MTN Nigeria CEO warns of industry crisis, advocates for urgent tariff review

The Chief Executive Officer of MTN Nigeria, Mr. Karl Toriola, has called for an urgent review of tariffs in the telecom sector, citing escalating operational costs that threaten the industry’s sustainability.

Speaking in a recent interview on Arise TV, Toriola revealed that telecom operators in Nigeria have requested a nearly 100% increase in tariffs to mitigate financial pressures and safeguard the sector’s long-term viability.

According to Toriola, the telecom sector is grappling with rising inflation, foreign exchange devaluation, and surging energy costs.

He highlighted how these challenges have driven operational expenses to unprecedented levels. Diesel prices, for instance, have soared from N230 per liter pre-COVID to over N1,000 per liter.

Additionally, the official exchange rate has shifted from N424.50 to N1,550 by the end of 2024, inflating the costs of importing critical infrastructure such as base stations by almost fourfold.

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“These cost increases are outpacing revenue growth. If large operators like MTN and Airtel are struggling, the impact on smaller players and the ecosystem is even more severe,” Toriola said.

Despite the dire financial situation, Toriola acknowledged that the Nigerian Communications Commission (NCC) might not approve the full extent of the proposed tariff increase.

The NCC, which regulates telecom pricing, has historically been cautious about allowing price hikes due to the prevailing economic conditions in the country.

“We’ve put forward a request for approximately 100% tariff increases to the regulators. I doubt they’re going to approve that quantum because they’re very sensitive to the current economic situation in the country,” Toriola explained.

The MTN CEO emphasized that the telecom industry is critical for economic growth and social well-being.

He warned that the sector’s financial strain could adversely affect service delivery, job sustainability, and economic activity. MTN alone accounts for over two million direct and indirect jobs, and any contraction in the industry would have far-reaching consequences.

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“This is not just about profitability; it’s about survival. If the industry constricts, employment and commercial activities around it will constrict as well,” he cautioned.

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Toriola commended recent government initiatives aimed at supporting the telecom sector. Notably, the declaration of telecom infrastructure as Critical National Infrastructure (CNI) is expected to enhance investment protection.

Additionally, plans to deploy 90,000 kilometers of fiber optic cable under the leadership of Minister Dr. Bosun Tijani were highlighted as a significant step toward accelerating digital penetration.

The CEO also acknowledged the regulator’s efforts to address sector indebtedness and improve quality of service obligations, expressing optimism about the industry’s future with continued collaboration between regulators and operators.

Industry associations, including the Association of Licensed Telecom Operators of Nigeria (ALTON) and the Association of Telecommunication Companies of Nigeria (ATCON), have been advocating for tariff reviews for over two years.

They argue that the telecom sector remains the only industry in Nigeria that has not adjusted its prices in response to rising inflation and economic realities.

In a joint statement, the associations criticized regulatory constraints that prevent appropriate pricing adjustments. Meanwhile, the NCC has indicated that it is conducting a cost-based study to determine whether to approve tariff increases for operators.