Tariff Hike Only Solution to Nigeria's Telecoms Industry's Survival, Says MTN's Tobe Okigbo
Nigeria’s telecom industry is at a critical crossroads, with rising operational costs, infrastructure challenges, and economic downturns threatening its sustainability. The call for a tariff review has been a long time coming since the last adjustment was done over a decade ago.
Don't miss out! Join Legit.ng's Sports News channel on WhatsApp now!
Speaking at a media forum, MTN Nigeria’s Chief Corporate Services Officer, Tobe Okigbo, shed light on the industry’s struggles, explaining why a tariff hike was necessary to keep networks running.
Beyond profitability, Okigbo emphasized that the immediate goal is survival—keeping the lights on to prevent a total collapse.
He discussed the financial strain on telecom operators, the impact of inflation on both businesses and consumers, and the long-term benefits of tariff adjustments.
Source: UGC
Telecoms faced risk of collapse
Okigbo explained why telecom companies raised concerns, emphasizing the risks of not reviewing tariffs. The telecom industry faced the risk of being unable to provide service, and restoring it would take years.
He said the priority was sustainability—keeping the network running to prevent service disruptions from becoming the norm, even before considering profitability.
He said:
"The risk was that we were approaching a point where we might no longer be able to provide service. If that happened, restoring the network to its current state would take years. Imagine the frustration of losing service—what if that became the norm rather than the exception? That was the real danger."
Tariff increase for sustainability, not profitability
He said the discussion being had was about sustainability. Before even considering profitability, the priority for telecoms companies is simply keeping the lights on—ensuring that the services subscribers rely on today remain available.
Okigbo stated that many organizations in Nigeria have had to take large loans to keep serving their customers. He noted that MTN, one of the country's biggest companies, has suffered massive losses over time, wiping out shareholder funds.
He said MTN's struggles could discourage foreign investors, as they may hesitate to invest if the poster child for foreign direct investment (FDI) in Nigeria is struggling to stay afloat.
He said:
"I can spend a lot of time I'm telling you everything that can go wrong if we don't get it right. In the history of any industry in the world, there's a particular time where there's an inflection point. If that tipping point is reached, going back becomes a problem. I suspect that what this 50% will do is to push that inflection point a little."
Okigbo explained that before any price adjustment in the telecom industry, a cost study is usually conducted. This involves analyzing all expenses, envisioning an efficient telecom network, and estimating actual costs. He noted that the last data cost study, conducted in 2021, was never released, as the government chose to set it aside after reviewing the findings.
"That's why the questions are why did it take so long. Is 50% enough? I don't know. We asked for 100, they gave us 50. We are saying, hallelujah."
Too many price hikes
Subscribers are concerned about rising telecom costs as they already struggle with inflation and price hikes on food, fuel, and electricity. Many Nigerians feel that nearly every sector has seen price increases, making an additional telecom tariff hike an added burden.
However, Okigbo explained that telecom companies are also affected by the economic downturn, facing high production and service costs. He stressed that a price increase is necessary to keep the industry afloat and prevent worsening inflation, which could threaten its survival.
He added that higher tariffs would encourage more investment in infrastructure, ultimately expanding access to telecom services that many people currently take for granted.
He said:
"What that means is an improvement in their life and the efficiencies that will come in means that they would, even in their activities, contribute a little bit more to the GDP. So we are looking at a virtuous cycle where everybody is rising, everybody is benefiting. So generally, it's a win-win."
Poor network hurts Telecoms
Okigbo stated that contrary to many opinions, telecom companies lose money when calls drop or browsing fails.
"The mistake people make is that sometimes people think that telecommunication companies benefit from poor quality. No. Every time you drop a call, we lose money. Every time you're unable to browse, we lose money."
He added that because base stations rely on expensive diesel, telecom companies only profit when customers use their services and do not benefit from poor network quality.
One major challenge telecom providers face is frequent fiber cuts, with MTN reporting 37 daily and Airtel over 40. These disruptions, often caused by construction work and vandalism, severely impact network quality and make reliable service difficult.
Okigbo emphasized that as long as these issues persist, maintaining high-quality service will remain a challenge.
He said:
"But the good thing is, as you know, the President, on the advice of the National Security Advisor, has kindly declared telecommunication critical national infrastructure. So we will be seeing greater protection and greater punishment for those who engage in this, and that would impact quality going forward."
Telecom companies argue that the tariff increase will help improve service quality and infrastructure. However, subscribers question when these improvements will take effect.
Addressing the timeline for service quality improvements, Okigbo assured subscribers that they would begin experiencing better service soon.
"From NCC's estimation, they expect that in three months, we should be seeing an uplift. Now, for us, we will try to make it shorter, because the truth is that the better this quality, the more money you spend and the better for us."
PAY ATTENTION: Сheck out news that is picked exactly for YOU ➡️ find the “Recommended for you” block on the home page and enjoy!
Source: Legit.ng
