Airtel, MTN, IHS to Reduce Spending in Nigeria, Resumes Push for Tariff Hikes

Airtel Nigeria, MTN Nigeria, and IHS Towers are considering reducing their investments in the country. 

The decision comes as the companies grapple with multiple taxations, worsening power supply, and two years of losses linked to foreign exchange (FX) volatility.

Carl Cruz, the CEO of Airtel Nigeria, revealed during a panel session at the Telecom Townhall Forum hosted by Financial Derivatives Company (FDC) that the company is beginning to have conversations with shareholders about the pace of investment in Nigeria. 

He emphasized that the capital being invested in Nigeria is being compared to capital being invested in other markets.

Karl Toriola, the CEO of MTN Nigeria, pointed out that the government’s reluctance to approve a tariff hike puts telcos in a tough spot as inflation quickens. 

He stressed that the market dynamics and macros have not been the same over the past five years, making it challenging for telcos to extract value from their investments.

Kazeem Oladepo, the vice president at IHS Towers, echoed similar sentiments, stating that the market dynamics and macros have not been the same over the past five years, making it difficult for telcos to extract value from their investments.

Maintenance costs are also a significant concern for the telecom companies. 

Gimba Mohammed, the director of government and external relations at IHS Towers, revealed that it cost over ₦14 billion to fix the 59,000 fiber cuts that happened between 2022 and 2023.

Underinvestment and Its Consequences

Data shared by Bolaji Balogun, the CEO of Chapel Hill Denham, showed that the total investment in the telecom industry since 2001, when the first telecom license was issued, amounts to over $70 billion. 

However, at least $4.33 billion is needed to connect most Nigerians to the internet.

Underinvestment is a real danger, as data from the Financial Derivative Company showed that a 1% drop in telecom investment leads to a 1% drop in the industry’s GDP contribution. 

This drop is something Nigeria cannot afford at this time, given the current economic challenges.

Read Next: Telecom Operators in Nigeria Prepare to Increase Tariff for Voice and Data Services

Regulators Caught Between Tariff Hikes and Cost-of-Living Crisis

Regulators remain reluctant to approve tariff increases that may prove unpopular and drive Nigerians, who are struggling with a dire cost-of-living crisis, to the edge. 

This leaves regulators in a difficult position, caught between the need for telcos to maintain profitability and the desire to protect consumers from further economic hardship.

The decision by Airtel Nigeria, MTN Nigeria, and IHS Towers to rethink their investments in Nigeria highlights the challenges faced by the telecom industry in the country. 

As the companies grapple with multiple taxations, worsening power supply, and losses linked to FX volatility, the government must find a balance between protecting consumers and ensuring the sustainability of the telecom industry.

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