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Urgent Call to Action: MTN Nigeria Warns of Impending Shutdown Without Tariff Hike

MTN Nigeria, the country’s largest telecom operator, is sounding the alarm, emphasizing the urgent need for the telecommunications sector to return to profitability to sustain its operations. Karl Toriola, Chief Executive Officer of MTN, made this stark warning during a recent tour of the company’s facilities in Ibeju-Lekki, Lagos.

MTN, which boasts around 78 million subscribers, has been operating on its accumulated profits from the past two decades. However, with the sector facing significant losses, Toriola stressed the necessity for immediate reform. "We must return the industry to profitability," he stated, underscoring the gravity of the situation.

The telecom giant’s financial woes are a concern for the entire industry. The company has seen its tax contributions decline due to the financial challenges it faces, and its first-quarter results for 2024 have led to a cautious approach to capital expenditure. MTN Nigeria reported a staggering N519.1 billion loss in the first half of the year, primarily due to foreign exchange losses stemming from the naira’s devaluation and high inflation rates.

Toriola pointed to rising operational costs, including escalating diesel prices required to power base transceiver stations, as a significant contributing factor to the industry’s struggles. He warned, "There should be no delusion; if the tariff doesn’t go up, we will shut down." This stark warning highlights the urgent need for tariff adjustments to reflect economic realities.

In a move that could have far-reaching consequences, MTN is seeking regulatory approval to suspend Unstructured Supplementary Service Data (USSD) banking services due to a N250 billion debt owed by Nigerian banks. The company has threatened to halt support for USSD services used for banking transactions unless the debt is resolved and tariffs are adjusted.

Despite the dire warnings, 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.

The situation facing MTN Nigeria serves as a stark warning for the entire telecommunications sector. As the company struggles to stay afloat, the need for urgent reforms and tariff adjustments has never been more pressing. The consequences of inaction could be severe, not just for MTN, but for the entire Nigerian economy.