Karl Toriola, the CEO of MTN Nigeria, has expressed concern over the “deep crisis” facing the country’s telecommunications sector, The Cable reported.
Speaking on Tuesday at the telecom investment forum hosted by Financial Derivatives Company (FDC) in Lagos, Toriola stated that despite the significant growth seen over the past two decades of liberalization, the telecom sector now faces serious threats due to rising costs and unsustainable pricing.
He argued that a price increase is now an “absolute necessity” to address the urgent need to rescue the telecom sector from collapse, describing it as being “in an intensive care unit.”
According to him, the financial returns from the industry have become so low that they threaten its very survival, casting doubt on the viability of continued investment in the sector.
In its audited financial report for 2023, the telecoms giant reported a loss after tax of ₦137.0 billion, a huge contrast to the ₦348.7 billion profits recorded in 2022. The huge financial fall was attributed to rising inflation, currency devaluation and foreign exchange shortages, complicated by geopolitical disruptions and cash shortages in Q1.
He warned that without appropriate changes, the influx of new investments could completely cease. He pointed out that the current static pricing model is no longer sustainable.
What Toriola said:
“Nobody is going to put in $1 with the expected return of 60 cents on the dollar,” he said.
“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,”
“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. Without adjustments to pricing, the industry’s ability to function and attract investment is in jeopardy,” he said.
Toriola acknowledged recent progress in discussions with regulatory authorities but emphasized that the challenges remain critical. He noted that stakeholders are starting to grasp the severity of the crisis and are contemplating essential interventions, such as price increases and concessions.
