MTN Nigeria, the country’s leading telecom operator, has highlighted the pressing need for the telecommunications sector to regain profitability in order to sustain its operations.
Karl Toriola, MTN’s CEO, made this clear on Monday during a tour of the company’s facilities by the Fellows of the Media Innovation Programme in Ibeju-Lekki, Lagos.
Toriola, who oversees a subscriber base of approximately 78 million, emphasized that the sector has been experiencing significant financial losses, requiring urgent corrective measures.
According to MTN’s 2023 Sustainability Report, the company, with a corporate social investment of N2.6 billion, is now relying on profits accumulated over the past two decades to stay afloat.
“We must restore the industry to profitability,” Toriola stressed, highlighting the necessity of reform.
He further explained that MTN is currently operating on reserves, a situation he warned is unsustainable over time.
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Earlier in the year, telecom operators pushed for a tariff hike, the first in 11 years, citing rising operational costs and the need to improve service quality. Without such adjustments, they cautioned, financial health and service standards would continue to erode.
Toriola reiterated the intense pressure on the sector due to rising operational costs, especially the soaring price of diesel needed to power base transceiver stations.
“There should be no illusion; if tariffs don’t increase, we will shut down,” Toriola warned, underscoring the critical need for tariff revisions to align with economic realities.
He also noted that MTN, once one of Nigeria’s top corporate taxpayers, has seen its tax contributions decline due to these financial challenges.
Reflecting on the first-quarter results, MTN and Airtel have adopted a cautious approach to capital expenditures for 2024.
Meanwhile, the country’s two other major mobile operators, 9mobile and Globacom, are not publicly listed.
In 2024, MTN Nigeria reported a staggering N519.1 billion loss in the first half of the year, largely driven by foreign exchange losses linked to the naira’s devaluation and high inflation.
Toriola also hinted at the possible suspension of Unstructured Supplementary Service Data (USSD) banking services, as Nigerian banks owe a debt of N250 billion.
MTN is seeking regulatory approval to discontinue USSD services, used for banking transactions, unless the debt is settled and tariffs adjusted to reflect the economic environment.
However, Toriola expressed optimism that the new Central Bank of Nigeria Governor, Yemi Cardoso, and the Executive Vice Chairman of the Nigerian Communications Commission, Dr. Aminu Maida, would step in to address the financial crisis.
He concluded by highlighting the telecom sector’s crucial role in supporting Nigeria’s economy, urging swift action from the government and regulators to prevent further deterioration.
