MTN Nigeria To Adjust Call tariffs Amid Operational Challenges

• MTN Nigeria plans to adjust call tariffs in response to operational challenges.

• Initiatives include regulated tariff adjustments and reviewing tower lease contracts.

• The company seeks to mitigate macro risks, which include FX volatility, through strategic negotiations.

EKO HOT BLOG reports that MTN has announced its intention to adjust call tariffs in response to the challenging operational landscape in the country.

Following an extraordinary general meeting on Friday, the telecommunications giant highlighted the imperative to rectify its negative net asset position.

In a bid to expedite revenue growth, restore profitability, and fortify reserves for enhanced business resilience and shareholder returns, MTN has implemented various measures.

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Among these strategies are regulated tariff adjustments, aimed at bolstering revenue expansion and enhancing operational efficiency to drive margin recovery.

In a statement, MTN emphasized the importance of engaging with regulatory authorities, facilitated through industry representation, to navigate the effects of these challenging conditions.

The company underscored the necessity of tariff adjustments to sustain ongoing investment and ensure the industry’s long-term viability, thereby facilitating commercial initiatives to spur top-line growth.

Call tariffs

“MTN Nigeria is focused on reducing the various exposures the business has to US$ volatility.

“One key area is the company’s outstanding letters of credit (LC) obligations, which contribute to the volatility in its earnings through FX losses reported in the company’s income statement.

“These obligations were incurred in support of capex requirements which are largely foreign currency denominated.

“In this regard, the company has utilised the improved liquidity in the FX market to reduce the balance of outstanding LC obligations to US$243.4 million as at 31 March 2024, from US$416,6 million as at 31 December 2023.

“This was funded using restricted cash balances held in Naira to support LC obligations.

“As CAPEX is optimised, these balances will be minimised and the company will continue to deploy resources to reduce these US$ obligation exposures.”

The company said another initiative put in place is to review tower lease contracts with key towerco service providers regarding changes to the existing tower lease contracts.

MTN Nigeria said it believes these aforementioned initiatives will go a long way to accelerate the recovery profile of the company’s earnings and restore its net asset position faster.

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“If successful, these negotiations could result in improvements that will help the company to mitigate macro risks impacting its business, including FX,” It added.

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