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- MTN Nigeria has underlined how important it is for the telecom sector to turn a profit once more in order to stay in business
- The CEO of MTN noted the recent significant losses in the industry and said that swift action is needed to reverse the trend
- He explained that the company is now operating on its reserves, which is not sustainable in the long run
Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.
The largest telecom provider in the nation, MTN Nigeria, has emphasised how critical it is for the telecom industry in order to earn profit again to stay in business.
Source: UGC
This was revealed by MTN CEO Karl Toriola on Monday when Fellows of the Media Innovation Program toured MTN's facilities in Ibeju-Lekki, Lagos.
The MTN CEO identified the industry's recent large losses and stated that quick action is required to buck the trend.
According to its 2023 Sustainability Report, the operator has made N2.6 billion in corporate social investment and is currently making ends meet with the revenues it has amassed over the last 20 years.
“We must return the industry to profitability,” he stated in a Punch report, emphasising the necessity for reform.
He explained that the business is now running on its reserves, which is not long-term viable.
Telecom companies call for rate hike
Telecom companies reaffirmed their demands earlier this year for a rate raise, the first in eleven years, in order to combat growing operating expenses and enhance service quality.
They contended that service standards and financial sustainability would keep deteriorating in the absence of such changes.
Toriola reaffirmed that growing operational expenses, such as the increased cost of diesel needed to power base transceiver stations, are putting significant pressure on the industry.
He warned, “There should be no delusion; if the tariff doesn’t go up, we will shut down,” underscoring the urgent need for tariff adjustments to reflect economic realities.
Toriola pointed out that these financial difficulties have caused MTN, formerly one of Nigeria's largest corporate taxpayers, to reduce its tax payments.
MTN reports loss
Due mostly to foreign exchange losses brought on by the devaluation of the naira and high rates of inflation, MTN Nigeria recorded N519.1 billion loss in the first half of 2024.
In addition, Toriola issued a warning that the N250 billion debt owed by Nigerian banks could result in the suspension of Unstructured Supplementary Service Data banking services.
Until the debt is settled and tariffs are changed to reflect the current state of the economy, the mobile network operator is requesting regulatory authority to stop supporting USSD services used for banking transactions.
Toriola did, however, voice hope that Dr. Aminu Maida, the Executive Vice Chairman of the Nigerian Communications Commission, and Yemi Cardoso, the recently appointed Governor of the Central Bank of Nigeria, would step in to help address the ongoing financial crisis.
In his closing remarks, he emphasized the vital role that the telecom sector plays in bolstering Nigeria's economy and urged policymakers and regulators to take immediate action to avoid the disastrous effects of delay.
MTN speaks on Increasing call, data tariffs
Legit.ng reported that MTN Nigeria is advocating for the support of higher telecom rates in reaction to the devaluation of the naira and the high cost of foreign exchange.
According to the telecommunication company, there would be no incentives for more investments in the sector unless a new traffic structure is authorised.
MTN Nigeria's chief financial officer (CFO), Modupe Kadri, stated this during a panel discussion organised by the Nigeria Economic Summit Group (NESG), The Punch reported.
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Source: Legit.ng
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