MTN Nigeria CFO warns of investment risks in telecom sector, calls for tariff adjustment

Modupe Kadri, the Chief Financial Officer of MTN Nigeria, has raised alarms about the potential decline of investments in Nigeria’s telecommunications sector, warning that without appropriate pricing mechanisms, the industry could face challenges akin to those currently experienced in the oil sector.

Speaking at the 30th Nigerian Economic Summit (NES) in Abuja, Kadri emphasized the urgent need for adjustments in tariffs to reflect the current economic realities.

Kadri highlighted that the telecommunications industry is facing significant hurdles due to rising inflation and foreign exchange volatility, which have severely hampered operational efficiency.

He pointed out that the majority of telecommunications products are imported, making the sector particularly vulnerable to fluctuations in the forex market.

During the panel discussion, Kadri questioned the disparity in tariff increases across different sectors, noting that while the petroleum and electricity industries have successfully implemented price hikes, the telecommunications sector has not been afforded the same opportunity.

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He urged the government to create a fair and conducive environment for business survival, stating, “Our business is mainly dependent on forex, so customers need to understand that for you to get the services that you desire, it costs money.”

He further warned that if investors cannot monetize their investments, the sustainability of the economy will be jeopardized. “The only way that this economy will thrive is if there is appropriate pricing such that investments in the sector are guaranteed,” Kadri asserted.

The telecommunications sector plays a crucial role in the Nigerian economy, contributing 16 percent to the Gross Domestic Product (GDP), making it vital that its financial health is maintained.

Industry stakeholders have echoed Kadri’s sentiments, advocating for an increase in tariffs as the sector grapples with mounting operational costs. Notably, telecom operators in Nigeria have not adjusted their prices for over a decade, with the last review occurring in 2013.

They have pointed out that they remain the only industry that has not responded to rising inflation and economic pressures due to regulatory constraints.

In addition to pricing challenges, the telecommunications sector faces various other issues, including excessive taxation, high Right of Way (RoW) charges, inadequate power supply, and frequent vandalism of infrastructure.

Bismarck Rewane, a prominent economist and CEO of the Financial Derivative Company, has also supported the call for an increase in telecom tariffs. He argued that the existing tariff structure limits operators’ ability to invest in necessary infrastructure, which, in turn, has led to a noticeable decline in service quality.

As the telecommunications sector stands at a critical juncture, the urgency for a comprehensive review of pricing and regulatory frameworks is clear, with the sustainability of the industry—and the economy—hanging in the balance.