MTN Nigeria’s CEO, Karl Toriola, has emphasized the critical need for the telecommunications industry to regain profitability to maintain its services. This statement comes amidst ongoing requests from telecom operators for tariff hikes to cope with economic pressures. During a visit to MTN’s facilities by the Media Innovation Programme Fellows in Ibeju-Lekki, Lagos, Toriola made it clear that without an increase in tariffs, the sector faces the risk of shutdown, as reported by the Nations.
Toriola highlighted that MTN has been depleting its reserves to stay afloat and warned that the industry is operating on borrowed time. He pointed out that MTN, which was once a significant contributor to Nigeria’s corporate income tax via the Federal Inland Revenue Service (FIRS), has seen its contributions dwindle to nothing as the company is no longer profitable.
The entire telecom sector is in a precarious position. MTN is operating at a loss due to the devaluation of the naira. To survive, we need a fundamental shift in tariffs.
Karl Toriola, MTN Nigeria CEO
In June 2024, it was reported that Nigerian banks had started repaying their debts to telecom companies based on an agreement from the last quarter of 2023. However, the slow pace of these repayments has prolonged the debt issue. Toriola expressed concerns over the significant outstanding debts owed to mobile network operators (MNOs) for the use of the Unstructured Supplementary Service Data (USSD) system.
He cautioned that if the situation remains unaddressed, MNOs might be compelled to seek regulatory permission to block commercial banks from executing transactions via the USSD platform.
By August 2024, there were indications that telecom operators in the country were contemplating a load-shedding approach, akin to that employed in the power sector, to manage their services due to economic difficulties. Engr. Gbenga Adebayo, the Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), mentioned that these economic challenges have significantly impacted telecom companies, potentially affecting their capacity to operate all facilities at once.
MTN Nigeria reported a substantial loss of ₦519.1 billion in the first half of 2024, attributed to foreign exchange losses from the naira’s devaluation and soaring inflation rates. Similarly, Airtel Africa’s financial statement for the fiscal year ending March 31, 2024, showed a post-tax loss of $89 million, influenced by the naira’s instability and $770 million in foreign exchange losses due to the currency’s devaluation.
