MTN May Shut Down Without Tariff Increase – CEO

MTN Nigeria, the country’s largest telecom operator, has highlighted the urgent need for tariff increases to restore profitability and sustain operations.

Speaking during a facility tour with Media Innovation Programme Fellows in Ibeju-Lekki, Lagos, MTN CEO Karl Toriola revealed that the telecom industry has been grappling with significant losses, threatening its financial stability. MTN Nigeria, with around 78 million subscribers, is now relying on profits accumulated over the last two decades, according to its 2023 Sustainability Report, which noted a corporate social investment of N2.6 billion.

Toriola stressed the need for urgent reform, stating, “We must return the industry to profitability.” He added that MTN is currently operating on reserves, a situation that is unsustainable in the long term.

Earlier this year, telecom operators, including MTN, called for a tariff hike—the first in 11 years—to combat rising operational costs and improve service quality. Without these adjustments, they warned, both financial sustainability and service standards would continue to deteriorate. Toriola particularly cited rising diesel prices, which are essential for powering base transceiver stations, as a major pressure on the sector.

“If the tariff doesn’t go up, we will shut down,” he warned, underscoring the urgency of tariff adjustments to reflect Nigeria’s economic realities.

The CEO also noted that MTN, historically one of Nigeria’s leading corporate taxpayers, has seen its tax contributions decline due to these financial difficulties. Reflecting the tough operating environment, MTN and Airtel have adopted a cautious approach to capital expenditure in 2024. In contrast, 9mobile and Globacom, the other major telecom operators in Nigeria, are not publicly listed.

MTN Nigeria reported a massive N519.1 billion loss in the first half of 2024, largely driven by foreign exchange losses linked to the naira’s devaluation and high inflation rates.

Toriola also raised concerns about the N250 billion debt owed by Nigerian banks for Unstructured Supplementary Service Data (USSD) services, used for mobile banking. He warned that MTN might suspend these services unless the debt is resolved and tariffs are adjusted accordingly.

However, Toriola expressed hope that the newly appointed Central Bank Governor, Yemi Cardoso, and Nigerian Communications Commission Executive Vice Chairman, Dr. Aminu Maida, would intervene to resolve the crisis. He emphasized the telecom sector’s vital role in supporting Nigeria’s economy and urged the government and regulators to act swiftly to avoid severe consequences.