Nigerian Telecom Operators Face $11.3 Billion Loss Due to 11-Year Tariff Delay

Nigeria’s telecom industry is going through a tough financial period, with losses expected to reach $11.3 billion between 2022 and 2026.

This issue has been worsened by a long 11-year wait for approval to increase prices, during which the value of Nigeria’s currency, the naira, fell significantly.

Karl Toriola, CEO of MTN Nigeria, and Dinesh Balsingh, CEO of Airtel Nigeria, said this delay brought the telecom sector close to collapse due to increasing operational costs.

Balsingh explained that raising prices was essential for the industry to keep growing and to provide better services and products to customers.

The naira’s drop in value in 2022, along with other financial difficulties, forced these companies to deal with even higher expenses.

By 2023, the exchange rate worsened to $1 for ₦900, making costs even higher and profits lower. This was particularly challenging for telecom companies that need to import a lot of their equipment.

This financial pressure resulted in significant losses for major telecom companies. MTN Nigeria reported its first loss since its public offering in 2019, a deficit of ₦137 billion mainly due to foreign exchange losses.

Similarly, Airtel Africa also reported its first loss in Nigeria, with a loss of $89 million for the fiscal year ending in March 2024.

“We were borrowing at 120% to fund our operations, which was unsustainable,” said Toriola at a press conference in Lagos.

The financial strain also led to a huge cut in dividends, from ₦530 billion in 2022 to ₦196.67 billion in 2023.

Another severe impact of the delayed price increase is the expected sharp decrease in taxes paid by telecom operators, projected to fall by 92% to just ₦29 billion in 2025. This will significantly affect government revenue.

Despite trying to lessen these challenges by seeking import waivers and other measures, Toriola admitted that these efforts were not enough to balance out the rising costs from higher power charges, taxes, and right-of-way fees.

As the financial situation worsened, the need to raise prices became more urgent, moving from a 40% increase request in 2022 to a critical 100% increase.

Finally, on January 20, 2025, approval was given for this price increase, offering some hope for recovery. With the new prices, the industry’s revenue is expected to increase to $6.67 billion in 2025 and $8.33 billion in 2026.

However, experts warn that the 11-year delay has caused deep and possibly lasting damage to the telecom industry and the wider Nigerian economy.