MTN Nigeria CEO, Karl Toriola
Globally, the key role of an industry regulator is not just to maintain consumer protection and grow government’s revenue, but also to extend the hands of support on issues that tend to border the welfare of firms under its regulation as an agency after all.
Business Hilights recalls that in July this year, a leading giant in the nation’s telecoms sector, MTN Nigeria had reported a massive loss after tax in H1 2024, which the company said is driven by FX volatility.
In fact, MTN Nigeria averred that accelerating inflation and currency volatility, which defied all the policies implemented in the first half of 2024, created a challenging macroeconomic environment for some of Nigeria’s biggest businesses.
No doubt, MTN Nigeria, the country’s largest telecommunications firm and historically a guaranteed profit maker, reported a loss after tax of ₦519 billion for the first half of 2024. It’s a massive jump from the ₦85 billion it lost in H1 2023.
Most of those losses are linked to the company’s USD obligations, such as leases priced in dollars and financing costs. The devaluation of the naira and currency volatility in H1 have significantly increased those costs.
“Overall, these headwinds put pressure on consumers and the cost of doing business in the country,” said CEO Karl Toriola in the results shared on within the period under review. “This includes, for MTN Nigeria, additional forex losses, leading to pressure on our period-end negative capital position.”
To mitigate these FX exposures, MTN has reduced its outstanding letters of credit in dollars to $100 million by June 2024. It is also renegotiating lease agreements with IHS towers.
Accordingly, the telecom giant is seeking regulatory approval for tariff increases to offset some of those losses.
Unfortunately, since MTN Nigeria made this passionate to the regulator, the Nigerian Communications Commission (NCC), has not made any form of official statement indicating either to review the current tariff rates or stay it.
Many analysts have started raising questions on why NCC had kept quiet on MTN Nigeria’s appeal. Whereas some argue that NCC may be waiting for another telecom firm to report losses or shut down before it can come up with a rescue measure or it does not realize that as far as telecoms sector is concerned, MTN Nigeria remains a ‘Too Big To Fail Company’ and should not be allowed to suffer for too long to avoid economic crisis in the sector and related industries.
Though only recently, there were unconfirmed reports that NCC will be reviewing or is coming out with a new tariff regime, the most confusing issue remains the fact that the regulator has refused to address the substance of that rumours up till now.
Apart from MTN Nigeria that reported loss in July, there is still another MNO (name withheld) that is currently in Intensive Care Unit, ICU considering the drastic drop of its subscriber base in recent data released by the regulator. All these signals technically indicate serious need for tariff review as it is only the telecoms sector that has maintained its charges ever since the removal of fuel subsidy and ill-floating of the Naira which have brought the economy to where it is now.
Therefore; to NCC, ‘A stitch in time saves nine’.
