MTN to increase tariff in Nigeria, South Africa, other African markets as inflation continues to rise

MTN Group – a major player in the global telecoms industry – has revealed that it intends to increase tariff in Nigeria, South Africa, and other select African markets. This decision is intended to soften the blow of inflation which rose from 11.5% last year to 18.5% as of Q1 of 2023.

This was revealed in its recently released first quarter report for the year. In the report, the telco giant noted that the ongoing war between Russia and Ukraine, coupled with the tons of debt accrued by many African countries during the heat of Covid-19, are among the driving factors of inflation on the continent. 

“Within this environment of elevated inflation, implementing selective price increases across the portfolio remains a critical priority.”

MTN Group

This isn’t the first time that MTN has informed consumers of its plan to increase tariff. Last year, the telecom company announced plans to raise its rates in the South African market to keep up with inflation. Beyond elevated inflation, South Africa – MTN’s home base – has been plagued by load shedding, a trend that has hurt many businesses due to incessant blackouts.

Loadshedding is a way of distributing demand for electrical power across multiple power sources. It is used to relieve stress on a primary energy source when demand for electricity is greater than the primary power source can supply. This has proven to be a major operating challenge, MTN noted. 

In 2022, the telco said it experienced 47 days of loadshedding in just October and November alone. In Q3 of the same year, it recorded 53 days of rolling blackouts. Additionally, it widened its budget on vandalism prevention to avoid service downtime.

Nigeria – one of MTN’s largest fields of operations – hasn’t exactly proven to be the best place to do business this year. The impact of an ill-thought-out currency redesign policy coupled with intermittent service downtime for many Nigerian banks fuelled protests, vandalism of ATMs, hefty point-of-sale (POS) transaction fees, and tons of hardship for the average citizen. 

MTN noted, in its trading report, that the redesign policy which drastically reduced the volume of notes in circulation greatly impacted its operations in the West African nation. Commenting on this, the CEO of MTN Nigeria – Karl Toriola – revealed that: “The limited availability of the new notes resulted in cash shortages, which impacted our customers’ ability to recharge through physical airtime vouchers (affecting mostly customers who did not have access to digital recharge channels) and over-the-counter (OTC) transactions within our MoMo agent network.” 

Despite the difficulties encountered in the course of operations, the telco accomplished some feats. It increased its service revenue by 20.4% with help from its main verticals – voice, data, fintech, and digital services. It also grew its mobile subscriber base to 76.8 million (+9.4%). 

By gaining an additional 167,000 home broadband users, MTN Nigeria now has 1.4 million broadband consumers. The telco credits this particular achievement to “the deployment of 5G fixed wireless access devices, mobile broadband solutions, and fiber-to-the-home connectivity.” 

Read also: MTN MoMo users increase by 21% as group records N437b in fintech revenue

MTN foresees a harsher rest of the year 

Tariff hikes won’t solve all of MTN’s problems, unfortunately, and it knows that. As such, the company is expecting a harsher run towards the end of the year. However, it remains resolute in its ability to churn out proactive solutions to challenges as they arise.

“We anticipate that trading conditions across markets will remain challenging for the remainder of 2023 and we will continue to execute on our proactive measures to manage the near-term challenges and risks,” the company says in the report.

To improve service delivery in South Africa, the telco will invest more in off-grid power solutions to keep consumers connected. In Nigeria, MTN will focus on advancing the spread of network coverage, especially in rural areas. Just yesterday, MTN renewed its 3G license, signaling an intention to keep supporting customers using the 3G network. Meanwhile, it continues to monitor the situation in Ghana and remains hopeful of the inflationary pressures easing soon.

It has also pledged to discuss the proposed tariff increases with the regulatory agencies. Dialogue with the government is a good step because its previous attempt at a rate hike was rejected. Last October, the Nigeria Communications Commission (NCC) ordered MTN and Airtel to reverse the 10% hike on data subscription plans, claiming the “action of the telcos was unilateral.”