MTN Nigeria Warns of Imminent Shutdown, Urges Telecom Sector Reforms Amid Mounting Losses

MTN Nigeria Warns of Imminent Shutdown, Urges Telecom Sector Reforms Amid Mounting Losses
Karl Toriola, Chief Executive Officer of MTN Nigeria

MTN Nigeria, the nation’s largest telecommunications operator, has raised an alarm over the urgent need for the telecom sector to return to profitability, warning that the current financial trajectory could lead to operational collapse if immediate reforms are not implemented.

Karl Toriola, Chief Executive Officer of MTN Nigeria, made this dire assessment on Monday while addressing Fellows of the Media Innovation Programme during a facility tour in Ibeju-Lekki, Lagos. 

Toriola, who oversees a subscriber base of approximately 78 million, emphasised that the telecom industry is facing significant financial strain, with mounting losses threatening the sustainability of its operations.

“The industry must return to profitability,” Toriola stressed, as he explained that MTN Nigeria is currently relying on reserves accumulated over the last two decades, a situation he described as unsustainable.

According to MTN’s 2023 Sustainability Report, the operator invested N2.6 billion in corporate social responsibility initiatives. However, the company’s ability to continue such investments is now in jeopardy. 

Toriola further elaborated that without a return to profitability, MTN and other telecom operators will struggle to maintain service quality, potentially affecting millions of Nigerians who rely on their services.

The growing financial pressure within the sector has led to renewed calls for a tariff increase – the first in over 11 years. Telecom operators, including MTN, argue that rising operational costs, particularly the escalating price of diesel needed to power base transceiver stations, have made a tariff review essential for financial viability.

“There should be no delusion; if the tariff doesn’t go up, we will shut down,” Toriola warned, stressing that the current economic environment necessitates urgent adjustments to tariffs to keep the industry afloat.

The financial challenges have also affected MTN’s tax contributions. Once one of Nigeria’s leading corporate taxpayers, the company has seen a significant decline in its tax payments due to the deteriorating financial situation. 

Toriola explained that this trend must be reversed to restore the sector’s ability to contribute to Nigeria’s economy.

MTN Nigeria’s first-half results for 2024 reveal a staggering N519.1 billion loss, primarily attributed to foreign exchange losses driven by the devaluation of the naira and soaring inflation rates.

 The loss has prompted the company, alongside rival operator Airtel, to adopt a cautious approach to capital expenditure for the remainder of the year.

Meanwhile, other operators in the sector, such as 9mobile and Globacom, have yet to publicly disclose their financial performance, as they remain privately held.

Toriola also highlighted another pressing issue – the potential suspension of Unstructured Supplementary Service Data (USSD) banking services. 

MTN is owed a massive N250 billion by Nigerian banks for USSD services used in banking transactions. 

The mobile network operator is currently seeking regulatory approval to halt support for these services unless the debt is resolved, and tariffs are adjusted accordingly.

Despite these challenges, Toriola expressed cautious optimism that the new Governor of the Central Bank of Nigeria, Yemi Cardoso, and the Executive Vice Chairman of the Nigerian Communications Commission, Dr. Aminu Maida, would intervene to help resolve the crisis and implement necessary reforms.

In his closing remarks, Toriola underscored the vital role the telecommunications industry plays in supporting Nigeria’s economy. 

He urged the government and regulatory bodies to act swiftly to avert the potentially catastrophic consequences of inaction.

“The telecom industry is at the heart of Nigeria’s economy. We must act now to ensure that we can continue to provide essential services to millions of Nigerians,” he concluded.

Culled from PUNCH

Tersoo Agber

Journalist, Travel enthusiast, PR consultant, Content manager/editor, Online publisher.