9mobile CEO, Obafemi Banigbe, has called for the strengthening of the Nigerian telecom industry by injecting funds for infrastructure development, proposing increase in call and data tariff as a means on funding.
Speaking on the prospects in the industry and its critical place in the economic growth of the nation, Banigbe said: “The telecom industry is a critical enabler of economic growth, but we are facing unprecedented challenges. We must find a balance between affordability and sustainability to ensure the industry remains viable and continues to provide quality services to Nigerians. The current situation has not achieved that balance, which is why we are having this conversation about sustainability,”
According to him, the industry is facing significant challenges, including macroeconomic headwinds, rising operational costs, and declining profitability. He emphasized that these challenges threaten the industry’s sustainability and ability to invest in infrastructure and quality of service.
“As you can imagine, both our capital and operational costs have risen dramatically, mainly because many of these costs are denominated in foreign currency or indexed to it, while our revenues are in local currency.
He referenced the free fall of the Naira against the dollar, which was previously around 400 to 450, but is now officially surpassed N1,500 to a dollar —representing a nearly 350% increase in just the past two years.
This foreign exchange devaluation, the 9mobile boss said, has caused operational costs to surge. “Even though the industry is seeing growth in top-line revenue, the increase in local currency revenue has not kept pace with the rising cost base,” he explained.
Drawing from 9mobile’s experience, he pointed out that a lack of investment in recent years has led to a decline in service quality, causing customers to switch to competitors that offer better quality.
He stressed that this situation poses a significant threat to the industry’s sustainability.
“What we are saying is that every business must generate enough revenue to cover its costs and allow for reinvestment into the business. If we fail to generate sufficient revenue, we will have no choice but to borrow, either from shareholders or the capital market.
“Over the past two years, this is what many of us have been forced to do. However, this is not sustainable in the long term, as it will eventually become impossible to continue borrowing without a clear plan for repayment,” he posited.
Banigbe’s comments come as the telecom industry tries to navigate the complexities of a proposed tariff hike. While some stakeholders have expressed concerns about the potential impact on consumers, others have argued that the hike is necessary to ensure the industry’s long-term sustainability. He said that if the sector does not remain viable, customers will not receive the services they expect.
