Airtel, MTN Nigeria, and IHS Towers, among Nigeria’s largest telecom firms, are contemplating scaling back their investments in the country. They attribute this reconsideration to multiple taxations, deteriorating power supply, and two years of losses due to foreign exchange volatility.
Airtel Nigeria CEO Carl Cruz mentioned during a panel at the Telecom Townhall Forum, hosted by Financial Derivatives Company (FDC) on Tuesday, that discussions are underway with shareholders about whether to maintain the current investment levels, noting that capital invested in Nigeria is being compared to other markets.
MTN Nigeria CEO Karl Toriola highlighted the challenges posed by the government’s reluctance to approve a tariff increase amid rising inflation, emphasizing the need for a reevaluation of price regulations due to the disparity between input costs and revenues.
IHS Towers Vice President Kazeem Oladepo pointed out that changing market dynamics over the past five years limit the potential for value extraction from current investments.
Bolaji Balogun, CEO of Chapel Hill Denham, reported that over $70 billion has been invested in the telecom industry since 2001, with at least $4.33 billion needed to expand internet access. Maintenance costs are also high, with over ₦14 billion spent on repairing 59,000 fibre cuts between 2022 and 2023, according to Gimba Mohammed, IHS Towers’ Director of Government and External Relations.
In a challenging economic environment, telecom companies are re-evaluating their investments as they face losses and shareholder concerns. However, underinvestment poses a significant risk, with data indicating that a 1% reduction in telecom investment could lead to a 1% decline in the industry’s GDP contribution.
With regulators hesitant to approve tariff hikes that could impact consumers struggling with high living costs, the industry faces a difficult situation, balancing the need for increased investment against the potential backlash from tariff increases.
