MTN Group, Africa’s largest telecommunications network, has announced plans to increase tariffs in Nigeria, South Africa, and some other African markets.
The decision is aimed at mitigating the impact of rising inflation, which has surged from 11.5% to 18.5% in Q1 2023. MTN attributes the inflation to factors such as the Russia-Ukraine conflict and the high levels of debt accumulated by African countries during the COVID-19 pandemic.
Last year, MTN had already announced tariff increases in South Africa to combat inflation. The country has also faced challenges due to load shedding, which has disrupted businesses through frequent blackouts. MTN highlighted load shedding as a significant operational obstacle, experiencing 47 days of blackouts in October and November 2022 alone.
MTN’s operations in Nigeria, one of its largest markets, have been affected by the country’s ill-conceived currency redesign policy as well as an intermittent service disruptions for banks. MTN particular reported that the currency redesign policy resulted in cash shortages, impacting customers’ ability to recharge through physical vouchers and over-the-counter transactions.
Despite the challenges, MTN achieved several milestones, including a 20.4% increase in service revenue and a 9.4% growth in its mobile subscriber base. The company also gained 167,000 home broadband users, reaching a total of 1.4 million. MTN attributed this success to the deployment of 5G fixed wireless access devices, mobile broadband solutions, and fiber-to-the-home connectivity.
However, MTN anticipates a more difficult second half of the year. It acknowledges that tariff hikes alone will not solve all its problems and is prepared to address challenges proactively. MTN plans to invest in off-grid power solutions in South Africa to improve service delivery, while in Nigeria, it aims to expand network coverage, particularly in rural areas. The company recently renewed its 3G license and intends to support customers still using the 3G network. MTN is monitoring the situation in Ghana and hopes that inflationary pressures will ease soon.
MTN intends to engage in dialogue with regulatory agencies regarding the proposed tariff increases, learning from its previous rejected attempt in October 2022. The Nigeria Communications Commission (NCC) had ordered MTN and Airtel to reverse a 10% data subscription plan hike, considering it a unilateral action by the telecoms companies.