Telecoms tariff hike unavoidable due to inflation, currency devaluation – MTN CEO

Chief Executive of MTN Nigeria, Karl Toriola, has said tariff increase in the Nigerian telecommunications sector is inevitable because of the current economic climate in the country.

Toriola said this on Tuesday, at the telecom investment forum organised by Financial Derivatives Company (FDC) in Lagos.

The MTN Nigeria CEO pointed out the severe sustainability challenges currently faced by telecom operators across the country.

He said despite the growth over the past two decades of liberalisation, the sector is now threatened by rising costs and unsustainable pricing.

Toriola said a price increase has become imperative, stressing that it is now an “absolute necessity”.

He said there is an urgent need to rescue the sector from collapse as it is “in an intensive care unit”.

Speaking on the viability of continued investment in the telecoms sector, Toriola said a fundamental challenge is that the financial returns expected from the industry are now “so low that they threaten its very survival”.

“Nobody is going to put in $1 with the expected return of 60 cents on the dollar,” he said.

Toriola, stressing the need for the sector’s revival, said without apt changes, the flow of new investment into the sector could dry up entirely.

He said the static pricing is no longer tenable.

“There’s no way under the surface of the earth, in the kind of inflationary environment and forex devaluation that we’ve seen, that an industry can maintain prices the same for 11 years,” he said.

“The telecoms sector has faced escalating costs across the board — from the cost of capital to the soaring expenses of maintaining infrastructure like base stations and diesel generators.

“Without adjustments to pricing, the industry’s ability to function and attract investment is in jeopardy.”

Although he acknowledged recent progress in discussions with regulatory authorities, Toriola said the challenges faced remain critical.