The Chief Executive Officer of MTN Nigeria, Carl Toriola, has issued a stark warning over the reintroduction of a 5% excise tax on telecom services.
According to Toriola, this move could spell doom for Nigeria’s telecommunications industry.
He likened the current state of telecoms to the collapse of Nigeria’s former national carrier, NITEL, and warned that telecom companies may soon follow a similar path.
The 5% excise tax was initially proposed by the National Assembly as part of a broader effort to reform Nigeria’s tax system.
The tax is aimed at telecommunications, gaming, and betting services, industries that lawmakers believe can contribute more to national revenue.
However, Toriola disagrees, stating that the impact of such a tax would be devastating.
He emphasized that the telecom industry is already in a critical condition.
Toriola said that MTN and other telecom operators are currently running at a loss due to the devaluation of the naira.
He warned that if tariffs are not increased, the situation will only worsen.
Speaking during a visit by the MTN Media Innovation Programme (MIP) Fellows to his office in Ikoyi, Lagos, Toriola did not hold back in expressing his frustration with the proposed tax.
“There is no way you’ll treat a sector that is adding over 15% to the GDP the way the telecom sector is being treated in Nigeria,” he said.
He argued that telecom operators are contributing significantly to Nigeria’s economy, and yet they are being squeezed financially by unfavorable policies.
Toriola’s comments come at a time when many Nigerians are already grappling with rising inflation, fuel costs, and the effects of currency devaluation.
If the 5% tax is implemented, it would likely lead to an increase in the cost of telecom services for consumers.
Toriola did not mince words in predicting the consequences.
“We are all making losses because of the naira devaluation. There should be no delusion. If the tariff doesn’t go up, we will shut down,” he stated.
He added that the industry is on the verge of collapse and is already heading in the direction of NITEL.
NITEL, once Nigeria’s flagship telecommunications provider, collapsed in the early 2000s after years of mismanagement and financial difficulties.
Its downfall left a vacuum that was eventually filled by private telecom operators like MTN.
However, Toriola is concerned that history may repeat itself if the government does not take action to support the industry.
He said that telecom companies are currently surviving by dipping into their financial reserves, which will soon run out if conditions do not improve.
“The country could be without any telecom operator,” he warned, underscoring the gravity of the situation.
Aside from the tax issue, Toriola also addressed the ongoing problem of Unstructured Supplementary Service Data (USSD) debts owed to telecom operators by Nigerian banks.
For years, telecom companies and banks have been at loggerheads over unpaid debts related to USSD services, which allow mobile phone users to access banking services without internet connectivity.
Rumors have circulated that banks have been making gradual payments to reduce the debt, but Toriola dismissed these claims.
He revealed that the debt has actually risen to over N250 billion, a significant increase from previous estimates.
Despite the mounting debt, Toriola acknowledged that regulators from the Nigerian Communications Commission (NCC) and the Central Bank of Nigeria (CBN) are working to resolve the issue.
Both agencies have been holding meetings with telecom and banking officials in an attempt to find a solution.
However, if these efforts fail, Toriola said that telecom operators may be forced to take drastic action.
“We will seek approval from the NCC to withdraw our services to the banks,” he said.