Nigeria telecom operators lost $11.3 billion over 11-year tariff delay 

The Nigerian telecom operators are reeling from significant financial losses, with projections estimating a staggering $11.3 billion in revenue erosion between 2022 and 2026. This follows an 11-year delay in approving a much-needed tariff increase, according to an in-house report conducted by MTN Nigeria and obtained by TechCabal. The primary cause of this financial hemorrhage is the devaluation of the naira, which, coupled with prolonged regulatory inaction by the Nigerian Communications Commission (NCC), placed immense pressure on telecom operators’ ability to sustain operations.

Industry executives, including MTN Nigeria’s CEO Karl Toriola and Airtel Nigeria’s CEO Dinesh Balsingh, claimed the delay pushed the telecom sector to the brink of collapse. With soaring operational costs, the telcos claimed their financial positions were unsustainable. 

“The price increase which was highly needed for the survival and continued growth of the industry, will enable us to continue investing in network infrastructure, expanding coverage, and delivering improved products and services that meet the evolving needs of our customers,” Balsingh said. 

A tariff adjustment became inevitable following naira devaluation in 2022 and liquidity problems which often forced players to resort to the parallel market. By 2023, the exchange rate had slipped to $1 to ₦900, further driving costs and cutting into profit margins. Telecom operators, who rely on imported equipment, were caught in a vicious cycle of rising costs and plummeting revenues.

In 2023, MTN Nigeria reported its first loss since its 2019 IPO, recording a ₦137 billion deficit largely driven by forex losses. Airtel Africa also faced its first-ever loss in Nigeria, with a post-tax loss of $89 million for the financial year ending March 31, 2024.

“We were borrowing at 120% to fund our operations, which was unsustainable,” Toriola said during a media conference MTN Nigeria in Lagos on Tuesday. MTN Nigeria had consistently paid dividends to shareholders from 2007 to 2022, but the pressure from the foreign exchange decline made regular payments impossible. Dividends declined from ₦530 billion in 2022 to ₦196.67 billion in 2023.

One of the most alarming side effects of the delay was the drop in taxes paid by telecom operators to the government. While taxes grew from ₦329 billion in 2023 to ₦428 billion in 2024, they are set to plummet to just ₦29 billion in 2025, a 92% decline. This will significantly impact government revenue.

Toriola emphasized that MTN Nigeria had explored alternatives, such as import waivers, to alleviate the financial burden. However, these efforts would not have been sufficient to offset the enormous costs imposed by rising power charges, taxes, and right-of-way fees. “Any relief from waivers would have come at a cost to the government, which would have been irresponsible,” he said.

In response to these escalating challenges, telecom operators had initially called for a 40% tariff increase in 2022. However, as the naira continued its downward spiral, the situation worsened, and demands for a 100% hike became urgent. According to the MTN report, the industry’s total revenue plummeted from $7.62 billion in 2022 to $6.87 billion in 2023, and further sank to $3.55 billion in 2024.

The long-awaited approval for a tariff increase finally came on January 20, 2025, offering hope for an industry in crisis. With the new tariffs in place, the telecom sector is projected to rebound, with revenues expected to rise to $6.67 billion in 2025 and $8.33 billion in 2026. However, experts warn that the 11-year delay has already caused irreversible damage, with long-term economic consequences for both the telecom industry and the Nigerian economy.