FOREX CRISIS: MTN NIGERIA HAS LESS MONEY TO INVEST ON INFRASTRUCTURE

The extended foreign exchange crisis in the country has, according to MTN Nigeria's Chief Financial Officer, Mr. Modupe Kadri, caused the business's fixed capital expenditure in Naira to lose value. As a result, the company has less money to spend in infrastructure.

In a rare interview, Kadri disclosed this. According to him, the devaluation of the Naira affects all telecom operators because most of them receive their earnings in Naira and their expenses are mostly in dollars. Now all you need to do is cut your coat to match your attire. Our time is unlike any other. Because our CAPEX is fixed in Naira from a governance perspective, the depreciation of the Naira would leave you with less money to spend.

But this is not the first time we have faced difficulties—COVID was another in 2017 and this one in 2023–2024. All we have to do is get back on track, set priorities, and concentrate on what really counts, he said.

REASONABLE TELECOM SERVICE PRICES

In reference to the mandate for fair pricing of telecommunications services, Kadri said that the country's telecom service providers are communicating with the industry watchdog to guarantee that the industry can establish rates high enough to cover those continuous costs.

If it was not allowed to happen, he said, the operators would quickly run out of money to invest in more infrastructure.

“We are moving forward at this time, but that is where the problem will lie down the road. Nobody predicted that we would acquire a 5G license, but we did.Last year, the percentage of the population served by 5G increased from 3% to 11%. That investment alone is worth more than $120 million. Kadri said, ”We made those investments because they are necessary to build resilience or to carry the kind of traffic that we see on our network.

THREATS TO ADDITIONAL INVESTMENTS

The CFO of MTN stressed the importance of reasonable pricing and said that the issue affects the telecom sector as a whole, not only MTN. He asserts that in order to ensure the survival of the ecosystem, the government must enact the appropriate legislation.

We make capital-intensive investments because we are an essential provider of the nation's infrastructure; therefore, in order to sustain what you already have, you must keep making new investments. If there is no business reason for an investment, people will suddenly refuse to make it or be unable to. What effects will this have on the infrastructure if it is the case？ It deteriorates and diminishes. That's exactly what happened with the oil industry—we suddenly needed those investments but couldn't get them after years of delay. He insisted, “We have to learn from that.”

WHAT IS FOREX

The foreign exchange market is a decentralized, global over-the-counter marketplace for currency trading. This market determines the foreign exchange rates for every currency. It includes all aspects of buying, selling, and exchanging currencies at current or set rates.

The main participants in this market are the larger multinational banks.

Except on weekends, financial hubs all around the world serve as anchors for trading between a variety of various types of buyers and sellers. Since currencies are typically exchanged in pairs, a currency's relative value is determined by its market price when paid for with another currency, not by its absolute value.