Nigeria’s telecommunications sector, a cornerstone of the country’s digital economy, continues to demonstrate remarkable growth while grappling with mounting economic challenges that threaten its sustainability. As of the fourth quarter of 2024, telecom accounted for 14.4% of Nigeria’s Gross Domestic Product (GDP), reflecting its pivotal role in the country’s evolving digital landscape.
The sector’s impressive expansion is the result of two decades of liberalisation and investment, particularly following the tenure of Ernest Ndukwe, who led the Nigerian Communications Commission (NCC) from 2000 to 2010. Under his leadership, Nigeria experienced what became known as a “Telecommunication Revolution,” marked by full market liberalisation, foreign direct investment, GSM licensing, and a surge in teledensity. Today, mobile subscriptions have soared from under 300,000 in 2001 to over 169 million in 2025.
Beyond financial contributions, the sector has been instrumental in promoting financial inclusion and employment. Mobile money services have helped expand financial access from 56% in 2020 to 64% in 2023, while the industry supports an estimated 2.3 million direct and indirect jobs. Broadband penetration has also made significant strides, reaching 48.15% by May 2025, though notable disparities between urban and rural areas remain.
Yet, beneath this growth lies a sector straining under severe macroeconomic pressures. Nigeria’s prolonged economic instability has exposed telecom operators to skyrocketing operational costs driven by foreign exchange shortages, naira devaluation, and spiralling inflation, which reached 33.88% in October 2024.
With 70% of telecom equipment imported, the shortage of foreign currency has made procurement and maintenance prohibitively expensive. Compounding these difficulties is Nigeria’s unreliable power supply, which forces over 40,000 base stations to rely on diesel-powered generators. The price of diesel has quadrupled in recent years, climbing from ₦300 to ₦1,200 per litre, drastically increasing operational expenses by over 300%.
Operators also face relentless financial burdens in the form of multiple taxation. According to reports, over 41 different taxes are levied across various tiers of government, while high right-of-way charges continue to delay the expansion of network infrastructure. Widespread vandalism further exacerbates these issues, with Lagos State alone reporting ₦5 billion in damages in 2024 due to fibre optic cable cuts and equipment theft.
The cumulative impact of these challenges has eroded profit margins and deterred further investment in network expansion and service quality. MTN Nigeria, the sector’s leading operator, reported a 96% surge in operational costs in 2024, far outpacing its 30% revenue growth. As a result, operators have been left with little choice but to raise tariffs, breaking a decade-long stretch of price stability.
Speaking on the recent tariff hikes, MTN CEO Karl Toriola emphasised that the increases were not a matter of profit, but of “survival.” While crucial for keeping the industry afloat, these hikes have placed additional strain on millions of Nigerians already battling with rising food and fuel prices. The higher tariffs risk undermining the country’s strides towards digital inclusion, disproportionately affecting low-income users and small businesses that rely on affordable communication services.
Policy interventions over the years have delivered mixed outcomes. Isa Pantami’s tenure as Minister of Communications and Digital Economy (2019–2023) saw significant digital advancements, including the introduction of 5G. However, controversial initiatives like the National Identification Number (NIN)-SIM linkage, which led to a loss of 9 million subscribers, and the suspension of Twitter operations for several months, sparked considerable public backlash.
The current Minister, Bosun Tijani, appointed in August 2023, has prioritised innovation, digital job creation, and broadband expansion through initiatives such as the 3MTT programme and major fibre optic investments. However, policy implementation remains an ongoing challenge, particularly in enforcing the protection of Critical National Information Infrastructure (CNII).
Meanwhile, the NCC under the leadership of Aminu Maida, appointed in October 2023, is undergoing significant internal reforms aimed at promoting professionalism, data-driven decision-making, and strict regulatory compliance. While these reforms have been welcomed by telecom operators, they have faced resistance from within the commission itself, revealing internal tensions between entrenched interests and market-oriented reforms. Despite this, Maida enjoys strong backing from the presidency, signalling political will to support a merit-based regulatory environment.
At the legislative level, efforts are underway to review the Nigerian Communications Act (NCA) of 2003. The proposed amendments aim to modernise outdated regulations, eliminate overlaps, address high operational costs, and confront emerging cybersecurity threats. The successful overhaul of this framework is seen as critical to relieving financial pressures on telecom operators, potentially stabilising tariffs and ensuring a more sustainable, inclusive digital future for Nigeria.
As the sector moves forward, its stability rests on finding a delicate balance across three critical dimensions: effective and independent regulation, industry sustainability through realistic pricing and investment incentives, and safeguarding consumer affordability to prevent further widening of the digital divide.
In the face of rising operational costs, internal institutional struggles, and significant consumer burdens, Nigeria’s telecommunications industry stands at a crossroads. Its future will depend not only on policy intent but on the political will and institutional capacity to translate reforms into lasting change.
