MTN Nigeria, the country’s leading telecom company, has reported a staggering 91% increase in its operating costs, hitting N1.1 trillion as of September 2024.
This marks a significant rise from the N575 billion recorded for the same period in 2023, reflecting the immense financial strain on the telecommunications giant.
A review of MTN Nigeria’s financial statements shows that its cost of sales also rose sharply, jumping from N289 billion in September 2023 to N382 billion as of September 2024.
This steep rise in operating expenses has had a major impact on MTN’s bottom line.
For the nine-month period ending September 2024, MTN Nigeria posted a profit before tax of N713.6 billion, but its profit after tax dropped to N514.9 billion, a marked difference from previous years.
This financial strain has led MTN to renew its call for a tariff increase.
In October, MTN Nigeria’s Chief Executive Officer, Karl Toriola, sounded the alarm, stating that without a tariff review, the company’s operations could be unsustainable.
“There should be no delusion; if the tariff doesn’t go up, we will shut down,” Toriola said, emphasizing the urgency for an upward adjustment in tariffs.
Toriola explained that MTN, along with other telecom companies, is currently operating on reserves to manage rising operational costs, a situation he says cannot continue indefinitely.
He warned that unless telecom rates are adjusted to reflect Nigeria’s current economic realities, MTN’s survival could be at risk.
MTN Nigeria is not alone in facing these economic pressures.
The Association of Licensed Telecoms Operators of Nigeria (ALTON) has expressed similar concerns, warning that without intervention, the telecom sector may face operational challenges.
Gbenga Adebayo, Chairman of ALTON, stated that the current economic environment has put telecom operators under immense strain.
“We have complained about the sustainability of telecommunications businesses and spoken about the need to review policies including interventions, but we have not gotten to the stage of load shedding,” Adebayo said in July.
Adebayo explained that if the economic situation continues to deteriorate, the telecom sector may face load shedding—much like Nigeria’s electricity sector, which has also struggled with distribution issues.
He noted, “We don’t pray we get to that stage, but if the issues raised persist, load shedding may occur.”
Comparing it to the electricity sector’s experience, Adebayo remarked, “There was a time we used to have 18 hours of electricity in this country, but that is no longer the case even though the government started doing things like Band A, B, and C.”
Adebayo further identified taxation as one of the key challenges impacting the sector.
Telecom companies like MTN face multiple taxes and regulatory fees, which further increase their operational expenses.
The combination of rising operational costs and taxation has placed a heavy burden on MTN’s ability to continue providing services at current tariff levels.
The call for a tariff review is not new, but with the sharp increase in MTN’s operating costs, the company insists that an upward adjustment is essential.
In recent years, Nigeria’s telecom sector has grappled with inflation, currency devaluation, and economic instability, making it challenging to sustain operations profitably.
For many telecom operators, the situation has become increasingly dire as they struggle to cover costs while maintaining affordable prices for their customers.
MTN’s call for a tariff increase reflects a broader concern in Nigeria’s telecommunications industry.
Operators fear that without economic reforms and regulatory support, their ability to provide consistent service may be compromised.
The implications of load shedding in the telecom sector could be severe, potentially disrupting internet and communication services across Nigeria.
