MTN Proposes Call Tariff Hike to Navigate Challenging Operating Environment

MTN Nigeria has announced plans to raise call tariffs as part of its strategy to address the adverse effects of the challenging operating conditions in Nigeria.

The telecommunications giant revealed this decision on Friday following discussions at its extraordinary general meeting.

The company cited the urgency to tackle its negative net asset position, stemming from a staggering loss of N740.4 billion in 2023, attributed to the foreign exchange market liberalization in June last year, coupled with a pre-tax loss of N575.69 billion in Q1 of 2024.

To counter these setbacks, MTN outlined several initiatives aimed at accelerating revenue growth, restoring profitability, and bolstering reserves to enhance business resilience and shareholder returns. One of these initiatives includes proposing a regulated tariff hike.

According to MTN, engaging with regulatory authorities, via the industry body, on tariff adjustments is crucial to mitigating the impacts of the challenging operating conditions. The company stressed that appropriate tariff increases are essential to sustain investment and ensure the long-term viability of the industry, facilitating commercial interventions to drive revenue growth.

Furthermore, MTN emphasized its commitment to reducing exposure to US dollar volatility by addressing outstanding letters of credit obligations, largely incurred to support foreign currency-denominated capital expenditure requirements. The company highlighted its efforts to utilize improved FX market liquidity to reduce outstanding LC obligations, thereby minimizing earnings volatility.

Additionally, MTN disclosed plans to review tower lease contracts with key towerco service providers, seeking amendments to existing contracts to mitigate macro risks, including FX fluctuations.

Ralph Mupita, CEO of MTN Group, previously indicated discussions with the Nigerian Communications Commission (NCC) regarding tariff adjustments in response to FX impacts.

MTN Nigeria remains optimistic that these proactive measures will expedite earnings recovery and restore its net asset position.