The largest telecom provider in the nation, MTN Nigeria, has emphasized how critical it is for the telecom industry to turn a profit again in order to continue operating.
This was revealed by MTN CEO Karl Toriola on Monday when Fellows of the Media Innovation Program toured MTN’s facilities in Ibeju-Lekki, Lagos.
The MTN CEO, who oversees roughly 78 million subscribers, identified the industry’s recent large losses and stated that quick action is required to buck the trend.
According to its 2023 Sustainability Report, the operator has made N2.6 billion in corporate social investment and is currently making ends meet with the profits it has amassed over the previous 20 years.
He emphasized the need for reform by saying, “We must bring the industry back to profitability.”
He went on to explain that the business is currently running on its reserves, which he said is not long-term viable.
Telecom companies reaffirmed their demands earlier this year for a tariff hike, the first in eleven years, in order to combat growing operating expenses and enhance service quality. They contended that service standards and financial viability would keep deteriorating in the absence of such changes.
Toriola reaffirmed that growing operational expenses, such as the rising cost of diesel needed to power base transceiver stations, are putting significant pressure on the industry.
He emphasized the urgent need for tariff adjustments to reflect economic realities by warning, “There should be no delusion; if the tariff doesn’t go up, we will shut down.”
Toriola pointed out that these financial difficulties have caused MTN, formerly one of Nigeria’s largest corporate taxpayers, to reduce its tax payments.
MTN and Airtel have taken a cautious approach to capital expenditure for 2024 in light of their first-quarter results.
Globacom and 9mobile, the nation’s other two mobile operators, are not publicly traded.
Due mostly to foreign exchange losses brought on by the devaluation of the naira and high rates of inflation, MTN Nigeria reported an astounding N519.1 billion loss in the first half of 2024.
In addition, Toriola issued a warning that the N250 billion debt owed by Nigerian banks could result in the suspension of Unstructured Supplementary Service Data banking services.
Until the debt is settled and tariffs are changed to reflect the current state of the economy, the mobile network operator is requesting regulatory approval to stop supporting USSD services used for banking transactions.
However, Toriola expressed optimism that the new Governor of the Central Bank of Nigeria, Yemi Cardoso, and the Executive Vice Chairman of the Nigerian Communications Commission, Dr. Aminu Maida, would intervene to help resolve the ongoing financial crisis.
He concluded by stressing the critical role the telecom industry plays in supporting Nigeria’s economy, urging the government and regulators to act quickly to prevent the dire consequences of inaction.
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