The Nigerian telecom industry is reeling from a staggering $11.3 billion revenue loss, projected to span from 2022 to 2026. This devastating blow comes after an 11-year delay in approving a crucial tariff increase, leaving operators struggling to stay afloat.
According to an in-house report by MTN Nigeria, the primary culprit behind this financial hemorrhage is the devaluation of the naira, exacerbated by regulatory inaction from the Nigerian Communications Commission (NCC).
The perfect storm of soaring operational costs and unsustainable financial positions has pushed telecom operators to the brink of collapse.
Industry executives, including MTN Nigeria’s CEO Karl Toriola and Airtel Nigeria’s CEO Dinesh Balsingh, have sounded the alarm, emphasizing that the delay has had disastrous consequences. “The price increase was essential for our survival and growth,” Balsingh explained. “It will enable us to invest in network infrastructure, expand coverage, and deliver improved services to our customers.”
The naira’s devaluation in 2022 sparked a liquidity crisis, forcing telecom operators to resort to the parallel market. By 2023, the exchange rate had plummeted to $1 to ₦900, driving costs up and cutting into profit margins.
The situation became unsustainable, with MTN Nigeria reporting its first loss since its 2019 IPO and Airtel Africa facing its first-ever loss in Nigeria.
The ripple effects of the delay are far-reaching, with taxes paid by telecom operators to the government set to plummet by 92% in 2025. This will have significant implications for government revenue.
In a last-ditch effort to alleviate the financial burden, telecom operators called for a 40% tariff increase in 2022, which later escalated to a 100% hike as the naira continued its downward spiral. The long-awaited approval finally came on January 20, 2025, offering a glimmer of hope for the beleaguered industry.
While the new tariffs are expected to help the telecom sector rebound, experts warn that the 11-year delay has already caused irreversible damage, with long-term economic consequences for both the telecom industry and the Nigerian economy.
The delay in approving the tariff increase has had a devastating impact on Nigeria’s telecom sector, with far-reaching consequences that will be felt for years to come.
