MTN Nigeria Communications Plc has projected an extra revenue of N1.34 trillion from its recently implemented 50 percent tariff increase on calls, data, and SMS.

On January 20, the Nigerian Communications Commission (NCC) permitted telcos to raise tariffs after a decade of lobbying for cost-reflective pricing. MTN has since implemented these new rates across its services, with call prices rising to N13.8 per minute (23 kobo per second) from N7.8 per minute (13 kobo per second) on its pulse bundle.

SMS rates increased to N6 from N4, while data prices have been adjusted within the approved range. As a result, MTN projects a ‘mid-40 percent’ boost in service revenue for 2025 in its recently released financial results.

In 2024, its service revenue was N3.36 trillion, meaning this forecast will push revenue to at least N4.71 trillion.

MTN highlighted that the price hike is necessary for sustaining network investments, a key condition set by the NCC while approving the tariff hike. The regulator has mandated telcos to enhance service quality within three months or face sanctions.

The company also forecasts earnings before interest, tax, depreciation and amortisation (EBITDA) margin of ‘at least mid-40 percent’ and a capital expenditure (capex) intensity in the ‘upper teens.’

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Karl Toriola, MTN Nigeria chief executive officer, stated in a recent investors’ call, “On our current assessments, we have provided a 12-month guidance that you would have seen in our release. Our tariff adjustments will take effect through the course of the coming year and will anticipate revenue growth in the range of mid-40s percent, with a similar range expected for EBITDA margins to also mid-40 percent.”

The telco has reinstated its medium-term guidance, targeting service revenue growth of ‘at least 20 percent’ and a recovery of its EBITDA margin to ‘at least 50 percent.’ It anticipates capex intensity subsiding as it normalises over the medium term, followed by an expected acceleration in capex deployment.

“In terms of our balance sheet, we aim for a recovery in our retained income and shareholders’ equity positions to positive balances within the next 12 months,” the telco stated.

Despite reporting a record revenue of N3.36 trillion for 2024, MTN recorded a N400.44 billion loss after tax, impacted by record-high inflation and the naira devaluation, which exacerbated the firm’s operational expenses. The company’s operating expenses surged by 76.59 percent year-on-year to N1.52 trillion from N860.32 billion in the period under review.

Other telecom operators have also struggled. Airtel Nigeria’s revenue fell by 40.34 percent to $738 million in the nine months ended December 2024, from $1.24 billion in the corresponding period of 2023.

“Telecoms growth is now shrinking,” said Abdulazeez Kuranga, regional economist, West Africa at Standard Bank Group.

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To sustain operations and drive network infrastructure, telcos pushed for a hike in their tariff prices. “Deteriorating network quality was due to declining investments in the sector,” explained Gbenga Adebayo, chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON).

Toriola of MTN and Dinesh Balsingh, CEO of Airtel Nigeria, agree that the price hike will unlock more cash flow.

While MTN remains optimistic about its prospects, its CEO acknowledged near-term uncertainties in Nigeria’s macro environment, including potential fluctuations in consumer demand following the price increase.

Bismarck Rewane, chief executive officer of Financial Derivatives Company, said the hike promises to benefit operators but will put additional strain on consumers’ pockets, possibly “resulting in reduced usage from consumers.”

Ayham Moussa, MTN’s chief operating officer (COO), highlighted on the telco’s investor call that it is still early to assess consumer reactions, as many customers buy bundles with more than a month’s validity. However, the company is betting on data services, recognising the growing reliance on internet access.

While the telco expects consumption adjustments, its CEO noted that consumption will eventually normalise as witnessed in Ghana, where tariffs were recently hiked.

“Consumption patterns tend to go back to what they were before the type increases. But again, varying factors can make it shorter or longer,” Toriola added.