KARL Toriola, the CEO of MTN Nigeria, has raised a stark warning about the company’s future, signalling that if tariffs are not increased soon, MTN may be forced to shut down its operations. The telecommunications industry has been lobbying for tariff hikes to counteract escalating operational costs and inflation, but progress has been slow.
MTN Nigeria is a significant contributor to the country’s economy, having been a reliable source of corporate income tax. However, the company’s financial performance has deteriorated sharply. In the first half of 2024, MTN Nigeria posted a pre-tax loss of ₦575bn, a staggering turnaround from the ₦162.9bn profit it recorded during the same period in 2023. This marked the first loss for MTN Group since 2016, with the primary factor being the dramatic devaluation of the naira.
Unpaid debts and operational challenges
MTN’s difficulties are compounded by ongoing issues with debts owed by Nigerian banks for services such as USSD. While a repayment plan was agreed upon in late 2023, banks have been slow to settle their obligations. As of June 2024, only ₦200bn ($132 million) had been repaid, leaving a substantial amount still outstanding.
Toriola has hinted that if these delays continue, telecommunications companies might have no choice but to block banks from using USSD services for transactions. Such a move could have serious repercussions, disrupting digital financial services across the country.
In response to these growing challenges, MTN Nigeria is also exploring drastic measures to maintain operations. One such measure being considered is a ‘load-shedding’ strategy, similar to that used in Nigeria’s power sector, where services would be limited across facilities to manage rising costs. However, this could lead to widespread service disruptions, a scenario that would heavily impact Nigeria’s economy and the millions of people who rely on mobile services for communication and business.
MTN’s significant role in Nigeria
Despite the grim warning, MTN Nigeria remains a dominant player in the telecommunications sector, with over 77 million subscribers and a 41 percent market share. Shutting down would not only affect MTN itself but would also have far-reaching consequences for the economy and the daily lives of Nigerians who depend on its services.
MTN has also made significant investments in upgrading its network infrastructure, particularly in expanding its 4G and 5G services, which have kept it competitive in an increasingly digital world. The company has built a loyal customer base, making it the preferred network for many across the country.
Future uncertainty
While Toriola’s warning underscores the severity of the situation, MTN Nigeria is unlikely to disappear anytime soon. Its extensive subscriber base, combined with its infrastructural investments, means it remains critical to the telecommunications landscape in Nigeria. However, without tariff increases or resolution of the debts owed by banks, the company faces an uncertain future. The longer these issues persist, the more likely it is that service disruptions could become a reality, potentially hitting Nigeria’s economy hard.
As one of Nigeria’s largest telecommunications providers, the fate of MTN Nigeria will have wide-reaching implications. The outcome of the ongoing negotiations and decisions on tariff adjustments will be crucial to the company’s ability to continue providing reliable services to millions of Nigerians.
