Telcos want a 100% Tariff Increase; Operating Costs have risen astronomically’ – Dr Karl Toriola

MTN Nigeria’s Chief Executive Officer, Dr Karl Toriola, has expressed the need for telcos to increase tariffs as a measure of sustainability. Dr Toriola made this known during a recent interview with Arise TV, in which he highlighted the sector’s current state, its potential for aiding economic growth, and the need for reforms to ensure its advancement and sustainability.

“We’ve put forward requests of approximately 100% tariff increase to the regulators. I doubt they are going to approve that quantum of increase because they are very sensitive to the current economic situation in the country,” he said.

Dr Toriola nevertheless expressed optimism about the implementation of reforms that will enable the telecom sector’s sustenance, considering the obvious challenges it is presently faced with. “We’re hopeful and optimistic that the realities are staring us in the face and the right decisions will be taken for the sustainability of the industry,” he said.

Dr Toriola opined that despite the varying submissions made by the CEO of Financial Derivatives Company Limited on the dire need for tariff increase and Minister of Communications, Innovation and Digital Economy, Dr Bosun Tijani, who stated that there is more to the industry’s improvement than tariff increase, policymakers, regulators, the private sector, and telecom industry operators are still concerned about the sector and its importance in the Nigerian economy.

“We are all on the same side, we are concerned about a few basic things. Telecommunications is a fundamental human right these days and a critical element towards driving an economy. If you do not have a sustainable industry, it’s going to affect the economy and the well-being of the people” Toriola said.

The MTN CEO noted that while operators are not ignorant of the high cost of living Nigerians are faced with due to inflation, economic downturn and naira devaluation, the challenges the telecommunications industry faces are not centred on profitability, but on sustainability. He cited the rising costs of power generation, procurement of raw materials to create and maintain networks and cost of licensing fees.

“The costs that we are expending are exceeding our revenue; even though we are seeing revenue growth. There is no way that the industry can continue to sustain itself and provide the required quality of service under this structure,” he added.

Dr Toriola also emphasized the astronomical increase in operational costs due to forex devaluation as well as the impact on foreign exchange liabilities of the company. “Every time there’s a shift in the exchange rate, we have to make provisions for foreign exchange loans or lease obligations, and that’s what leads to FX losses. From an operational perspective, we also have the cost of doing business to contend with. For instance, assuming we acquired a base station worth $100,000 two years ago, it would have cost around N40 million. Now, the same base station would cost over N160 million.”

He further stated that the cost of doing business has shrunk the profit margins of operators and pushed them into negativity, which has a ripple effect on the Nigerian economy.

“It is impacting our ability to create jobs, directly and indirectly. MTN is accountable for over 2 million jobs in this economy today. And what happens in situations like this is that the industry constricts, which means employment constricts and commercial activity around the industry constricts”.

Finally, Toriola revealed that he is enthusiastic about the progress of the telecommunications sector in 2025, stating that operators, the government and the Nigerian Communications Commission (NCC) are collectively working towards fixing the sustainability of the industry and enabling its growth.