Stakeholders in Nigeria’s telecommunications sector are anticipating increased investments in 2025, buoyed by the relative stability recorded in the foreign exchange (forex) market towards the end of 2024.
Industry leaders believe that the worst of last year’s forex volatility is over, paving the way for improved planning and growth.
The instability in the forex market, rather than the declining value of the Naira, was highlighted as the primary challenge for telecom operators in 2024.
This volatility disrupted financial planning and hindered investment decisions. Towards the end of the year, the official exchange rate at the Nigerian Foreign Exchange Market (NFEM) stabilized between N1,535 and N1,538 to a dollar.
Similarly, the parallel market rate steadied at an average of N1,650 to N1,655 to a dollar.
The President of the Association of Telecommunications Companies of Nigeria (ATCON), Mr. Tony Emoekpere, emphasized the importance of sustained forex stability.
“The main issue with the forex is the instability. In the last few months, we have seen some stability. Now that we have a kind of range—almost like a top and bottom ceiling—I think it’s enough for any organization to plan and help us attract more investments,” he said.
Echoing this sentiment, the CEO of MTN Nigeria, Mr. Karl Toriola, projected a more stable forex environment in 2025.
Reflecting on 2024’s challenges, he stated, “I don’t expect any repeat of the kind of volatility we experienced last year, which was driven by the move towards a more liberal foreign exchange market.”
Toriola noted that while a gradually declining currency is manageable, stability is crucial for effective adaptation and operational efficiency.
The rapid depreciation of the Naira in 2024, from approximately N460 to over N1,600 per dollar, disrupted operators’ plans for equipment imports and hindered access to additional funding.
Mr. Gbolahan Awonuga, Head of Operations at the Association of Licensed Telecommunications Operators of Nigeria (ALTON), stated that many operators struggled to generate returns amid the forex turmoil.
From a data center perspective, Engr. Ikechukwu Nnamani, CEO of Digital Reality, outlined the challenges of pricing services amidst forex instability.
“If you benchmark pricing at N1,500/$1 and the Naira depreciates to N2,000/$1, your revenue in dollar terms drops significantly. This throws your entire business case into disarray, despite having a strong customer base and sound metrics,” Nnamani explained.