Chief Executive Officer (CEO) of MTN Nigeria, Karl Toriola, has sounded a warning bell, saying that the country’s telecommunications sector is ‘in a deep crisis’.
Toriola made this assertion on Tuesday at the telecom investment forum organised by Financial Derivatives Company (FDC) in Lagos.
The telco CEO highlighted the severe sustainability challenges faced by telecom operators across the country, despite the growth experienced over the past two decades of liberalization.
He noted that the sector is now threatened by rising costs and unsustainable pricing, making a price increase an ‘absolute necessity’.
“The telecoms sector has faced escalating costs across the board — from the cost of capital to the soaring expenses of maintaining infrastructure like base stations and diesel generators,” Toriola said.
“Without adjustments to pricing, the industry’s ability to function and attract investment is in jeopardy.”
Toriola stressed that the static pricing of the past 11 years is no longer tenable, especially in an inflationary environment with forex devaluation.
“There’s no way under the surface of the earth, in the kind of inflationary environment and forex devaluation that we’ve seen, that an industry can maintain prices the same for 11 years,” he said.
The MTN Nigeria CEO also noted that the financial returns expected from the industry are now “so low that they threaten its very survival”.
He noted that without apt changes, the flow of new investment into the sector could dry up entirely.
Although he acknowledged recent progress in discussions with regulatory authorities, Toriola emphasised that the challenges faced remain critical.
He called for swift and decisive action to prevent the collapse of the industry, stating that “qualitative action needs to be swift and decisive to prevent the collapse of this industry” as time is of the essence.
Toriola’s warning came at a critical juncture for the telecoms sector, which has been grappling with rising costs and unsustainable pricing.
As the industry teeters on the brink of collapse, stakeholders are beginning to understand the depth of the crisis and are considering necessary interventions, including price increases and concessions.
Boluwatife Enome
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