Lagos, NIGERIA – Managing Director of MTN Nigeria, Mr. Karl Toriola, has defended the Nigerian Communications Commission’s (NCC) recent decision to approve a 50% tariff increase, asserting that the hike is essential for the telecommunications industry’s survival.
In an exclusive interview, Toriola explained that the move, which will affect voice and SMS rates, was not driven by a desire for increased profit but by the pressing need to manage spiraling operational costs threatening the stability of telecom services in the country.
The price adjustment comes as MTN, alongside other major telecom operators, faces immense financial strain due to surging costs, particularly in energy and infrastructure. According to Toriola, MTN’s Q1 2024 revenue growth of over 30% was entirely offset by a staggering 96% rise in operational costs. A key driver of this spike has been the skyrocketing price of diesel, which has escalated from N200 per liter to over N1,200 in recent years, directly impacting the cost of powering base stations and network operations.
“We are spending more than we’re earning,” Toriola admitted. “The costs of maintaining our infrastructure have increased significantly. For example, two years ago, the cost of a base station was about N4.5 million. Today, the same base station costs N16.4 million.” This dramatic surge in costs, coupled with the dollar-denominated expenses for network equipment and maintenance, has placed tremendous pressure on telecoms companies operating in Nigeria.
Despite proposing a 100% increase, the industry received approval for a 50% tariff hike. Toriola expressed optimism that the increase, while not enough to fully recover costs, will help stabilize MTN’s operations. The funds generated will go towards addressing vital operational expenses, including diesel, electricity, and the maintenance of equipment that ensures service continuity. The tariff hike will also support planned improvements in network quality, such as faster response times for service restoration and enhancements in connectivity.
“For every base station that goes down, the neighboring ones become congested, which directly impacts service quality for customers,” Toriola noted. The additional funds from the tariff increase, he explained, will help MTN refurbish aging infrastructure, expand network capacity, and ensure a reliable power supply with backup generators and battery systems.
The telecom sector in Nigeria has not seen a tariff adjustment in over 11 years, despite rising operational costs. Toriola emphasized that, unlike the public sector, private telecom companies like MTN do not receive subsidies for operational expenses. As a result, the industry has had to manage cost inflation on its own, leading to the necessity of this tariff hike.
Addressing concerns from labor unions and other critics of the price increase, Toriola reassured Nigerians that the decision was not about boosting profits. Instead, it was about securing the continued provision of essential services for businesses and individuals who depend on reliable telecom networks. He also acknowledged the challenges of transitioning to alternative energy sources like solar power, noting that the high cost of installation and space constraints in urban areas make it a difficult solution for many telecom operators.
The 50% tariff increase, which will see the cost of calls rise from N11 to N16.50 per minute and SMS charges increase from N4 to N6, is expected to be implemented in the coming weeks, pending final approval. Toriola remains hopeful that the adjustment will provide the necessary financial cushion for telecom companies to maintain their services and continue investing in network improvements across Nigeria.
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