Telecom operators in Nigeria have begun implementing measures to manage the rising costs of operations resulting from economic instability.
This development follows the Nigerian Communications Commission’s (NCC) reluctance to approve a tariff increase, which operators have sought to mitigate the impact of naira’s devaluation and rising inflation.
The operators have resorted to load shedding, a practice where services are deliberately reduced in specific areas to prevent system-wide failures and cut costs.
Although the operators have not officially confirmed this move, there is noticeable prioritisation of service in high-revenue areas, leading to varying service quality across different regions.
The telecom sector in Nigeria is currently faced with several challenges, including the escalating costs of diesel, maintenance, and infrastructure, compounded by a rapidly depreciating naira.
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For instance, MTN Nigeria, with nearly 80 million subscribers, reported a huge loss of ₦137 billion after tax for the first time since its 2019 listing, primarily due to foreign exchange losses amounting to ₦740 billion.
Similarly, Airtel Africa, which serves over 50 million Nigerian subscribers, recorded a loss of $89 million for its fiscal year ending in March 2024, largely due to foreign exchange challenges.
The economic downturn has greatly affected the sector’s investment capacity. Airtel Nigeria’s CEO, Carl Cruz, spoke on the sharp devaluation of the naira and how it has hindered the industry’s growth, given its reliance on imported infrastructure.
MTN Nigeria’s CEO, Karl Toriola, stated that the sector is on the brink of collapse unless urgent interventions, such as tariff increases, are implemented.
The situation has become so dire that operators are now exploring load shedding as a cost-saving measure. This strategy involves reducing the number of operational base stations, particularly in low-revenue areas, to cut costs.
This has inevitably led to poor service quality in these regions, as the remaining infrastructure struggles to cope with the demand.
The NCC has not issued an official response to the operators’ demands, leaving the industry in a state of uncertainty. The regulatory body’s silence has increased fears of continuous service disruptions becoming large if a resolution is not reached soon.
