The biggest telecoms operator in Nigeria, MTN, is considering increasing tariff prices for its services in the country. This is a result of the recently recorded loss on the telecom giant’s balance sheet, caused by the Naira devaluation.
To combat the negative on the balance sheet, MTN is reportedly working with regulators for approval to increase tariffs for voice and data. This would mark the second time the telecom giant is taking this move under a year.
Given our expense profile in Nigeria, we need some tariff increases to mitigate the cost of running the networks. Our focus is to work with regulators for tariff increase in the voice and data as there haven’t been any increase for quite some time in that market
MTN Group CEO, Ralph Mupita to the press
The year 2023 was challenging for MTN Nigeria, as the country was going through a turmoil of financial problems, including foreign exchange shortages, which led to a rapid devaluation of the Naira and finally an even more rapid inflation.
Nigeria saw a 28.9% increase in the inflation rate in December 2023, marking the highest point of inflation in 18 years, including an average of 24.5% throughout the year.
As a result, the company saw the breathtaking depletion of stored earnings and shareholder funds to a negative ₦208 billion and ₦40 billion, respectively. A situation that left the company and a majority of the company shareholders on the red line.
According to the telecom giant, its headline earnings per share (HEPS) saw a sharp 72.3% decline to 315 cents in 2023, from the recorded 1,137 cents in 2022. A loss attributed to the rapid devaluation of the Naira which resulted in a loss after tax of ₦137 billion by MTN Nigeria, ending in a negative equity.
The MTN network tower costs
Part of, or according to MTN Nigeria, the majority of expenses are contracts between the telecom giant and cell tower operators, IHS Holdings and ATC. To cut costs all around, the MTN CEO states that the telecom giant is renegotiating some of its contracts with the cell tower operators as a means to enable the company to get back on profitability.
