Nigeria’s telecom industry may experience a significant $870m drop in capital expenditures by 2026, as a result of 11 years of delays in tariff increases, according to an internal document from MTN Nigeria obtained by The PUNCH.
The decline in investments, which would have been used to expand and upgrade telecom infrastructure such as network coverage, technology upgrades, and the deployment of new services, is largely attributed to tariff hike delays.
The document revealed that in 2022, Nigerian telcos invested $1.41bn in capital expenditure, but the figure dropped to $1.16bn in 2023.
This is expected to fall even further to $0.47bn in 2025. By 2026, the investment is forecasted to remain low at $0.50bn, marking a $0.87bn shortfall compared to the baseline figures from 2022, the document showed.
The 18 per cent decline in planned capital expenditures is primarily driven by the inability of telecom companies to raise tariffs, which are crucial for offsetting operational costs and financing network expansion.
In a key development, the NCC has approved a 50 per cent tariff hike, the first such increase in over a decade. The new tariffs are expected to take effect from February 2025, providing a much-needed boost to the telecom industry.
Major telecom operators MTN Nigeria Communications Plc and Airtel Africa Plc had announced reducing their investments in network infrastructure as they focus on minimising foreign exchange exposure and managing rising operational costs.
This strategy was detailed in their financial statements for the nine months ending September 2024 and aligns with earlier forecasts of decreased capital expenditure due to FX-induced losses in 2023 and 2024.
Both companies are adjusting their investment strategies in response to the persistent challenges posed by the volatility of the naira and rising operational expenses.
The Chairman of the Association of Licensed Telecom Operators of Nigeria, Gbenga Adebayo, stated that telecommunications companies in Nigeria are becoming reluctant to invest more in infrastructure as they continue to contend with a tough economic environment.
According to him, the decrease in investment has led to outdated systems, poor quality of service, and inadequate pricing.
Adebayo stated, “If you don’t invest in a sector, you can’t talk about the quality of service; you can’t talk about the right pricing. The government must help, and the time is now,” he said last year on Channels TV.
