Doing business in Nigeria is expensive — MTN

Ernest Ndukwe,
NCC Vice ChairmanSOUTH Africa’s mobile phone operator, MTN, said, on Wednesday that the strong depreciation of Nigeria’s naira against the dollar had increased the cost of doing business at its Nigerian unit.

MTN took out a loan worth $2 billion from a consortium of banks early last year to expand its mobile network in Nigeria, with 80 per cent of the funds paid out in naira.

The naira shed more than 20 per cent of its value against the US dollar at the start of the year largely because of declining world oil prices, the main source of foreign earnings in Africa’s top oil producer.

“We didn’t anticipate the depreciation of the naira. A lot of the investments we are now buying are in US dollars,” Christian de Faria, vice president of MTN’s West and Central Africa operations, said.“We have to reduce our exposure on the financing. We are trying more and more to buy in naira and convince our suppliers to make deals in naira,” he said on the sidelines of an industry conference in the capital Abuja.

The naira is officially trading at around 148 to the dollar, while in the parallel market the greenback is valued at around 168 Naira.

Faria said he expected the naira to stabilize with the real and parallel markets converging at around 150 naira to the dollar, which he said would make life more manageable.

MTN hopes to add six million new subscribers in Nigeria this year, from a current 25 million in Africa’s top mobile market.

Africa’s most populous country has more than 62 million subscribers, overtaking South Africa as the biggest market, according to the Nigerian Communications Commission.

MTN’s main competitors in Nigeria are Zain, previously known as Celtel and owned by Kuwait’s Mobile Telecommunications Company and Globacom, a privately owned Nigerian firm.