Subscribers to MTN in Nigeria may pay higher tariff as Africa’s largest telephone operator is feeling uneasy with the hint of more stringent licence conditions.
Its licence expires in 2016 and there is speculation that the regulator may issue tougher rules to renew it.
Bloomberg quoted MTN Nigeria Chief Financial Officer, Andrew Bing, as saying that tougher rules, tougher regulations, greater demands ultimately will impact price.
“The more you charge upfront or the more you demand over a period of time, well somebody has to pay for it. Ultimately the subscribers are the people who will have to pay.”
“It’s bigger than the power sector combined, it’s bigger than the cement industry, but they get away with everything,” said Bing, who will go on sabbatical leave from the company at the end of this month. “Yet everybody wants a piece of us.”
In February, the Nigerian Communications Commission (NCC) fined the three largest mobile networks, including MTN, for low quality service and prohibited them from selling new SIM cards in March, the first time the punishment was imposed along with a financial penalty.
Omobola Johnson, Information and Communication Technology Minister
The same month, Information and Communication Technology Minister, Omobola Johnson, disclosed that Nigeria will probably revalue MTN spectrum and push to have improving service and infrastructure written into the contract.
With a population of about 170 million, Nigeria had 126.9 million active mobile telephone lines by November 2013, NCC data show.
Many subscribers own more than one line; therefore, the number may grow to more than 200 million in 2017, according to Informa Telecoms & Media, a research company based in London.
MTN rates in Nigeria have come down in the last three years, said its Chief Executive Officer, Michael Ikpoki, who added that the company has spent between $5 billion and $6 billion to expand capacity in the same period.
Nigeria’s regulators have to allow telephone companies to make “decent margins” or it will negatively affect investment, Ikpoki argued.
“We are already operating under fairly stringent conditions. I don’t know what can be tougher than this.”
MTN shares have fallen 1.9 per cent this year in Johannesburg, South Africa, where it is based.
In Nigeria, the company struggles with power supply and cuts to its fiber-optic network, giving it a challenge to meet regulators’ standards.
Hundreds of cuts are made a week to its cables due to negligence as roads are constructed or dug, plus malicious damage, said Bing.
Last year, MTN spent about N34 billion ($214 million) on diesel to power its base stations nationwide because of unstable electricity.
The government sold 15 state-owned power generation and distribution companies last year and is spending $3.5 billion to boost transmission this year by 50 per cent from 4,000 megawatts, less than a 10th of South Africa’s capacity.
“We are very concerned and very keen to see that the whole power privatisation actually succeeds because it’s going to be really, really critical for our business,” Ikpoki said.
MTN is looking to grow revenue from data as the use of smartphones, tablets and television increases in Africa’s most populous nation to offset a slowdown in the growth in subscription numbers.
While users in Nigeria, MTN’s biggest market, rose only “marginally” to 57.2 million in the quarter ended March 31, data revenue in local currency rose 21 per cent.
At the end of last year, 15 per cent of MTN Nigeria’s revenue came from data, Ikpoki disclosed.
“Voice is getting cheaper and people are now using more data. Will it ever overtake? It probably will, but it’s going to be a long way, because a lot of people in this country still haven’t made a phone call.”
