MTN Nigeria’s Chief Executive Officer, Karl Toriola, has revealed that the company has submitted a proposal to the Nigerian Communications Commission (NCC) seeking a 100 percent increase in service tariffs.
Speaking during an interview on Arise TV on Thursday, Toriola acknowledged the uncertainty surrounding the approval of the request, citing the economic difficulties faced by Nigerians.
“We’ve submitted proposals for approximately 100 percent tariff increases to the regulators. However, I doubt they’ll approve such a significant increase given their sensitivity to the prevailing economic conditions in the country,” he stated.
This disclosure comes amid growing concerns over a potential hike in telecom service charges this year. The Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), Gbenga Adebayo, recently warned of a possible industry shutdown if tariffs are not increased.
However, telecom subscribers across the country have strongly opposed any plans for a tariff hike.
In a similar development, MTN Nigeria, a leading telecommunications company, has recently faced significant financial challenges due to economic factors such as inflation and currency devaluation.
Financial Losses Due to Economic Challenges
In the first half of 2024, MTN Nigeria reported a loss after tax of ₦519.1 billion, primarily attributed to record-high inflation and a weaker naira. The inflation rate reached 34.2% in June, with an average of 32.8% for the first half of the year. Additionally, the naira depreciated significantly, closing at ₦1,505 per dollar in June 2024, compared to ₦907 per dollar in December 2023.
For the nine months ending September 30, 2024, the company reported a loss after tax of ₦514.9 billion. This period also saw a 0.9% decrease in total subscribers, bringing the subscriber base to 77 million, largely due to the implementation of National Identification Number and Subscriber Identification Module regulations. Despite these challenges, MTN Nigeria experienced a 33.6% increase in service revenue, reaching ₦2.4 trillion, showcasing the resilience of its core business operations.
Impact on Service Revenue
MTN Group, the parent company, reported an 18.5% decline in service revenue for the third quarter ended September 30, 2024. This decline was mainly due to the devaluation of the Nigerian naira and operational challenges in Sudan. MTN Nigeria saw a significant 48.7% revenue decline due to currency devaluation, although the naira showed less volatility compared to previous quarters.
Operational Adjustments and Future Outlook
In response to these economic challenges, MTN Nigeria has been exploring various strategies to mitigate financial losses. The company has submitted a proposal to the Nigerian Communications Commission (NCC) seeking a 100% increase in service tariffs. However, the approval of such a request remains uncertain due to the current economic situation in the country.
Despite the financial setbacks, MTN Nigeria continues to invest in its infrastructure to meet rising demand. The company estimates capital expenditure between ₦28 billion and ₦33 billion for the full year, with increased investment in Nigeria.
MTN Nigeria’s recent financial performance reflects the broader economic challenges facing the country, including high inflation and currency devaluation. The company’s efforts to navigate these challenges, such as proposing tariff increases and investing in infrastructure, will be crucial in determining its future performance in the Nigerian telecommunications market.
