A recent report recently revealed that Nigerian telecom companies are suffering notable financial losses, with forecasts indicating a startling $11.3 billion in revenue losses between 2022 and 2026.
This is a result of a delay in the tariff hikes, which has persisted for 11 years.
The main culprit for the recordd losses is the country’s constantly dwindling currency value, alongside long-term regulatory inaction by the Nigerian Communications Commission (NCC).
This information was detailed in a report by the country’s premier telecommunications company, MTN, as seen on TechCabal.
MTN Nigeria CEO Karl Toriola and Airtel Nigeria CEO Dinesh Balsingh, alongside other major players in the industry, have noted that the delay in tariff hikes had brought the telecom sector to the verge of collapse.
With rising operating costs, the telecoms stated that their financial conditions were unsustainable.
“The price increase which was highly needed for the survival and continued growth of the industry, will enable us to continue investing in network infrastructure, expanding coverage, and delivering improved products and services that meet the evolving needs of our customers,” Balsingh said.
In 2023, MTN Nigeria recorded a shortfall of ₦137 billion, mostly due to FX losses, marking its first loss since its 2019 initial public offering.
Similarly, Airtel Africa experienced its first-ever loss in Nigeria, posting a $89 million post-tax loss for the fiscal year that concluded on March 31, 2024.
“We were borrowing at 120% to fund our operations, which was unsustainable,” the CEO of MTN stated earlier this week.
NCC tariff hike approval
For months now, there has been a raging debate between the NCC and telecom operators on how they should go about increasing tariffs.
In 2022, telecom firms had demanded a 40% tariff increase.
However as the Nigerian currency went from around N600 per dollar in 2023 to N1,600 per dollar, telecoms began demanding a 100% increase.
Very recently, the NCC approved a 50% tariff hike which the GSM Association (GSMA), argued would create an estimated two million jobs and N1.6 trillion in tax revenue.
According to Angela Wamola, GSMA’s head of Sub-Saharan Africa, the NCC’s decision is expected to improve customer service quality while also driving economic growth in the West African country.
“This decision by the NCC is an important milestone for Nigeria’s digital future. By enabling sustainable investment, we are improving the quality of service for consumers and fostering opportunities for innovation and economic growth,” Wamola stated.
