The Chief Financial Officer (CFO) of MTN Nigeria, Mr. Module Kadri, has issued a stark warning, suggesting that the Nigerian telecoms sector could face a divestment crisis similar to the oil industry if service prices are not reviewed upwards. Speaking at the 30th Nigerian Economic Summit (NES), Kadri highlighted the financial strain caused by inflation and foreign exchange scarcity, which has severely impacted the operational costs of telecoms companies.
Kadri explained that the rising cost of essential products and services mostly procured in dollars has made it difficult for telecom operators to sustain their business without price adjustments. He emphasized the need for customers and regulatory bodies to recognize the financial realities faced by the sector.
In a statement made available to 9am News Nigeria, Kadri said, “Our business is mainly dependent on forex, so customers need to understand that for you to get the services that you desire, it costs money. When people have to invest in the country and are not able to monetize their investment, it cannot work.”
Kadri further cautioned that if they don’t address the pricing structure, the telecoms industry may follow the oil sector’s path, which has seen significant divestment due to regulatory and pricing challenges. “If we are not careful, what happened to the oil industry, which led to loss of investments, will happen to telecommunications, and the industry will come to a halt. It’s not rocket science,” he added.
Clamour for Prices Review in Telecoms Sector
Telecom stakeholders in Nigeria have been pushing for the Nigerian Communications Commission (NCC) to authorize a price review. The last review of telecom service prices occurred in 2013—11 years ago. Despite the steep rise in inflation, especially following the removal of fuel subsidies in May 2023, the NCC has withheld approval for any price changes, leaving the sector under significant financial strain.
The telecoms sector, which contributes 16% to Nigeria’s GDP, also faces additional challenges such as inadequate power supply, infrastructure vandalism, and multiple taxes. The sector remains the only major industry yet to adjust prices despite ongoing inflation, exacerbating financial difficulties.
As a reflection of rising operational costs, Starlink, a telecoms company owned by Elon Musk, recently increased its subscription fees from N38,000 to N75,000, marking a 97% price hike. This further underscores the sector-wide need for regulatory approval for price reviews to maintain sustainability.
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