Business
MTN Spikes On Good News About Price Increases
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MTN spikes on good news about price increases
By Aremu Adebayo
MTN’s share price increased by more than 10% on Monday, fueled by positive news about price increases in Nigeria.
MTN has been lobbying the Nigerian Communications Commission (NCC) to approve big price increases in the country.
MTN Nigeria wants to increase prices by 100% to cover operational costs and fight against inflation.
The Nigerian economy is facing significant challenges, including a weak currency, high inflation, and fluctuating exchange rates.
Telecommunications operators have faced large input cost increases for diesel to generate power and telecommunications equipment linked to hard currencies.
Nigeria’s increased costs and weak currency have seen these companies suffer financially with declining revenues and profits.
MTN Nigeria chief executive Karl Toriola said 2024 has been a torrid year for telecommunications operators in that country.
He said the rapid currency devaluation and inflation have driven up the operating cost of MTN Nigeria nearly three-fold.
“By the end of the last year, we were spending more to keep our network operating than what we received in revenue,” he said.
To address these challenges, MTN wants to increase prices by 100% and has been lobbying the relevant authorities to get approval.
He warned that failing to allow higher tariffs could jeopardise the Nigerian telecommunications industry’s survival.
Nigeria’s Minister of Communication, Innovation, and Digital Economy, Bosun Tijani, recently confirmed that prices will increase.
However, while tariff increases will be approved for calls, SMS, and data, they will not be 100% MTN, as requested.
The market welcomed the news, and MTN’s share price increased by over 10% on Monday, 15 January 2025.
Steven Schultz from Momentum Securities explained that Nigeria is an essential market for MTN, representing roughly a third of its revenue.
He said there is uncertainty about the size of the price increases and how consumers will respond.
“Consumers are under pressure and higher prices mean lower usage. However, this is a step in the right direction,” he said.
