Telcos are hanging their hopes on the possible tariff increase in 2025, insisting that this is the only way they can offer services sustainably to the Nigerian public this year.

Nigeria’s telecommunications sector has long been a beacon of hope, playing a role in pulling the nation out of recession in 2020 and laying the foundational infrastructure for its digital economy.

The sector has thrived despite economic challenges, becoming a key driver of the gross domestic product (GDP) growth and tax revenues. However, 2024 proved particularly turbulent, with operators struggling to survive.

From record losses to a subsea cable cut that disrupted internet connectivity in Nigeria and West Africa, telecom operators fought to stay afloat in 2024. As the sector ushers in 2025, experts predict that tariff hikes, increased renewable energy adoption, partnerships with satellite operators, and government-led fibre expansion projects will define its trajectory.

Tariff Hikes

At a December 2024 stakeholder meeting, telecom operators warned of potential service shedding in 2025 unless tariffs are increased. This follows a decade-long agitation by telcos for a hike in tariff prices.

Gbenga Adebayo, chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), said, “If nothing is done, we might begin to see in the new year grim consequences unfolding, such as service shedding. Operators may not be able to provide services in some areas and at some times of the day leaving millions disconnected.”

He noted that the resources needed to maintain, expand, and modernise networks are no longer available, and without intervention, the sector’s future is at risk.

Adebayo noted that telcos’ tariffs must be reviewed to reflect the economic realities of delivering telecom services at a minimum for industry sustainability.

Karl Toriola, CEO of MTN, re-echoed this, noting that, “there should be no delusion; if the tariff doesn’t go up, we will shut down.”

According to Bosun Tijani, minister of communications, innovation and digital economy, there is a need for price adjustments. “We think there may be a need for that,” he said.

How this increment happens remains to be seen, with the government careful of how it may impact already burdened Nigerians.

According to Adebayo, “We fully understand and appreciate the financial stress Nigerians are experiencing today. Prices will need to rise, but action needs to be measured through sustainable conversations and partnerships with the government. It is time to address this head-on.”

Read also: Telcos threaten to cut services over rising costs

Renewables, Cost Savings in 2025

Energy costs remain one of the sector’s biggest challenges. According to ALTON, diesel alone accounts for 35 percent of telecom operators’ operating expenses. In May 2024, Airtel Nigeria spent N28 billion on diesel, according to Harmanpreet Dhillon, its chief technical officer.

“The biggest constraint in the telecom industry is high energy cost,” said Gbenga Adebayo, chairman of ALTON. To address this, telcos have renegotiated tower contracts with ATC and IHS, with solar, lithium batteries, CNG, and LPG as energy options.

MTN Nigeria estimates that these new contracts could save between N100 billion and N110 billion in 2025. These savings are expected to significantly ease operating costs for the sector.

Satellite Partnerships, Fibre Expansion

Telecom operators are increasingly collaborating with satellite providers like Starlink to bridge connectivity gaps in rural areas. With 27 million Nigerians still lacking access to telecom services, these partnerships aim to extend high-speed internet to remote regions where traditional infrastructure is costly or impractical.

Notable collaborations include Airtel Nigeria’s partnership with Eutelsat OneWeb and MTN’s trials with Omnispace, OneWeb, Starlink, Lynk Global, and AST SpaceMobile.

“To keep customers and businesses connected at all times, we are going to have to embrace satellite as an additional technology form,” said Ralph Mupita, MTN group chief executive officer.

Also, Africa Mobile Networks (AMN) partnered with Starlink to provide backhaul for its base stations in rural communities. Initial deployment took place in Nigeria in April 2024. These efforts align with the government’s plan to expand telecom access to 80 percent of rural areas by 2027, leveraging satellite technology.

However, while satellite solutions address immediate needs, fibre optic networks remain critical for long-term connectivity. To this end, the country intends to lay 90,000 km of fibre optic cables through a $2 billion special-purpose vehicle (SPV).

