Impending telecom crisis: MTN, stakeholders urge tariff increase to avert service collapse

Joy Agwunobi  

Nigeria’s telecommunications sector is teetering on the brink of a major crisis, with industry leaders, including MTN Nigeria, raising alarms over the severe financial strain brought on by rising operational costs.

As one of the largest operators in the country, MTN has voiced urgent calls for a tariff increase to avoid a potential shutdown that could have widespread consequences for businesses, financial institutions, and millions of subscribers.

Karl Toriola, CEO of MTN Nigeria, recently sounded the alarm during a tour of MTN’s facilities by Fellows of the Media Innovation Programme, revealing that without an immediate tariff increase, the company might be forced to shut down its services.

MTN, which oversees a massive subscriber base of approximately 78 million people, is struggling with escalating fuel costs, particularly diesel, which powers the critical base transceiver stations that keep the network running.

Toriola pointed out that the telecom industry, and MTN specifically, has been incurring heavy financial losses due to these rising costs. “If the tariff doesn’t go up, we will shut down,” Toriola stated, stressing the urgency of increasing tariffs to reflect Nigeria’s current economic realities.

The ripple effect of such a shutdown would be catastrophic, with MTN serving as the backbone of connectivity for millions of businesses, financial institutions, and individuals, any disruption in its services would severely impact Nigeria’s economy. For instance, financial institutions, which rely on the network for USSD banking services, could face operational paralysis; businesses, large and small, that depend on the telco for their daily operations ranging from e-commerce to customer communications would be thrown into disarray.

Even basic connectivity for personal use, which many Nigerians rely on, would be compromised, making everyday tasks such as online transactions, virtual meetings, and social interactions impossible.

MTN’s warnings come amidst the operator’s declining profits, with the company reporting a N519.1 billion loss in the first half of 2024 much of this loss is attributed to the naira’s devaluation and the country’s persistent inflation, which has further compounded the financial strain on telecom operators. This has led MTN to dip into its reserves, an unsustainable practice that threatens the company’s long-term viability.

Beyond MTN, the entire telecom sector is feeling the pinch, other major operators, such as Airtel, 9mobile, and Globacom, are also facing rising operational expenses due to the increasing cost of fuel and other key resources.

The last time telecom tariffs were raised was 11 years ago, and industry players have consistently argued that the current charges are no longer sufficient to cover their growing expenses and sustain quality services.

Toriola further highlighted that MTN, once the top corporate taxpayer in Nigeria, has seen its tax contributions plummet as the company’s financial struggles deepen. According to the CEO,the company  is also seeking regulatory approval to discontinue support for USSD services—used by millions of Nigerians for banking transactions, unless the banks resolve their N250 billion debt owed to the telecom company and tariffs are adjusted accordingly.

The impact of a telecom sector collapse would extend far beyond the financial and business realm. If a company like MTN were to go offline, essential services such as banking, healthcare, and education, all of which rely on steady telecom services, would be severely disrupted.

Virtual banking transactions, which have become a lifeline for many Nigerians, could grind to a halt, affecting millions of users and potentially plunging the economy into chaos. Additionally, sectors that are increasingly reliant on online services, such as education through e-learning platforms and healthcare via telemedicine, would be crippled.

In light of this, the National Association of Telecommunications Subscribers (NATCOMS) has stepped forward, urging the Nigerian Communications Commission (NCC) to approve a 10 per cent  tariff hike to address these financial challenges.

Adeolu Ogunbanjo, president of NATCOMS, pointed out the urgent need for quality service delivery in a time when platforms like Instagram, X (formerly Twitter), Facebook, and WhatsApp are vital to everyday communication and business operations. He argued that despite operational costs soaring over the past decade, telecom companies have not increased their tariffs during that period.

Ogunbanjo emphasised that without a tariff adjustment, the sector’s quality of service will continue to decline, further affecting consumers and businesses alike. “When you look at the quality of service today, it’s poor, and telecom companies are also complaining. They have  highlighted the rising costs of petrol, diesel, and other resources required to maintain network operations,” he explained.

“A marginal increase would suffice to support the sector without excessively burdening subscribers,” Ogunbanjo noted. He noted that any tariff adjustment would ultimately need to be approved by the NCC, which acts as the intermediary between Mobile Network Operators (MNOs) and subscribers. He added that once the NCC approves the 10 per cent increase, telecom operators would be expected to invest in improving services for subscribers, ensuring better quality and reliability.

Despite the concerns over increased expenses for consumers, the reality is clear: without immediate action to stabilise the telecom sector, the country  could face far more devastating consequences; as the  sector serves as the bedrock of connectivity, and its potential collapse would spell disaster for the nation’s businesses, financial institutions, and millions of everyday users who depend on these services to function.