Nigeria’s Telecom Sector Faces $870m Investment Shortfall Amid Tariff Delays
Nigeria’s telecommunications industry is on the brink of a significant investment shortfall, with capital expenditures projected to plummet by $870 million by 2026 due to a prolonged delay in tariff adjustments, according to an internal document from MTN Nigeria.
The document revealed that in 2022, telecom operators in Nigeria invested $1.41 billion in capital projects, a figure that dropped to $1.16 billion in 2023. The decline is expected to accelerate, with investments projected to hit just $470 million in 2025 and remain at $500 million in 2026—marking a staggering 61% drop from 2022 levels.
At the heart of this downturn is an 11-year delay in tariff increases, which telecom firms argue has constrained their ability to finance network expansion, technology upgrades, and service improvements. With operational costs soaring due to inflation, foreign exchange volatility, and rising energy expenses, industry stakeholders warn that further stagnation could undermine service quality nationwide.
In a bid to arrest the decline, the Nigerian Communications Commission (NCC) recently approved a 50% tariff hike—the first adjustment in over a decade. The increase, set to take effect from February 2025, is expected to provide much-needed relief for operators struggling to maintain infrastructure investments.
MTN Nigeria and Airtel Africa, two of the country’s largest operators, have already signaled plans to scale back network investment in response to mounting financial pressures. Both companies, in their financial statements for the nine months ending September 2024, cited the adverse impact of foreign exchange losses and economic instability as key reasons for the retrenchment.
Gbenga Adebayo, Chairman of the Association of Licensed Telecom Operators of Nigeria, warned that the sector’s reluctance to commit new capital to infrastructure could have far-reaching consequences.
“If you don’t invest in a sector, you can’t talk about quality of service; you can’t talk about the right pricing. The government must step in, and the time is now,” Adebayo said in an interview last year.
With telecom firms bracing for further economic headwinds, industry analysts say the coming months will be critical in determining whether the tariff increase can offset the years of underinvestment or if Nigeria’s telecom infrastructure will continue its downward spiral.
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