The Nigerian telecom operators are reeling from important monetary losses, with projections estimating a staggering $11.3 billion in income erosion between 2022 and 2026. This follows an 11-year delay in approving a much-needed tariff improve, based on an in-house report carried out by MTN Nigeria and obtained by TechCabal. The first explanation for this monetary hemorrhage is the devaluation of the naira, which, coupled with extended regulatory inaction by the Nigerian Communications Fee (NCC), positioned immense strain on telecom operators’ capability to maintain operations.
Business executives, together with MTN Nigeria’s CEO Karl Toriola and Airtel Nigeria’s CEO Dinesh Balsingh, claimed the delay pushed the telecom sector to the brink of collapse. With hovering operational prices, the telcos claimed their monetary positions had been unsustainable.
“The worth improve which was extremely wanted for the survival and continued development of the trade, will allow us to proceed investing in community infrastructure, increasing protection, and delivering improved services that meet the evolving wants of our prospects,” Balsingh mentioned.
A tariff adjustment turned inevitable following naira devaluation in 2022 and liquidity issues which frequently pressured gamers to resort to the parallel market. By 2023, the change fee had slipped to $1 to ₦900, additional driving prices and reducing into revenue margins. Telecom operators, who depend on imported gear, had been caught in a vicious cycle of rising prices and plummeting revenues.
In 2023, MTN Nigeria reported its first loss since its 2019 IPO, recording a ₦137 billion deficit largely pushed by foreign exchange losses. Airtel Africa additionally confronted its first-ever loss in Nigeria, with a post-tax lack of $89 million for the monetary 12 months ending March 31, 2024.
“We had been borrowing at 120% to fund our operations, which was unsustainable,” Toriola mentioned throughout a media convention MTN Nigeria in Lagos on Tuesday. MTN Nigeria had persistently paid dividends to shareholders from 2007 to 2022, however the strain from the overseas change decline made common funds inconceivable. Dividends declined from ₦530 billion in 2022 to ₦196.67 billion in 2023.
One of the alarming negative effects of the delay was the drop in taxes paid by telecom operators to the federal government. Whereas taxes grew from ₦329 billion in 2023 to ₦428 billion in 2024, they’re set to plummet to simply ₦29 billion in 2025, a 92% decline. This may considerably affect authorities income.
Toriola emphasised that MTN Nigeria had explored options, similar to import waivers, to alleviate the monetary burden. Nevertheless, these efforts wouldn’t have been enough to offset the big prices imposed by rising energy fees, taxes, and right-of-way charges. “Any reduction from waivers would have come at a price to the federal government, which might have been irresponsible,” he mentioned.
In response to those escalating challenges, telecom operators had initially known as for a 40% tariff improve in 2022. Nevertheless, because the naira continued its downward spiral, the scenario worsened, and calls for for a 100% hike turned pressing. Based on the MTN report, the trade’s complete income plummeted from $7.62 billion in 2022 to $6.87 billion in 2023, and additional sank to $3.55 billion in 2024.
The long-awaited approval for a tariff improve lastly got here on January 20, 2025, providing hope for an trade in disaster. With the brand new tariffs in place, the telecom sector is projected to rebound, with revenues anticipated to rise to $6.67 billion in 2025 and $8.33 billion in 2026. Nevertheless, specialists warn that the 11-year delay has already brought about irreversible harm, with long-term financial penalties for each the telecom trade and the Nigerian economic system.
