The Chief Financial Officer of MTN Nigeria, Modupe Kadri, has lamented the inability of the telecom operators in the country to pass the increasing costs of operations to the subscribers.
Kadri, who stated this during a live interview on Arise TV on Tuesday, said every other sector has adjusted its prices as inflation surges but the telecom operators are not allowed to.
Speaking against the backdrop of the N740 billion in forex loss recorded by the company in its full-year 2023 financial performance recently released, the CFO said the telecom industry in Nigeria needs fair pricing to reflect the rising costs of operations.
Note that the Nigerian Communications Commission (NCC) has said that telecom operators in the country are not allowed to increase their tariffs until an ongoing cost-based study to that effect is concluded.
According to Kadri, business sustainability is now being threatened in the telecom industry as a result of the inability to pass on the rising costs to the consumers.
Survival of the industry
While noting that the need for fair pricing is for the survival of the industry, the MTN CFO said many small players may die if there is no urgent intervention on the issue of pricing.
- “The reality is that everybody else has passed on their costs and we haven’t, and the industry just can’t survive. It is not about MTN being the biggest player, smaller players in the industry are going to die if interventions are not made in that space.
- “Don’t look at MTN as a standalone compay; we have to look at it in the context of the industry, ecosystem, and survival and that’s the key to the realization that there has to be fair pricing.
- ”If you look at the deregulation of the petroleum sector, everybody has passed on the cost of fuel subsidy removal to the consumers. People adjusted right, but it didn’t stop them from driving their cars,” he said.
He emphasized that as the people are demanding fair services, and better customer experience, there is also a need for fair pricing to give the service providers the ability to invest more in their infrastructure to deliver the quality experience that the customers want.
The calls for tariff hike
Before now, the Association of Licensed Telecommunications Operators of Nigeria (ALTON) has been advocating for a tariff hike, citing rising operational costs.
- In a recent meeting with Dr. Bosun Tijani, the Minister of Communications, Innovation, and Digital Economy, ALTON Chairman Engr. Gbenga Adebayo argued that the tariffs set by the regulator are insufficient in light of escalating operational expenses.
- He pointed out that, unlike the telecom sector, other heavily regulated industries like power and insurance have seen price increases to reflect macroeconomic changes and the increased cost burden on operators.
However, the NCC has insisted that price regulation is guided by regular cost-based and empirical studies to determine the appropriate cost (upper and floor price) within which service providers are allowed to charge their subscribers for services delivered.
The regulator said telecom tariffs cannot be adjusted until an ongoing cost-based study being conducted by KPMG is concluded.
