Karl Toriola, CEO of MTN Nigeria, has sounded the alarm over the future of Nigeria’s telecommunications industry, declaring that the sector is in a “deep crisis.”
Speaking at the “Telecoms Industry 2.0: The Next Investment Frontier in Nigeria” event organized by Financial Derivatives Company (FDC) in Lagos on Tuesday, Toriola emphasized the severe sustainability challenges that threaten the industry’s survival.
Toriola’s concerns come despite two decades of growth fueled by the liberalization of the telecoms sector. The industry, once a beacon of economic development, is now struggling under the weight of rising operational costs and stagnant pricing structures.
According to Toriola, the financial returns expected from telecom investments have become so low that they are deterring further investment, putting the sector at risk.
“Nobody is going to put in $1 with the expected return of 60 cents on the dollar,” Toriola warned, highlighting the grim reality that without significant changes, the influx of new investments could cease entirely.
A key factor contributing to the crisis is the outdated pricing model that has remained unchanged for over 11 years, despite Nigeria’s high inflation and currency devaluation. Toriola argued that maintaining the same prices in such an economic environment is unsustainable.
“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 explained.
The sector has been hit with escalating costs, from capital expenditures to the soaring expenses of maintaining infrastructure, such as base stations and diesel generators.
Without adjustments to the pricing structure, Toriola warned that the telecoms industry’s ability to operate and attract investment is in serious jeopardy.
While Toriola acknowledged that there has been some progress in discussions with regulatory authorities, he made it clear that the situation remains critical.
Stakeholders are beginning to understand the depth of the crisis, and considerations are being made for necessary interventions, including price increases and other concessions.
However, Toriola cautioned that swift and decisive action is needed to avert the collapse of the industry. “Qualitative action needs to be swift and decisive to prevent the collapse of this industry,” he urged.
