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One of Nigeria’s top telecom providers, MTN Nigeria, are well-established in the Nigerian market and have recently released financial results that showwd the level of loss that was incurred in 2023.
MTN Nigeria CFO Speaks on Rising Cost
Modupe Kadri, the Chief Financial Officer of MTN Nigeria, has bemoaned the incapacity of the nation’s telecom providers to pass on the rising operational expenses to their customers.
In a live interview on Arise TV on Tuesday, Kadri said that while every other industry has raised prices in response to rising inflation, telecom operators are not permitted to do so.
Speaking in light of the company’s recent release of its full-year 2023 financial performance, which showed a forex loss of N740 billion, the CFO stated that fair pricing is necessary for the Nigerian telecom sector to keep up with growing operating expenses.
Take note that the Nigerian Communications Commission (NCC) has declared that until a cost-based study that is currently underway is finished, telecom operators in the nation are not permitted to raise their rates.
The Implication of not Updating The MTN Nigeria Pricing Issue
The MTN CFO warned that many small players may go out of business if the pricing issue is not resolved quickly, even as he acknowledged that fair pricing is essential to the industry’s survival.
“The industry simply cannot survive because we haven’t passed on our costs like everyone else has. It is not about MTN being the largest player; if actions are not taken in that area, smaller players in the industry will perish.
“The key to realizing that fair pricing is required is to not view MTN as a stand-alone company, but rather in the context of the industry, ecosystem, and survival.”
Examining the deregulation of the petroleum industry, all parties have transferred the expense of eliminating fuel subsidies to the end-users. People made the necessary adjustments, but they continued to drive their cars,” he said.
He underlined that fair pricing is necessary to enable service providers to make greater investments in their infrastructure in order to provide the high-quality customer experience that consumers desire, just as people are demanding fair services and better customer experiences.
MTN Nig Statement Concerning Losses Incurred
In a note, MTN Nigeria stated that 2024 will be difficult and that there’s a chance the telecom company will experience further foreign exchange losses. In 2023, the company reported a net loss of N137 billion.
According to MTN Nigeria’s outlook, the depreciation of the naira and growing inflation will make 2024 difficult. The telecom attributed the expectation, in part, to pressures on exchange rates and inflation.
In order to promote compliance with the NCC’s NIN-SIM directive and guarantee that the greatest number of customers are correctly registered, MTN Nigeria said it has increased resources at its service outlets and offered alternate channels.
“As we continue to execute on our commercial strategies to expand our subscriber base and drive usage, we also remain engaged with authorities on tariff adjustments through the telecom industry body. We want to expedite the verification process and minimize service disruptions to our base and the potential impact on our revenue.”
MTN Seeks Better Pricing Level In Nigeria
It further stated that an appropriate pricing level is necessary for the industry to support its sustainability and ability to keep investing in networks given the elevated volatility in its trading environment, particularly in relation to inflation, energy costs, and exchange rates.
The appropriate cost (upper and floor price) that service providers may charge their subscribers for rendered services, as determined by regular cost-based and empirical studies, is what the NCC has insisted should serve as the basis for price regulation.
According to the regulator, telecom rates cannot be changed until KPMG’s ongoing cost-based study is finished.
