MTN Nigeria, the country’s largest telecommunications provider, has issued a stark warning about the potential closure of its operations if significant changes are not made to restore profitability in the telecom industry. This revelation was made by the company’s CEO, Karl Toriola, during a visit by fellows of the Media Innovation Program to MTN’s facilities in Ibeju-Lekki, Lagos, on October 21, 2024.
Toriola emphasized that the telecom sector has been experiencing substantial losses, largely driven by increasing operational costs, including the skyrocketing price of diesel to power its base transceiver stations (BTS) and the devaluation of the naira. These financial pressures, he noted, have left the company operating on its reserves—a situation he described as unsustainable.
“We must return the industry to profitability,” Toriola stated, noting that the telecom sector is now at a critical juncture. He explained that without reforms, including a much-needed hike in service tariffs, the company might be forced to shut down its operations.
The Call for Tariff Increases
Earlier this year, telecom companies, including MTN, called for a review of telecom rates for the first time in over a decade. These companies have argued that without adjustments to reflect the rising costs of operation, service quality would continue to deteriorate, and the financial health of the industry would worsen.
Toriola reiterated this call for change, saying, “There should be no delusion; if the tariff doesn’t go up, we will shut down.” He stressed that the current operational model is no longer viable, particularly in light of the industry’s mounting losses.
Financial Struggles and Sector Challenges
MTN’s financial reports reflect the severity of the situation. The company recorded a staggering N519.1 billion loss in the first half of 2024, driven primarily by foreign exchange losses and Nigeria’s high inflation rate. Additionally, the telecom giant has been affected by the N250 billion debt owed by Nigerian banks, which could lead to a suspension of Unstructured Supplementary Service Data (USSD) banking services unless the debt is settled.
Toriola also expressed concern over the potential impact on the company’s tax contributions. Once one of the nation’s top corporate taxpayers, MTN has had to scale back its tax payments in response to its declining profitability.
Government Intervention Needed
Despite the grim outlook, Toriola remains hopeful that regulatory authorities will step in to help stabilize the industry. He specifically called on Dr. Aminu Maida, the Executive Vice Chairman of the Nigerian Communications Commission (NCC), and Yemi Cardoso, the Governor of the Central Bank of Nigeria (CBN), to take swift action to address the ongoing crisis. He emphasized the importance of the telecom sector in bolstering Nigeria’s economy and warned of the disastrous consequences if the current situation is not resolved.
In closing, the MTN CEO reiterated the urgency of the situation, stating, “The telecom sector plays a vital role in supporting the economy, and immediate action must be taken to avoid a collapse.”
