THE Chief Financial Officer (CFO) of MTN Nigeria, Module Kadri has questioned why tariff increases have not been permitted in the telecommunications industry like the electricity and oil sectors.
He therefore warned that Nigeria’s telecommunications sector might lose investment such as it happened in the oil sector if appropriate pricing is not guaranteed.
Speaking during a recent panel session in Abuja, Kadri explained that rising inflation and foreign exchange challenges have significantly impacted the telecommunications industry’s ability to operate efficiently. Kadri explained that the situation is particularly difficult because most of the industry’s products are imported.
He stated that the government must create a level playing field to support the survival of businesses. “Our business is mainly dependent on forex, so customers need to understand that for you to get the services that you desire, it costs money. When people have to invest in the country and are not able to monetise their investment, it cannot work.”
“The only way that this economy will thrive is if there is appropriate pricing such that investments in the sector are guaranteed. The telecommunications industry contributes 16 per cent to the GDP, and it is not something that you mess around with. If we are not careful, what happened to the oil industry, which led to loss of investments will happen to telecommunications, and the industry will come to a halt. It’s not rocket science,”
A number of players in Nigeria’s telecommunications industry have been angling for an increase in tariffs as inflation and foreign exchange woes increase the cost of operations in the business.
Telecommunications operators in Nigeria previously stated that their services are long overdue for price increases, as they have not adjusted prices upward in the past 11 years. The last time telecoms tariffs were reviewed was as far back as 2013. It was noted that the telecoms sector is the only industry that has not reviewed its pricing despite rising inflation and other economic pressures that justify an increase. They attributed this to regulatory restrictions that have prevented them from adjusting prices accordingly.
The sector is also known to grapple with several other challenges, such as multiple taxation and regulations, high Right of Way (RoW) charges, inadequate power supply, and frequent vandalism of telecommunications infrastructure.
In a recent interview, prominent Economist and CEO of Financial Derivative Company, Bismarck Rewane supported plans to increase telecoms tariffs noting it is the only way to guarantee sustainability in the business. Rewane noted that the current tariff structure is limiting the operators’ ability to invest in infrastructure, leading to a decline in the quality of their services in recent times.