This initiative aims to expand the country’s fibre network from 35,000 km to 125,000 km over the next four years, and significant progress is expected by mid-2025.

Record Losses

MTN recorded its first loss of N137 billion in 2023, while Airtel Africa posted an $89 million loss in FY 2024, primarily driven by challenges in Nigeria. Both telcos recorded a combined N1.29 trillion in FX losses this year.

MTN’s fortune has remained unchanged, reporting a N514.93 billion loss for the nine months ending September 2024, despite a 33.7 percent growth in service revenue to N2.37 trillion. Similarly, Airtel’s revenue fell by 46.9 percent to $755 million during the same period, underscoring challenging operating conditions for both telcos.

To compound telcos’ woes, their average revenue per user (ARPU) has continued to fall. The ARPU of telecom companies declined by 40.87 percent to $1.85 in the quarter ending September 2024, compared to $3.12 in the same period in 2023. MTN’s ARPU dropped from $3.24 to $2.09, while Airtel’s fell from $3 to $1.60.

SIM-NIN Chaos

After years of delays, the government enforced the Subscriber Identification Module (SIM) to National Identity Number (NIN) linkage deadlines in 2024, causing chaos as millions of subscribers were disconnected. All active lines had been linked by September, but not without significant disruptions.

Glo’s Falsified Subscriber Data

In 2024, the NCC audited the total number of mobile subscriptions in the country to ensure that operators were correctly reporting their actual numbers. This audit revealed that Globacom was falsifying its numbers by as much as 40 million.

“One Mobile Network Operator was found to have incorrectly reported around 40 million subscribers as active, despite the absence of any revenue-generating activity over a 90-day period. This was in direct violation of the Commission’s guidelines for determining active subscribers and led to an inflated report of the operator’s subscriber base, thereby skewing industry statistics,” a NCC document read.

This audit and the impact of the SIM-NIN exercise led to the loss of 64.37 million active mobile subscriptions between March and September 2024, with total subscriptions falling to 154.63 million from 219.01 million. Glo’s subscriber base fell by 69.20 percent to 19.15 million from 62.19 million.

Cable Cuts and Internet Disruptions

Subsea cable cuts in March disrupted internet connectivity in Nigeria and West Africa, highlighting the vulnerability of the existing infrastructure. Meanwhile, terrestrial fibre cuts remain a daily issue, with operators like Airtel reporting an average of 43 incidents daily.

These cuts led to $23 million in losses for the sector in 2023. Femi Adeniran, director of corporate communications and CSR, said, “These interruptions not only inconvenience consumers but also hinder businesses, delay government operations, and compromise public safety, particularly in emergencies.”

To address these cuts, the Federal Government signed the ‘Designation and Protection of Critical National Information Infrastructure Order, 2024.’

According to Tijani, “The security and protection of these Critical National Information Infrastructure (CNII) is a priority for this administration and will help improve the quality of telecoms services, which has very often been affected by disruption and intentional damage.”

Based on the new law, anyone who damages telecom infrastructure can end up with a 10-year jail term.

Rising Smartphone Adoption and Data Usage

For the first time, smartphone adoption surpassed feature phone penetration in September 2024, driving a 30 percent year-on-year increase in data usage to 850,249 terabytes. By October, the status quo remained, with 3G, 4G, and 5G connections constituting 58 percent of the 157.32 million active mobile subscriptions. Data usage grew to a record high of 870,398.28 TB.

Data revenues now outpace voice revenues for major operators like MTN and Airtel, signalling a shift in consumer behaviour. MTN made 20.25 percent more from data (N1.14 trillion) than voice (N949.43 billion) in the nine months ended September 2024, and Airtel Nigeria’s data revenue ($229 million) outgrew voice ($209 million) by 9.57 percent.

The telecom sector enters 2025 at a crossroads, with a key decision on tariff hikes expected soon. A chief executive officer of a tier-one telecom company told BusinessDay, “We believe it may happen soon.”