MTN CEO Warns of Possible Shutdown Without Immediate Tariff Hike

MTN Nigeria, the nation’s largest telecommunications provider, has issued a stark warning regarding the sustainability of its operations without an urgent tariff hike.

Speaking on Monday during a tour of the company’s facilities in Ibeju-Lekki, Lagos, MTN CEO Karl Toriola highlighted the severe financial pressures facing the telecommunications sector.

He emphasized that MTN, which currently serves approximately 78 million subscribers, is operating on reserves built over two decades, a situation he described as unsustainable.

Toriola stressed the importance of returning the industry to profitability, warning that without reforms and a tariff adjustment, MTN and other operators may face shutdowns.

“We must return the industry to profitability,” he stated, calling for immediate action to reverse the sector’s financial decline.

Telecom Operators Push for First Tariff Hike in 11 Years

Earlier this year, telecommunications companies, including MTN, renewed calls for a tariff hike—the first in over a decade—to combat escalating operational costs.

Toriola explained that rising costs, particularly diesel prices used to power base transceiver stations, are exerting significant pressure on the company’s finances. He cautioned that without a tariff increase to reflect economic realities, service standards and financial viability would continue to deteriorate.

“There should be no delusion; if the tariff doesn’t go up, we will shut down,” Toriola warned, emphasizing the urgency of the situation.

N519.1bn Loss and Forex Challenges Impact Financial Health

MTN Nigeria’s financial struggles are evident in its 2024 report, which showed a staggering N519.1bn loss in the first half of the year. The loss was primarily attributed to foreign exchange challenges and the naira’s devaluation, compounded by rising inflation.

Toriola also pointed out that the company, once a major corporate taxpayer in Nigeria, has seen a decline in tax contributions due to these financial pressures.

In response to the challenging economic environment, both MTN and Airtel have taken a cautious approach to capital expenditure for 2024, while other operators, such as 9mobile and Globacom, remain privately held.

USSD Services at Risk as MTN Seeks Debt Resolution

In addition to tariff concerns, MTN Nigeria faces a N250bn debt owed by Nigerian banks related to Unstructured Supplementary Service Data (USSD) banking services. Toriola warned that the company might suspend USSD services unless the debt is settled and tariff rates adjusted. USSD services are critical for banking transactions, and halting them could disrupt financial operations across the country.

Hopes for Regulatory Intervention

Despite the dire warnings, Toriola expressed hope that the 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 sector’s financial crisis.

He emphasized the essential role the telecommunications industry plays in supporting Nigeria’s economy and urged the government and regulators to act swiftly to prevent further deterioration.

Toriola concluded by underscoring the importance of immediate regulatory support, stating that failure to act could have far-reaching consequences for the telecom industry and the wider Nigerian economy.

 

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