We are still getting to understand the effects of the devaluation and the continuous depreciation of the naira on the economy and private businesses. The telecom sector is one that will probably be hit the most if they had no hedged effectively.
The CEO of Main One Cable Funke Opeke in an article in The Nation explains why the depreciating value of the naira is affecting telecoms.
“Well the declining value of the naira is definitely putting pressure on margins for telecoms operators.
As you know, a lot of the technology inputs into the sector are imported; so they are dollar-denominated and most operators have entered into long term supply service contracts ……value of your naira receivables against the dollar not at par puts a lot of pressure.
…. So, it is a two-sided equation.
I think we are all hoping that there will be additional stimuli instituted by the government to try to advance the economy a little bit faster to stimulate spending in all the sectors aside from oil so that the economy can quickly recover,”
The article also explains she said consumers will also feel the pinch of the inflationary trends as they would not have so much disposable capital to spend on telecommunications.
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