Telecoms Tariff Hikes: MTN Nigeria will stop operations, if….—CEO

*Karl Toriola, CEO of MTN Nigeria Communications Plc, asserts ‘there should be no delusion; if the tariff doesn’t go up, we will shut down’, underscoring the urgent need for tariff adjustments to reflect the current economic realities in the country

Gbenga Kayode | ConsumerConnect

Against the backdrop of the current high inflation, including high cost of living and depreciated value of the national currency, the MTN Nigeria Communications Plc has stressed the urgent need for the telecommunications sector of the economy to sustain operations and return to profitability.

Mr. Karl Toriola, Chief Executive Officer (CEO) of MTN Nigeria, stated this Monday, October 21, 2024, during a tour of the Telco’s facilities by Fellows of the Media Innovation Programme at Ibeju-Lekki, Lagos.

Toriola also affirmed that the sector has been accumulating significant losses that require an immediate, necessary action to reverse this ugly trend.

The telecoms operator with a corporate social investment of N2.6bn, according to its 2023 Sustainability Report, is now surviving on the profits it accumulated in about 20 years.

“We must return the industry to profitability,” Toriola noted in regard to necessity for reform in telecommunications.

The MNN Chief also explained that the foremost telecoms company is currently operating on its reserves, which Toriola described as “unsustainable” in the long run, The Punch report said.

On Telcos’ persistent push for tariff increments

ConsumerConnect reports the network operators, since early 2024, have advocated tariff increments for telecoms products and services in the Nigerian ecosystem.

According to the Telcos, the first increase in 11 years ought to be reviewed upwards in regard to operational costs and improve service quality.

The Association of Licensed Telecoms Companies of Nigeria (ALTON) and the Association of the Telecoms Companies of Nigeria (ATCON) at diverse fora, have both articulated their arguments for tariff hikes.

The network operators contended that without such upward adjustments in prices of telecoms products and services, financial viability and service standards will continue to decline in the all-important 6

Telecommunications industry faces critical pressures, says Toriola

In justifying the urgent need for tariff increases, the CEO of MTN Nigeria restated the sector faces critical pressures from rising operational costs, including escalating diesel prices required to power base transceiver stations across the country.

Toriola stated: “There should be no delusion; if the tariff doesn’t go up, we will shut down”, underscoring the urgent need for tariff adjustments to reflect economic realities in the West African country.

He further disclosed that MTN, once one of Nigeria’s top corporate taxpayers, has seen its tax contributions decline as a result of these financial challenges in the economy.

As regards the company’s performance in the first-quarter (Q1) 2024 results, MTN Nigeria and Airtel Networks have adopted a cautious approach to capital expenditure for this year, according to report.

In Q1 2024, MTN Nigeria reported a staggering N519.1billion loss primarily  due to Foreign Exchange (Forex) losses resulting from devaluation of the Naira and high inflation rates in the economy.

Why telecoms firms may suspend USSD banking services

The Chief Executive of MTN Nigeria has also warned stakeholders in the telecoms ecosystem, that the Telco may suspend the Unstructured Supplementary Service Data banking services because of the outstanding N250 billion the banks owe the network operators.

Report equally indicates the telecoms company is seeking the approval of the Nigerian Communications Commission (NCC), the industry regulator, suspend its support for USSD services used for banking transactions.

MTN reportedly is contemplating the move until the N250 billion accumulated USSD debt is resolved, and tariffs are adjusted to reflect the current economic realities in Nigeria.

Optimism over CBN, NCC’s interventions to resolve issues

Meanwhile, Toriola has expressed optimism that Dr. Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), and Dr. Aminu Maida, Executive Vice-Chairman and CEO of NCC, will intervene to help resolve the ongoing financial crisis in the country’s telecoms space.

The MTN Chief emphasised the critical role the telecoms industry plays in supporting the Nigerian economy.

He, therefore, urged the Federal Government and industry regulators to urgently intervene towards preventing dire consequences of inaction in the telecoms ecosystem.

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