The Managing Director of MTN Nigeria, Mr. Karl Toriola, has defended the Nigerian Communications Commission’s (NCC) recent tariff hike, explaining that the 50% increase is crucial for the sustainability of the telecommunications industry.
In an exclusive interview with Jimi Disu on Nigeria Info's Daily Digest, Mr. Toriola highlighted the financial challenges telecoms companies face, noting that the sector risks collapsing without a price adjustment.
Mr. Toriola stated that MTN’s growth in revenue of over 30% in Q1 2024 was wiped out by a surge in operational costs by a staggering 96%, primarily driven by the escalating prices of diesel, which has spiked from N200 a liter to over N1,200 in recent years. This surge in energy costs, coupled with the dollar-denominated expenses for equipment and maintenance, has pushed the company to the brink.
“The cost of maintaining our infrastructure has increased significantly. For instance, two years ago, the cost of a base station was about N4.5 million. Today, the same base station costs N16.4 million,” Mr. Toriola explained. “We are spending more than we’re earning, and this tariff increase is essential for survival, not profitability.”
MTN and other telecommunications operators proposed a 100% increase, but the government approved a 50% tariff hike, which Mr. Toriola believes will provide much-needed cash flow to address critical operational costs, including diesel, electricity, and equipment maintenance. The increase will also support improvements in network quality, with plans for faster implementation of better services in the coming months, he said.
According to the MTN Nigeria chief, the tariff adjustment is necessary to keep the network running smoothly. “If one base station goes down, the nearby ones get congested, making it difficult for customers to get a reliable connection,” he said. The funds from the tariff increase will help restore stability, refurbish equipment, expand capacity where needed, and ensure a steady power supply with redundant generators and battery backups.
The telecom sector, Mr. Toriola added, has not seen a tariff adjustment in over 11 years. While the government has created an enabling environment, it does not subsidize operational costs for private telecom companies like MTN. As such, the industry has to find ways to stay afloat without relying on public sector intervention.
Addressing concerns raised by labor unions opposing the tariff hike, the MTN Nigeria CEO emphasized that the increase was not about profitability but about ensuring the continued provision of services that businesses and individuals depend on. He also discussed the challenges of transitioning to solar power, citing the high costs and space limitations in urban areas as major barriers.
The 50% tariff increase is expected to be implemented in the coming weeks, subject to formal approval, and will provide telecoms companies with the necessary resources to maintain and enhance network services across Nigeria.
The cost of calls and data are regulated by the NCC. Calls on GSM networks like MTN, Airtel, Globacom, and 9Mobile currently cost approximately N11 a minute, while an SMS costs N4. A 50% increase will see Nigerians pay N16.50 for a minute of talk time and N6 for an SMS.
