Instability in the forex market is threatening Nigeria’s telecom industry as local operators struggle to import new equipment for network improvement and expansion as the dollar to naira exchange rate soars.
The Nigerian currency, the naira, slumped to N1,605.74/$1 at the official market despite several efforts by the Central Bank of Nigeria (CBN) to stabilize the foreign exchange market.
According to Mr. Gbolahan Awonuga, the Head of Operations at the Association of Licensed Telecommunications Operators of Nigeria (ALTON), the significant rise of the dollar from about N460 last year to over N1,600 this year has disrupted the operators’ plans for importing equipment.
Furthermore, the Chief Financial Officer of MTN Nigeria, Mr. Modupe Kadri, discussed the company’s infrastructure investment plans for this year, noting the difficulty in justifying new investments to shareholders due to the forex issue.
He stated, “The reality is that as a business, you continue to explore your options. We have a strict capital allocation framework that allows us to determine where we allocate our CapEx. However, the ultimate bottom line is the return to the shareholders.”
“Now, if there is no investment case due to the terrible macroeconomic conditions we face, it becomes challenging to justify the necessary investments at the governance level. Nonetheless, we have made significant investments in enhancing our 4G and 5G networks, and our fiber assets are also increasing,” he added.
Kadri also lamented the current instability in the country’s forex market, emphasizing the critical need for forex stability to enable businesses to plan effectively and mitigate the impact of forex fluctuations on their bottom line.
Also expressing concerns, the Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), Engineer Gbenga Adebayo, pointed out that the telecom sector in Nigeria requires increased investment to thrive.
