The Cost of Connection: MTN’s Tariff Hike to Net N1.34 trn

MTN Nigeria Communications Plc is set to gain an impressive N1.34 trillion from its recent 50% increase in tariffs for calls, data, and SMS services. This adjustment, sanctioned by the Nigerian Communications Commission (NCC) on January 20, represents a notable transition towards cost-reflective pricing following a decade of advocacy.

The revised rates, now in effect across MTN’s offerings, are as follows:

·        Call charges have risen to N13.8 per minute (23 kobo per second) from N7.8 per minute (13 kobo per second) on its pulse bundle.

·        SMS fees have increased to N6 from N4.

·        Data pricing has been modified within the approved parameters.

Consequently, MTN anticipates a significant 40% increase in service revenue for 2025, projecting its total revenue to reach at least N4.71 trillion, an increase from N3.36 trillion in 2024.

MTN has defended the tariff increase as essential for maintaining network investments, a requirement established by the NCC. The regulator has cautioned telecommunications companies to improve service quality within three months or risk facing penalties.

Subscribers’ Demands and NCC’s Response

Telecommunications subscribers have expressed a strong demand for enhanced quality of service (QoS), a transparent billing system, and prompt responses to customer service inquiries.

They have emphasized that mobile network operators (MNOs) should no longer provide excuses, especially after the Nigerian Communications Commission (NCC) approved a 50 percent increase in end-user tariffs.

Representatives from the Association of Telephone, Cable TV, and Internet Subscribers of Nigeria (ATCIS-Nigeria) conveyed in a recent telephone interview that their members will not accept any justifications for inadequate service. The NCC has instructed telecommunications companies to enhance network quality, stipulating that the tariff increase is contingent upon rigorous monitoring of service quality and full compliance by the operators. A three-month timeline has been established for these companies to demonstrate improvements, with increased scrutiny and the imposition of stricter penalties for any service deficiencies.

Beneath the surface; the real reason for the hike.

Although MTN Nigeria reported an unprecedented revenue of N3.36 trillion in 2024, its financial stability appears to be more precarious than it initially suggests. The company faced a significant after-tax loss of N400.44 billion, primarily attributed to the severe impacts of high inflation and the devaluation of the naira, which have driven operational costs to unprecedented levels.

The company’s operating expenses surged by 76.59% year-on-year, reaching N1.52 trillion, compared to N860.32 billion previously. This dramatic rise in costs has compelled telecommunications companies to advocate for increased tariff rates to maintain their operations and enhance network infrastructure.

Gbenga Adebayo, the chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON), indicated that the decline in network quality is a direct consequence of reduced investments within the industry.

While MTN expresses confidence in its long-term outlook, the CEO has recognized the immediate uncertainties present in Nigeria’s macroeconomic landscape, including possible variations in consumer demand following the tariff hike.