“If tariff doesn’t go up, we will shut down”- MTN CEO raises alarm

Joshua Fagbemi
MTN Nigeria proposes a merger of MoMo PSB, Yello Digital Finance Services to form one 'super' finance platform

The Nigerian arm of African telecommunications company, MTN Nigeria has raised concerns about the impact of the existing tariff pricing structure on its operations and survival. According to a report by Punch, CEO, Karl Toriola, expressed during a media tour of the company’s facility that the company might shut down if things don’t change soon.

According to Toriola, the telecommunications sector has incurred huge losses that require significant intervention. He added that MTN, the largest telecommunications company in the country with about 78 million subscribers, is not left out.

“There should be no delusion; if the tariff doesn’t go up, we will shut down,” he said.

While calling for immediate intervention, he pointed out that the company is now surviving on the reserves it has accumulated in two decades. “We must return the industry to profitability,” he stated, emphasizing the urgent need for reformation.

MTN expects to report 35% to 45% higher earnings per share

The CEO stressed the significance of operators in the country and their contributions to the Nigerian economy. He urged the government and telecommunications regulators to take swift action to prevent the sector from an uncontrollable financial crisis.

MTN’s losses andebts

With a corporate social investment of N2.6bn, MTN reported a N519.1bn loss during the first half of 2024. This results from foreign exchange losses relating to the high inflation rate and the naira’s devaluation. 

At the same time, the company reported that it is being owed N250 by Nigerian banks from its Unstructured Supplementary Service Data (USSD) rendered to bank customers. Consequently, the mobile network operator is seeking regulatory approval to halt its USSD services for banking transactions unless the impasse is resolved. 

Karl Toriola, Chief Executive Officer of MTN
Karl Toriola, MTN’s CEO

He also noted that MTN, which is a top taxpayer in the country, has seen its tax contributions decline following several financial crises.

The company CEO then pointed out that the Central Bank of Nigeria’s Governor, Yemi Cardoso, and the Executive Vice Chairman of the Nigerian Communications Commission, Dr. Aminu Maida, would intervene.

The push for a tariff hike

MTN, alongside mobile network operators, is seeking an approval for a 10% tariff increase. The telcoms companies believe that this will help them meet up with the current economic realities.

According to them, this will cover operational costs and the effect of the rising foreign exchange regime and inflation. They also argue that without the adjustment, their financial viability and service standards will continue to deteriorate.

Toriola added that telecommunications operators face rising costs including increasing the rate of diesel prices used in powering base transceiver stations. “There should be no delusion; if the tariff doesn’t go up, we will shut down.”

Following their first-quarter results, MTN and Airtel have adopted a cautious capital expenditure model for 2024. However, the two other mobile operators in the country, 9mobile and Globacom, are not publicly listed.

FG imposes call tax on phone subscribers

The government has declined the proposal, urging the companies to implore strategic measures to counter inflationary pressures.

Following the government’s refusal of the proposal, the National Association of Telecommunications Subscribers of Nigeria (NATCOMS) has announced its plan to take legal action against the Federal Government.

According to the President, Prince Adeolu revealed that the case, formally filed during the COVID-19 pandemic, will be revived in the court.

When they first introduced the five per cent excise duty, we went to court, but since it hadn’t been implemented, we decided to stay-action. Now that the government is moving forward with this, we will firm up our belts and get back to the courts,” he said.

Adeolu expressed that the association will be forced to take drastic measures if the Federal Government proceeds with the tax. “The government needs to understand that this tax will force operators to look at load shedding. They want to squeeze the industry, and it could lead to severe disruptions,” he added.

Also Read: 5% duty on telecoms, gambling: Nigeria operators condemn move, may sue government 


Technext Newsletter

Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!

Register for Technext Coinference 2023, the Largest blockchain and DeFi Gathering in Africa.

Technext Newsletter

Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!