Nigeria’s telecoms sector in deep crisis, tariff hike necessary, says MTN CEO

Karl Toriola, chief executive officer (CEO) of MTN Nigeria, says the country’s telecommunications sector is “in a deep crisis”.

Toriola spoke on Tuesday at the telecom investment forum organised by Financial Derivatives Company (FDC) in Lagos.

The telco CEO pointed out the severe sustainability challenges currently faced by telecom operators across the country.

He said despite the growth over the past two decades of liberalisation, the sector is now threatened by rising costs and unsustainable pricing.

Toriola said a price increase has become imperative, stressing that it is now an “absolute necessity”.

He said there is an urgent need to rescue the sector from collapse as it is “in an intensive care unit”.

Speaking on the viability of continued investment in the telecoms sector, Toriola said a fundamental challenge is that the financial returns expected from the industry are now “so low that they threaten its very survival”.

“Nobody is going to put in $1 with the expected return of 60 cents on the dollar,” he said.

Toriola, stressing the need for the sector’s revival, said without apt changes, the flow of new investment into the sector could dry up entirely.

He said the static pricing is no longer tenable.

“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,” he said.

“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.”

Although he acknowledged recent progress in discussions with regulatory authorities, Toriola said the challenges faced remain critical.

He said stakeholders are beginning to understand the depth of the crisis and are considering necessary interventions, including price increases and concessions.

Toriola said “qualitative action needs to be swift and decisive to prevent the collapse of this industry” as time is of the essence.