The Average Revenue Per User (ARPU) in Nigeria’s telecommunications industry plunged by 40.87% to $1.85 in Q3 2024 from $3.12 in the same period in 2023, highlighting the profound effects of the naira’s devaluation on the sector.
Financial reports from MTN Nigeria and Airtel Nigeria revealed significant declines in ARPU, with MTN dropping to $2.09 (from $3.24) and Airtel to $1.60 (from $3). Despite these challenges, MTN’s service revenue grew by 33.6% to ₦2.4 trillion for the nine months ending September 2024, while Airtel’s revenue shrank by 46.87% to $755 million.
The naira’s depreciation, driven by the Central Bank of Nigeria’s foreign exchange unification policy, has severely impacted telcos. From N471/$ in June 2023, the naira plummeted to N1,690.37/$ by November 2024, leading to $1.56 billion in foreign exchange losses for telecom firms in 2023.
Operational costs have soared due to inflation, which reached 33.88% in October 2024. MTN reported a 95.87% increase in operating expenses to ₦1.13 trillion for the first nine months of 2024, while Airtel saw a 90% spike in diesel costs. Capital expenditures have also taken a hit, with MTN reducing spending by 27.79% and Airtel cutting by 36.59%.
Gbenga Adebayo, Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON), stressed the urgency of raising tariffs, stating, “We need a long-term, sustainable solution through collaboration with the government.” However, Minister of Communication, Innovation, and Digital Economy Bosun Tijani argued that tariffs alone cannot address the sector’s woes, emphasizing the need for broader reforms.
As telcos explore renewable energy and renegotiate contracts to lower costs, stakeholders warn that reduced investments in infrastructure will further erode service quality. Industry leaders are advocating for a balanced approach to pricing and regulation to ensure the sector’s sustainability.
The Nigerian Communications Commission (NCC) has acknowledged the sensitivity of adjusting tariffs, given the essential role of connectivity in daily life, and is currently reviewing telcos’ requests for price revisions.
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