MTN expects the new tariff hikes in Nigeria will boost its service revenue by at least a quarter, helping to steady the group’s largest operation after almost two years of pain.
This, as President Bola Tinubu announced plans to reform his country’s telecom regulatory framework to align with global standards, with provisions to protect infrastructure and reform taxes, in an effort to create a more investment-friendly environment.
At the weekend, Tinubu met officials from MTN’s rival Airtel in Abuja, where he outlined plans for the sector. This included a recent move to classify fibre and undersea cables as critical infrastructure.
Telecom companies operating in the West African nation have been lobbying the government on many fronts for years. In recent times, the devaluation of the naira has intensified this effort by the private sector, with mounting pressure on the government to bolster confidence as a destination for telecom investment, which often requires billions in capital expenditure.
In January, Nigeria’s mobile network operators, including MTN, received a major win when the government approved a 50% increase in mobile service prices for the first time in more than a decade.
While the increase is only half of what operators had been hoping for, MTN has indicated that the move will help its earnings this financial year.
“In light of the developments in our operating context, we expect full-year 2025 service revenue growth of at least mid-40% as tariff adjustments take effect,” MTN Nigeria CEO Karl Toriola said as the operator reported annual earnings to December 2024.
In an environment in which inflation reached 34.8% in December 2024, averaging 33.2% for the year, Nigerian authorities had to balance the commercial needs of cellphone providers with the erosion in consumer purchasing power.
Total subscribers rose 1.6% to 80.9-million, while service revenue surged 35.9% to 3.3-trillion naira (about R41bn), for the period. If all goes according to plan, the increase to service revenue for 2025 will be 45%, at a minimum.
The tariff hike is part of an ongoing effort to right-size an industry devastated by inflation and a historic currency devaluation.
Even then, Toriola is not naive to the realities of doing business in Nigeria, saying: “the near-term uncertainties in our macro environment, including exchange rate and potential price elasticity from the new tariff implementation, may affect the trajectory of our recovery”.
Like many other companies operating in Africa’s largest economy, MTN has been a casualty of the devastation caused by the Nigerian naira’s more than 90% plunge since mid-2023.
In April 2024, MTN Nigeria convened an emergency meeting of shareholders to discuss plans to grow revenue, improve margins and return to profit in an effort to address declines caused by the challenging operating environment.
At the top of the five-point plan was a lobbying effort for regulated tariff increases meant to boost revenue and counter the weak currency.
Earnings before interest, tax, depreciation and amortisation (ebitda) increased 9.2% to 1.3-trillion naira, while profit after tax, adjusted for net forex losses, decreased 35.2% to 247.3-billion naira.
The group said its net loss for the year resulted in a depletion of retained earnings and shareholders’ fund to 208-billion naira and 40.8-billion naira, respectively.
MTN Nigeria reported active data users increased 7% to 47.7-million, data traffic by 42.9% for the year, with average monthly data usage per user growing 33.6% to 11.2GB.
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