Stakeholders in Nigeria’s telecommunications industry are projecting increased investment in 2025, fueled by the relative stability observed in the foreign exchange (forex) market toward the end of 2024. Industry leaders believe that the era of extreme forex volatility may have passed, offering a more predictable environment for business planning.
Impact of Forex Stability on Investments
According to the President of the Association of Telecommunications Companies of Nigeria (ATCON), Mr. Tony Emoekpere, the sector has been grappling not only with the Naira’s declining value but also with the unpredictability of exchange rates, which made strategic planning difficult. Emoekpere noted that the recent stability within a defined range has given telecom operators a foundation to plan, thereby attracting new investments.
Echoing this sentiment, MTN Nigeria’s CEO, Mr. Karl Toriola, expressed optimism, stating that while a gradually declining currency is manageable, the key is maintaining stability. He emphasized that operators can adapt and find efficiencies as long as currency fluctuations are minimal.
Challenges of 2024
The telecom sector faced significant challenges in 2024, as the exchange rate rose from approximately N460 per dollar in 2023 to over N1,600 per dollar. This volatility disrupted operators’ plans, particularly for importing equipment and securing additional funding. The Head of Operations at the Association of Licensed Telecommunications Operators of Nigeria (ALTON), Mr. Gbolahan Awonuga, highlighted that these challenges strained the industry’s ability to sustain operations.
Digital Reality CEO, Engr. Ikechukwu Nnamani, explained how currency fluctuations drastically impacted data center operations. He noted that Naira depreciation altered business projections, reducing service revenues in dollar terms despite stable customer demand.
Factors Driving Optimism for 2025
Economic analysts, including Dr. Muda Yusuf of the Centre for the Promotion of Private Enterprises (CPPE), share the industry’s optimism. Yusuf attributed the forex stability to regulatory reforms, Central Bank of Nigeria (CBN) interventions, and improved foreign reserves, which currently exceed $40 billion. He also pointed to inflows from diaspora remittances, a $2 billion Eurobond, and the expected contributions of domestic projects like the Dangote and Port Harcourt refineries.
Looking Ahead
While telecom operators welcome the anticipated forex stability, they are also seeking regulatory approval from the Nigerian Communications Commission (NCC) for tariff adjustments. A proposed 100% increase in data and voice service charges aims to offset rising operational costs. However, whether the regulator will approve such increments remains uncertain, given the current economic climate and the financial strain on consumers.
Conclusion
The relative stability in Nigeria’s forex market provides a foundation for potential growth in the telecommunications sector. If sustained, it could bolster investor confidence and drive the expansion needed to strengthen the country’s digital infrastructure.
