MTN Will Shut Down Without Tariff Hike

News/Opinion

MTN Will Shut Down Without Tariff Hike - CEO

Reported by Ibadan Media

MTN Nigeria, the country's largest telecom operator, has highlighted the pressing need for the telecommunications sector to regain profitability to ensure its sustainability.

Karl Toriola, the Chief Executive Officer of MTN Nigeria, shared this during a visit by the Media Innovation Programme Fellows to MTN’s facilities in Ibeju-Lekki, Lagos, on Monday.

With approximately 78 million subscribers under its management, Toriola revealed that the telecom sector has been facing significant financial losses, making immediate action essential to reversing this trend.

MTN, which has invested N2.6 billion in corporate social responsibility projects according to its 2023 Sustainability Report, is currently relying on profits accumulated over the past two decades to stay afloat.

“We need to return the industry to profitability,” Mr.Toriola said.

He also emphasized, calling for reforms to address the situation. He pointed out that the company’s reliance on reserves is not sustainable in the long run.

Earlier in 2023, telecom operators, including MTN, pushed for a tariff increase—the first in over 11 years—to combat rising operational costs and enhance service quality. Without such adjustments, they warned, the financial stability of the sector and service quality would continue to decline.

Toriola reiterated the challenges, particularly the soaring operational costs driven by increasing diesel prices needed to power base transceiver stations. He cautioned, "We must not be under any illusions; if tariffs do not rise, we will be forced to shut down."

This statement underscores the critical need for tariffs to align with current economic conditions.

Additionally, Toriola noted that MTN, once among Nigeria’s top corporate taxpayers, has seen its tax contributions fall due to the ongoing financial pressures.

MTN and Airtel have both taken a conservative stance on capital expenditures for 2024, following a difficult first quarter. Meanwhile, 9mobile and Globacom, the country’s other two mobile operators, remain privately held and are not publicly listed.

In 2024, MTN Nigeria reported a substantial N519.1 billion loss in the first half of the year, largely due to foreign exchange losses driven by the naira's devaluation and high inflation.

Toriola also warned of a potential suspension of the Unstructured Supplementary Service Data (USSD) banking services if Nigerian banks fail to settle the N250 billion debt owed to MTN. The telecom operator is seeking regulatory approval to discontinue USSD services unless the debt is cleared and tariffs are adjusted to reflect current economic realities.

Despite these challenges, Toriola remains hopeful that the newly appointed Central Bank of Nigeria Governor, Yemi Cardoso, and the Executive Vice Chairman of the Nigerian Communications Commission, Dr. Aminu Maida, will step in to help resolve the ongoing financial crisis.

He concluded by highlighting the vital role the telecom sector plays in supporting Nigeria’s economy, urging both the government and regulators to act swiftly to avoid the severe consequences of inaction.