MTN Announces Plans To Increase Call Tariff

Byadulawo

May 3, 2024

MTN has announced plans to increase call tariffs to manage the effect of the challenging operating conditions in the country.

In a statement on Friday after its extraordinary general meeting, MTN said a major issue discussed at the meeting was the need to address its negative net asset position.

The telecommunication company said some initiatives have been put in place to accelerate revenue growth development, restore profitability and rebuild reserves to strengthen business resilience and boost shareholder returns”.
MTN stated that these interventions include regulated tariff hikes, adding that it will boost revenue growth and improve operational efficiency by driving margin recovery.

The statement reads: “Engagement with the authorities, through the industry body, on tariff increase to manage the effects of the challenging operating conditions.
“Importantly, appropriate tariff increases will be necessary to support continued investment and the long-term sustainability of the industry. This will support commercial interventions to accelerate topline growth.
“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.

“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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