MTN Nigeria has strongly advocated for increased telecommunications tariffs in response to the naira devaluation and biting cost of forex.
MTN said except a new traffic structure is approved, there would be no incentive for increased investments in the industry.
Mr. Modupe Kadri, the Chief Financial Officer (CFO) at MTN Nigeria gave this indication during a panel session at the concluded Nigeria Economic Summit Group (NESG). The panel spoke to the theme: “Navigating Business Growth in an era of volatility and uncertainty.”
Other panelists at the session included: Mrs. Oyeyimika Adeboye is the MD/CEO of Cadbury Nigeria PLC; Mr. Courage Obadagbonyi, the CFO of APM Terminals; and Mrs. Nkechi Obi, the Group Managing Director/CEO of Techno Oil Limited.
He said the naira devaluation has spiked the cost of inputs as telecoms technologies are all sourced abroad using foreign. Thus, the cost of doing business has increased exponentially whilst the tariffs have remained constant for ten years.
The MTN CFO said if tariffs are not reviewed upward, it would stifle growth and ultimately impact negatively on other sectors of the economy as the telecoms sector is a key driver of other sectors and also contributes 16 percent to the Gross Domestic product (GDP).
“Our business is mainly dependent on forex. The forex problem arose as a result of the policy to devalue or let the naira find its true level. The same thing happened in the petroleum industry – to get appropriate pricing for petroleum products therefore removing all subsidies. This meant that the government was feeling some pressure on the burden it was carrying and decided to offload it. In the telecoms industry, the problem still remains forex. We have suffered devaluation in the movement of the rate from about N400-$1 to N16,000-$1. We have established the letters of credit to import some equipment. We have contractual obligations which the CBN hasn’t fulfilled” he explained.
“We have experienced forex losses. We are in a business to survive. But we operate in a regulated industry where you are not allowed to adjust your prices. Other sectors have moved prices over the years to survive devaluation but we haven’t moved our prices in the past 10 years yet we are supposed to continue providing these nice services that you enjoy. If we say there is full deregulation in the econo quality of services you all desire, it costs money because this equipment are imported. my, let things find their natural levels because there will be no new investments” if we continue that way he warned.
Continuing he said: “When you are stifling the growth of the telecoms sector, other technologies are also impacted. Telcoms industry is the backbone of the economy. Telcoms industry contributes about 16 percent of the GDP. So if the telecoms don’t thrive, the whole economy is impacted. Mobile financial services, fintechs, digital services, etc are all riding on telecoms. If the government doesn’t create policies for the industry to thrive, it will have an impact on the entire economy” he further warned.
