial fall to rising inflation, currency devaluation, foreign exchange shortages, geopolitical disruptions, and cash shortages in Q1. These challenges have made it increasingly difficult for telecom companies to maintain their operations and attract new investments.
Toriola emphasized the urgent need for a price increase in the telecom sector, describing it as an „absolute necessity“ to rescue the industry from collapse. He highlighted the escalating costs faced by telecom companies, including the cost of capital, maintaining infrastructure like base stations, and diesel generators. Without adjustments to pricing, the industry’s ability to function and attract investment is at risk.
Toriola pointed out that the current static pricing model is no longer sustainable, especially in the face of inflationary pressures and forex devaluation. He stressed that no industry can maintain prices at the same level for 11 years, especially in the current economic environment. Without appropriate changes, the influx of new investments into the sector could come to a halt, further exacerbating the crisis.
While Toriola acknowledged recent progress in discussions with regulatory authorities, he emphasized that the challenges facing the telecom sector remain critical. Stakeholders are beginning to understand the severity of the crisis and are considering essential interventions, such as price increases and concessions, to address the industry’s pressing issues.
In conclusion, the telecommunications sector in Nigeria is at a crossroads, with the need for urgent action to address the deep crisis it is facing. Price increases and other interventions are necessary to ensure the industry’s sustainability and attract much-needed investments. As stakeholders work together to find solutions, the future of the telecom sector in Nigeria hangs in the balance.
