Nigeria’s telecommunications sector is grappling with a severe financial strain, prompting telecom companies to call for a nearly 100% increase in tariffs to sustain operations. MTN Nigeria’s CEO, Karl Toriola, confirmed the request to regulatory bodies, highlighting that rising costs are increasingly outpacing the industry’s revenue growth.
Toriola explained that telecom operators have formally asked for significant tariff increases, noting that “the costs that we’re expending are exceeding our revenue, even though we are seeing revenue growth.” He expressed concerns that unless tariffs are raised, the quality of service across the sector will be compromised, further stressing that the industry cannot continue to operate under the current financial strain.
Nigeria’s telecommunications industry is facing several challenges, including inflation, currency devaluation, and escalating fuel prices, which have all contributed to the unsustainable cost structures. According to the Nigerian National Bureau of Statistics, the country’s inflation rate reached 34.6% year-on-year as of November, significantly impacting the telecom sector’s bottom line.
Under Nigerian law, the Nigerian Communications Commission (NCC) regulates tariff changes, requiring telecom operators to obtain approval before making any price hikes. This regulatory framework has led to concern among telecom companies, who are pushing for swift approval of their tariff increase requests to avoid potential service disruptions. Gbenga Adebayo, chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), warned that the sector may face service disruptions, including shedding, if regulators do not approve the proposed hikes.
However, Sina Bilesanmi, president of the Association of Telephone Cable TV and Internet Subscribers of Nigeria (ATCIS), disagreed with the proposed hikes. He argued that operators could raise tariffs within the bounds of existing regulations and pointed out that competitive pressures would prevent excessive tariff increases.
The telecom sector, a critical component of Nigeria’s economy, has repeatedly warned of existential threats if the cost structure remains unaddressed. The escalating operational costs are putting pressure on telecom operators to find sustainable financial solutions while maintaining quality service for millions of Nigerians.
The outcome of the regulators’ decision will be closely watched as the industry seeks a resolution to its financial difficulties while balancing the need for affordability for consumers.
