MTN CEO Warns Company May Collapse Without Tariff Increase

MTN Nigeria, the nation’s largest telecommunications provider, has underscored the pressing need for the sector to regain profitability to maintain its operations. Karl Toriola, CEO of MTN, made this statement during a facility tour for Media Innovation Programme Fellows in Ibeju-Lekki, Lagos, on Monday.

With approximately 78 million subscribers, Toriola highlighted that the industry has been facing substantial financial losses, necessitating immediate reforms to change the current trajectory. He pointed out that MTN is relying on profits accumulated over the past two decades, a situation he deemed unsustainable.

“We must return the industry to profitability,” Toriola stressed, reinforcing the call for necessary changes. He indicated that the company is currently operating on its reserves, which cannot continue indefinitely.

Earlier this year, telecom operators, including MTN, renewed their requests for a tariff hike—the first in 11 years—to combat rising operational expenses and enhance service quality. They warned that without such increases, the financial viability of the sector and service standards would continue to decline.

Toriola emphasized the mounting pressures from operational costs, particularly rising diesel prices needed to power base transceiver stations. He warned, “There should be no delusion; if the tariff doesn’t go up, we will shut down,” highlighting the critical need for tariff adjustments that reflect current economic conditions.

He noted that MTN, once a major corporate taxpayer in Nigeria, has seen a decrease in its tax contributions due to these financial challenges. In the first quarter of 2024, both MTN and Airtel have opted for a cautious approach to capital expenditure.

While two other mobile operators, 9mobile and Globacom, remain privately held, MTN reported a staggering N519.1 billion loss in the first half of 2024, largely due to foreign exchange losses tied to the naira’s devaluation and soaring inflation.

Additionally, Toriola warned that MTN might suspend its Unstructured Supplementary Service Data (USSD) banking services due to a N250 billion debt owed by Nigerian banks. The company is seeking regulatory approval to discontinue support for USSD services used in banking transactions unless the debt is settled and tariffs are adjusted.

Despite these challenges, Toriola expressed hope 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, will intervene to help alleviate the ongoing financial crisis.

He concluded by emphasizing the essential role of the telecom industry in Nigeria’s economy and urged government and regulatory bodies to act swiftly to avoid severe repercussions from inaction.