Telecoms struggle as revenue per user rops by 41%”

The average revenue per user (ARPU) fell 40.87 percent to $1.85 in Q3 2024 from $3.12 in the same period the previous year, indicating a severe decline in the financial performance of Nigerian telecom businesses.

Given that telco revenues are still being squeezed by inflation and rising exchange rates, this fall emphasizes the negative effects of the weakening naira on the sector.

With an ARPU of $5.03 in Q1 2023, MTN Nigeria was the top-performing MTN Group company. However, in Q3 2024, its ARPU dropped to $2.09. From a $3 ARPU in 2023 to just $1.60 in the third quarter of 2024, Airtel Nigeria likewise saw a steep decline.

Airtel Nigeria reported a 46.87 percent loss in revenue to $755 million, while MTN’s service revenue increased by 33.6 percent in naira but saw a steep decline when converted to dollars. These declines have had an impact on the revenue growth of both firms.
Telcos have suffered significant foreign exchange losses as a result of the depreciating naira, which has been made worse by the Central Bank of Nigeria’s unification of the foreign exchange market in 2023. This has led to record-high inflation and increased operating expenses in Nigeria.

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Energy prices are skyrocketing—diesel prices have increased by 90%—and telecom companies’ finances are under increasing strain. In the first nine months of 2024, MTN’s operating costs increased by almost 96%, and Airtel has seen a comparable strain.
In response, both businesses have reduced their capital expenditures; MTN has done so by about 28%, while Airtel has done so by more than 36%. Telcos are investigating renewable energy sources and renegotiating agreements with tower providers to lessen their reliance on pricey diesel in an attempt to offset growing expenses.

Industry insiders caution that telecom companies might still experience financial difficulties if they don’t implement significant price increases or change their operational approaches. Karl Toriola, the CEO of MTN Nigeria, stated that pricing is essential for survival, highlighting how urgent it is that the industry handle the mounting financial pressure.