MTN will shut down without tariff hike — CEO

MTN Nigeria, the country’s largest telecom operator, has stressed the urgent need for the telecommunications sector to return to profitability to sustain its operations.

The Chief Executive Officer of MTN, Karl Toriola, made this known on Monday during a tour of MTN’s facilities by Fellows of the Media Innovation Programme in Ibeju-Lekki, Lagos.

The MTN chief, who has about 78 million subscribers under his watch, pinpointed that the sector has been accumulating significant losses and that immediate action is necessary to reverse this trend.

The operator with a corporate social investment of N2.6bn, according to its 2023 Sustainability Report, is now surviving on the profits it accumulated in about two decades.

“We must return the industry to profitability,” he stated, emphasising the necessity for reform.

He further elaborated that the company is currently operating on its reserves, which he described as unsustainable in the long run.

Earlier this year, telecom operators renewed calls for a tariff hike—the first increase in 11 years—to address rising operational costs and improve service quality. Without such adjustments, they argued, financial viability and service standards will continue to decline.

Toriola reiterated that the sector faces critical pressures from rising operational costs, including escalating diesel prices required to power base transceiver stations.

He warned, “There should be no delusion; if the tariff doesn’t go up, we will shut down,” underscoring the urgent need for tariff adjustments to reflect economic realities.

Toriola noted that MTN, once one of Nigeria’s top corporate taxpayers, has seen its tax contributions decline as a result of these financial challenges.

Reflecting on their first-quarter results, MTN and Airtel have adopted a cautious approach to capital expenditure for 2024.

Meanwhile, the two other mobile operators in the country, 9mobile and Globacom, are not publicly listed.

In 2024, MTN Nigeria reported a staggering N519.1bn loss in the first half of the year, primarily due to foreign exchange losses stemming from the naira’s devaluation and high inflation rates.

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Speaking further, Toriola also warned that it may suspend Unstructured Supplementary Service Data banking services due to the N250bn debt owed by Nigerian banks.

The mobile network operator is seeking regulatory approval to halt support for USSD services used for banking transactions unless the debt is resolved and tariffs are adjusted to reflect the economic realities.

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.