“Playing With Fire”: MTN Nigeria CEO Warns Nigeria On Plans To Implement 5% Telecom Excise Duty

The CEO of MTN Nigeria, Mr. Carl Toriola, has expressed concern regarding the latest proposal by the National Assembly to reintroduce a 5% excise tax on telecommunications and related services, such as gaming and betting, warning that such a move could critically damage the telecom sector in Nigeria, which is already grappling with significant financial challenges.

He likened the potential impact to the demise of the former national carrier, NITEL, highlighting that the industry is on the brink of collapse.

Background on the Excise Tax Proposal

The proposed 5% excise duty is part of broader efforts by the National Assembly to reform Nigeria’s tax system through a new “Nigeria Tax Act.” The legislative body aims to overhaul existing tax laws and consolidate various tax frameworks. However, this proposal has met resistance from stakeholders in the telecom industry, who argue that the sector cannot sustain additional financial burdens.

The excise tax had previously been exempted under former President Muhammadu Buhari, who argued that it would worsen the economic difficulties faced by Nigerians. In line with this, President Bola Tinubu issued an Executive Order upon taking office that suspended the tax, recognizing the financial strain it could impose on consumers and the industry.

“Something Drastic Will Happen” – Toriola’s Stark Warning

During a recent interaction with Cohort 3 of the MTN Media Innovation Programme (MTN-MIP) Fellows at MTN’s office in Ikoyi, Lagos, Toriola expressed his concerns about the reintroduction of the tax, warning that the lawmakers pushing for it are “playing with fire.” He emphasized that the sector, which contributes over 15% to Nigeria’s GDP, is being pushed toward a dangerous tipping point.

“Make no mistake about it, there is no way you’ll treat a sector that is adding over 15 percent to the GDP the way the telecom sector is being treated in Nigeria,” Toriola said.

He noted that the current financial state of the industry is dire, with operators struggling due to the severe devaluation of the naira and existing economic pressures.

Telecom operators’ attempts to review tariffs had been resisted by the Nigerian Communication Commission (NCC) on the grounds of the country’s current economic hardship.

Toriola also revealed that the companies are now dipping into their financial reserves to stay afloat, which he warned would not last much longer. Without a tariff adjustment, he said, the sector would face shutdowns, drawing a parallel to the collapse of NITEL, Nigeria’s former telecommunications monopoly.

“Some fundamentals have to change or something drastic will happen. MTN and the entire industry are in a dire situation,” Toriola stressed. “We are all making losses because of the naira devaluation. There should be no delusion. If the tariff doesn’t go up, we will shut down. Already, we are regressing the way of NITEL and it is a matter of time; the country could be without any telecom operator.”

USSD Debt Remains a Persistent Issue

Addressing another ongoing challenge in the telecom industry, Toriola provided clarity on the Unstructured Supplementary Service Data (USSD) debt owed by banks to telecom operators. He refuted rumors that the banks have been gradually settling the debt, disclosing that it has actually increased beyond N250 billion.

The USSD debt issue has strained relationships between the telecom and banking sectors for several years. Despite ongoing meetings between regulators—the Nigerian Communications Commission (NCC) and the Central Bank of Nigeria (CBN)—to find a resolution, the debt continues to grow.

Toriola noted that telecom companies would consider withdrawing USSD services to banks only as a last resort, should regulatory efforts to resolve the issue fail.

“Regulators of both sectors, the Nigerian Communications Commission, NCC, and the Central Bank of Nigeria, CBN, are constantly meeting to see a lasting solution,” he said.

Implications of the 5% Tax on the Telecom Sector

With the growing pressure from the country’s economic downturn, analysts and industry experts have warned that the proposed 5% excise tax would put the telecom sector in a precarious situation.

Although the NCC has resisted attempts at tariff review, analysts warned that the implementation of the excise tax will force telcos to increase tariffs. This they said is likely going to lead to higher service costs, which could be passed on to consumers, compounding the financial burden on a population already struggling with rising living costs.

Telecom operators like MTN, Airtel, Glo, and 9mobile have continuously invested in infrastructure to expand network coverage, despite facing high operational costs driven by factors such as diesel price increases, multiple taxation, and regulatory fees.

Moreover, the government has been reminded that the sector’s financial health is crucial, not only for telecommunications but also for the broader economy. The industry supports millions of jobs, including direct employment and ancillary services, and plays a vital role in driving digital transformation in Nigeria. In addition, the telecom industry has served as the country’s economic cash cow, particularly during COVID-19 – when the global economy took a hit.

Against this backdrop, telecom operators, industry experts, and consumer advocates are calling for the excise tax proposal to be reconsidered.