Karl Toriola, the Chief Executive Officer of MTN has warned that the Nigerian Telecoms industry may collapse if urgent steps are not taken and that the situation is so bad that it could be likened to an intensive care unit.
Toriola’s views were corroborated by Gbenga Adebayo, Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON)/
Toriola spoke on Tuesday in Lagos at a virtual telecom investment forum organised by Financial Derivatives Company (FDC).
He pointed out the severe sustainability challenges currently faced by telecom operators across the country.
Addressing a hybrid telecom investment forum , he said despite the growth over the past two decades of liberalisation, the sector is now threatened by rising costs and unsustainable pricing.
Toriola said a price increase has become imperative, stressing that it is now an “absolute necessity”.
He said there is an urgent need to rescue the sector from collapse as it is “in an intensive care unit”.
Speaking on the viability of continued investment in the telecoms sector, Toriola said a fundamental challenge is that the financial returns expected from the industry are now “so low that they threaten its very survival”. “Nobody is going to put in $1 with the expected return of 60 cents on the dollar,” he said.
Toriola, stressing the need for the sector’s revival, said without apt changes, the flow of new investment into the sector could dry up entirely.
He said the static pricing is no longer tenable.
“There’s no way under the surface of the earth, in the kind of inflationary environment and forex devaluation that we’ve seen, that an industry can maintain prices the same for 11 years,” he said.
“The telecoms sector has faced escalating costs across the board — from the cost of capital to the soaring expenses of maintaining infrastructure like base stations and diesel generators.
“Without adjustments to pricing, the industry’s ability to function and attract investment is in jeopardy.”
Although he acknowledged recent progress in discussions with regulatory authorities, Toriola said the challenges faced remain critical.
He said stakeholders are beginning to understand the depth of the crisis and are considering necessary interventions, including price increases and concessions.
Toriola said “qualitative action needs to be swift and decisive to prevent the collapse of this industry” as time is of the essence.
In his submission, Gbenga Adebayo, Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON), corroborated Toriola’s concerns.
According to Adebayo, the telecom industry had become a victim of its own success, with the government increasingly viewing it as a primary revenue source.
He said: “Today, many people are complaining about the quality of service. One thing we need to realize is that quality of service is tied to government policies. There are 54 agencies of government that are always on our neck for one levy or the other.
“Unfortunately, telecom operators are now seen as a major source of government revenue. With this trend, the sustainability of the sector cannot be guaranteed. The issue of over ₦200 billion banks owing our members for services rendered has not been settled up till now.”
