Amid the ongoing debate surrounding the proposed tariff increase by telecommunications companies, 9mobile’s Chief Executive Officer, Obafemi Banigbe has weighed in, emphasising that the telecom sector has been a key contributor to Nigeria’s GDP and a cornerstone of the nation’s digital economy over the past two decades.
He noted that the growth experienced in the industry had attracted significant capital inflows, both from foreign and local investors, which were directed toward expanding coverage in underserved areas, increasing capacity, and enhancing service quality, ultimately improving the user experience.
Banigbe highlighted the severe challenges posed by the current macroeconomic climate, particularly inflation and currency devaluation. “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. For instance, the Naira, which was previously around 400 to 450 per United States dollar, has now officially surpassed 1,500 — representing a nearly 350 per cent increase in just the past two years. This foreign exchange devaluation has caused our 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.
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.”
While acknowledging the various arguments against a tariff increase, Banigbe underscored the importance of ensuring the survival of the industry. He explained that if the sector does not remain viable, customers will not receive the services they expect. 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.
Banigbe further said that the key challenge is finding a balance between affordability and sustainability, ensuring that the industry remains viable and capable of generating sufficient cash flow to cover costs and support reinvestment. “The current situation has not achieved that balance, which is why we are having this conversation about sustainability”, he said
