Nigerian telecom companies are bracing themselves for a significant financial blow, with forecasts indicating a staggering $11.3 billion revenue loss between 2022 and 2026. This substantial loss is attributed to the delayed implementation of tariff hikes and the country's constantly dwindling currency value.

The main culprit behind the record losses is the 11-year delay in tariff hikes, which has persisted despite the Nigerian Communications Commission's (NCC) recent approval of a 50% tariff increase. The telecom industry has been struggling to cope with rising operating costs, and the delay in tariff hikes has brought the sector to the verge of collapse.

MTN Nigeria, the country's premier telecommunications company, has already felt the pinch, recording a ₦137 billion shortfall in 2023, primarily due to foreign exchange (FX) losses. This marks the company's first loss since its 2019 initial public offering. Similarly, Airtel Africa experienced its first-ever loss in Nigeria, posting a $89 million post-tax loss for the fiscal year ending March 31, 2024.

The CEOs of MTN Nigeria and Airtel Nigeria, Karl Toriola and Dinesh Balsingh, respectively, have emphasized that the delay in tariff hikes has made their financial conditions unsustainable. According to Balsingh, "The price increase, which was highly needed for the survival and continued growth of the industry, will enable us to continue investing in network infrastructure, expanding coverage, and delivering improved products and services that meet the evolving needs of our customers."

The debate between the NCC and telecom operators on tariff hikes has been ongoing for months. In 2022, telecom firms demanded a 40% tariff increase, but as the Nigerian currency devalued from around N600 per dollar in 2023 to N1,600 per dollar, telecoms began demanding a 100% increase. The NCC's recent approval of a 50% tariff hike is expected to create an estimated two million jobs and N1.6 trillion in tax revenue, according to the GSMA.

Angela Wamola, GSMA's head of Sub-Saharan Africa, believes that the NCC's decision will improve customer service quality while driving economic growth in Nigeria. "This decision by the NCC is an important milestone for Nigeria's digital future. By enabling sustainable investment, we are improving the quality of service for consumers and fostering opportunities for innovation and economic growth," Wamola stated.

The projected $11.3 billion revenue loss by 2026 raises concerns over the long-term sustainability of Nigeria's telecom industry. As the industry continues to grapple with the challenges posed by delayed tariff hikes and currency devaluation, it remains to be seen how the NCC's recent decision will impact the sector's growth and development.