Telcos Slash Capital Expenditure Amidst Financial Strain, Threatening Network Quality

Cash Crunch Forces Telecom Companies to Reduce Spending, Heightening Concerns Over Connectivity

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Telecommunication companies in Nigeria are cutting back on capital expenditure due to financial losses, potentially worsening network quality, experts warn.

Major telcos like MTN Nigeria and Airtel reported significant losses in 2023, attributing them to naira devaluation and economic downturn. As a result, they plan to reduce capital expenditure and rely more on existing infrastructure.

The reduction in capital expenditure raises concerns about declining network quality, already a major issue in the country. The move may exacerbate connectivity challenges faced by Nigerians.

The telecom sector faces various challenges, including insecurity, high operating costs, and taxation. To address these issues, telcos are considering raising tariffs, while experts suggest regulatory changes to promote sustainable investment.

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The Nigerian government acknowledges the challenges but emphasizes that tariff hikes alone won’t solve the sector’s problems. It aims to create a conducive business environment for investors while actively engaging in tariff discussions.

To improve connectivity, the government plans to deploy additional fiber optic cables. However, achieving broadband penetration targets is at risk due to the current financial strain on telcos.

The telecom sector’s financial challenges highlight the need for a balanced approach to address issues and sustain investment. Regulatory reforms and government support are crucial to ensuring the sector’s viability and improving network quality for all Nigerians.

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