Nigeria’s telecommunications sector is grappling with a substantial decline in average revenue per user (ARPU), diminishing the market’s attractiveness to major telecom operators.
As of the end of 2024, the ARPU had fallen by 38.79% year-on-year to $1.89, down from $3.08 in 2023.
The continuous deterioration of the naira against the dollar stands as the main reason behind this decline.
A major devaluation in June 2023 caused the naira to decline by 70 percent which reduced its value from N470/$ to N1,528/$.
The strong currency depreciation hits the financial performance of domestic businesses negatively which results in historical records of losses.
MTN Group and Airtel Africa together with other multinational telecom operators have traditionally earned significant revenues from their Nigerian operations.
Investor dividends from Nigeria have decreased while the country has dropped down the earnings rankings since the recent currency volatility occurred.
MTN Group operates MTN South Africa as its leading revenue-generating business since MTN Nigeria lost this position.
During the fourth quarter of 2024 MTN Nigeria achieved its best-ever revenue total of N3.36 trillion but its ARPU decreased to $2.17 which marked a 35.42% drop compared to $3.36 in the corresponding period of 2023.
The Airtel Nigeria ARPU dropped to $1.60 in December 2024 representing a 75% decrease from its previous level of $2.80 during the same time in 2023.
Airtel Africa demonstrates weakened profitability performance in Nigeria based on its current ARPU figure being lower than the regional average of $2.60.
Airtel Nigeria suffered reduced revenue by 40.34% in the nine months ending December 2024 which decreased to $738 million.
The Global System for Mobile Communications Association (GSMA) observes Nigeria’s mobile industry financial outcomes have decelerated during recent times even though it experienced constant development during a lengthy period.
The dollar-denominated expenses have become unwieldy for operators thus reducing network investments and causing service quality decline in 2024.
Nigerian Communications Commission (NCC) approved higher tariffs by 50% to make up the difference between costs and revenue.
The NCC provided an explanation that increased rates would enable service providers to invest in modernization while delivering better connections to their consumer base.
The telecom operators predict that higher prices will generate additional revenue and fund upcoming investments though consumer costs remain a point of concern.
CEO Bismarck Rewane from Financial Derivatives Company warned that higher tariffs would increase operator revenue but users might decrease their consumption because of new pricing schemes.
The declining value of the naira created substantial negative effects on Nigeria’s telecommunications sector by decreasing ARPU and making operating profits more difficult for major operators to achieve.
Telecommunications companies are addressing these market challenges through strategic shifts together with their tariff readjustments to maintain consumer satisfaction.
