The Chief Executive Officer of MTN, Karl Toriola, has said that the sustainability of the telecommunications industry in Nigeria needs to be addressed, if not, it could negatively impact Nigeria’s economy.
Toriola said this in an interview with ARISE NEWS on Thursday, where he emphasised that the problem in Nigeria’s telecommunications industry was not profitability, but sustainability, and that while telecommunications operators had submitted requests for tariff increases of approximately 100% to regulators, he knew it may not be approved.
Speaking on the tariff situation, he said, “There’s actually a balance to be struck. I think the debate is really about the sustainability of the industry and what it does for the Nigerian economy as a whole. I think the federal government has been very supportive through the course of 2024 with significant”
“We’ve seen a lot of support from the government to really make this industry sustainable. The vision of the honourable minister Dr Bosun Tijani to roll out 90,000 kilometres of fibre is a brilliant initiative that is going to really accelerate digital penetration. But we do have a problem on sustainability, and that’s been very well recognised by the authorities, and we believe it’s in the process of being addressed.”
Despite these advancements, Toriola highlighted the escalating costs due to inflation, devaluation, and rising fuel prices, which have pushed the industry to a breaking point.
He explained, “Telecommunications is a fundamental human right these days and a critical element towards driving an economy. And if you don’t have a sustainable industry, it’s going to affect your economy and the well-being of people. Yes, everyone in Nigeria has gone through difficult times in the last few years due to economic challenges, inflation, devaluation, et cetera, et cetera.
“But the challenge that we face, and we’re not talking about profitability in the industry, we’re just talking about sustainability. Profitability will come on a longer term basis.”
“Official rates have gone from about 424.50 to about 1,550 odd at the end of the year. So that has driven our cost structures up drastically. So in paying for diesel, diesel has gone from pre-COVID times from 2,300 Naira to 1,000 plus Naira.
“Petrol has gone up several fold. The cost of power generation, the cost of procuring raw materials, what we call raw materials is a lot of things, batteries, fibre cables, base stations, towers, et cetera, et cetera. To actually roll out and maintain these networks, we pay software licensing fees for these networks.
“Those costs have gone up astronomically. So you see in this hypothetical situation of a company that makes a hundred billion naira a year and pays 900 billion, those costs have gone up to like 1,600, 1,900. So the costs that we’re expending are actually exceeding our revenue, even though we are seeing revenue growth. And there’s no way that the industry can continue to sustain itself and provide the required quality of service under this structure.
“Now, we’ve put forward requests of approximately 100% and type increases to the regulators. I doubt they’re going to approve that quantum of increases because they’re very, very sensitive to the current economic situation in the country. But we’re hopeful and optimistic that the realities are staring us in the face and the right decisions will be taken for the sustainability of the industry,” he added.
The MTN CEO also emphasised the critical role telecommunications play in economic development, citing that the industry directly and indirectly supports over two million jobs in Nigeria. He said, “We’re not talking about profitability. We are talking about a situation of an existential threat to the entire industry. We’re the biggest players, ourselves and Airtel.
“If we are struggling with these kind of cost structures, there’s no way the rest of the industry will not experience the same. And the truth is, this just doesn’t affect the large operators. Every part of the ecosystem that works backwards from there is affected by exactly the same thing, because they’ve all seen their cost risen.”
Ozioma Samuel-Ugwuezi
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