African telcos struggle with balancing financial sustainability with growth

It is one thing is for African telcos to post “big” earnings; it is another if it’s enough to accommodate their operational cost and infrastructural upgrades. When revenue is not sustainable, they turn to either increase tariffs, reduce capital on less yielding areas or reduce their entire investment. 

African telcos, especially between 2024 and 2026, navigated a complex “collision” between the need for high capital expenditure (CAPEX) to expand infrastructure and the pressure to keep services affordable for a largely low-income user base. 

MTN Nigeria, in its 2025 report said that it spent N1 trillion on infrastructure upgrades. This is more than two-fold of the N443.5 billion spent in 2024. This was made possible by the 50% tariff hike approved by the Nigerian Communications Commission (NCC), which in turn resulted in a massive earnings turnaround for telcos.

The scenario reveals one thing: African telcos cannot balance high operational costs with affordable pricing for subscribers. It’s an inverse relationship. 

Recall that in October 2024, MTN Nigeria’s CEO, Karl Toriola, raised the alarm that if tariffs are not adjusted, telcos will shut down due to rising operational costs that threaten the sector’s profitability.

At that time, the company was set to report a N400.4 billion annual loss. 

With subscriber base expansion comes the need to spend more on telecom equipment. But telcos have always explained that the returns that come from every single customer addition are lower than the extra cost they spend on infrastructure.

So, an increase in voice and data costs is always recognised as the last resort.

Recently, Telkom raised its tariffs in South Africa, after citing the need to maintain service quality amid rising operating costs and broader macroeconomic factors. The 2.6% to 8% range of increase represents Telkom’s market survival activator.

What about the users’ affordability?

Most times, the spending capacity of users is given the least consideration. They bear the highest burden.

“You can’t solve this by raising prices. The users can’t afford it,” said Dawid Mielnik, General Manager of Telecoms at Software Mind, urging telcos to explore other alternatives.

A sudden change in voice and data price offset a subscriber’s cost of living. Spending more on data means spending less on other necessities if wages remain unchanged. 

In a continent faced by a high rate of low-income earners and inequality, raising the prices of products might mean depriving some users from consuming the service. World Bank data shows that 464 million people in Sub-Saharan Africa are living in extreme poverty as of 2024. 

To balance earnings with users’ affordability, Dawid suggests that telcos should reduce the cost of operation. This doesn’t mean offsetting service quality, but exploring other alternatives. 

He proposed three solutions. 

One. Telcos should explore the possibilities of sharing tower infrastructure rather than building their own or managing telecom towers. This reduces capital expenditure, increases efficiency and improves coverage.

Dawid added that “tower sharing is the model with the best track record, and Africa adopted it earlier than most”, which can then spread to sharing active network equipment in rural areas. 

Two. Automating network operations to reduce headcount dependency. Dawid suggests that using software to optimise telecom networks reduces the need for manual human intervention. Aside from being a cost-saving measure, it helps solve network issues with automation.

Three. Rolling out 5G to business customers first, where the revenue justifies it, before going mass-market. This includes focusing on individuals who can afford the premium cost of 5G deployment, its high internet and low-latency ability.

Also Read: MTN, Safaricom in world’s top 10 strongest telecom brands.

Shift to mobile money to offset cost 

To diversify their revenue beyond voice and data, telcos have been expanding into mobile money services. 

MTN’s MoMo, Airtel’s Smartcash, Vodacom/Safaricom’s M-PESA, Orange’s Orange Money, Telkom’s T-Kash, Ethio Telecom’s Telebirr, and other help telcos leverage their customer base and infrastructure to bridge financial inclusion. 

The strategy has worked for telcos in some countries, while it’s crawling in others. For instance, M-PESA is struggling outside Kenya. MTN’s MoMo and Airtel’s Smartcash are still behind in the Nigerian competitive mobile money/fintech market. 

While the diversification is targeted at improving their revenue and spreading infrastructure, Dawid noted that telcos must be strategic about the mobile money business.

Reacting to using mobile money for cost offset, Dawid said “It can work,” but warned that telcos must not treat it as a “copy-paste model” where they adopt the operational style of a product or country to another. 

“Mobile money is a real opportunity, but it takes time, regulatory licensing, and patient capital,” he added. 

Currency volatility 

Another core issue with balancing earnings with infrastructure upgrades is the dollar-to-local-currency exchange. 

From 2024 to mid-2025, businesses, including telcos, experienced a significant drop in earnings due to unfavourable currency volatility, thereby affecting their profitability and investments. In 2024, the naira against the dollar averaged N1,535/$1 compared to 2025’s N1,436/$1. Kenyan shilling averaged KSh154/$1 in 2024, while it averaged at an exchange rate of KSh130/$1 in 2025.

However, with or without an unfavourable exchange rate, African telcos operate in a fragile trading condition.

For instance, telcos buy equipment in dollars, pay for spectrum in dollars, but collect revenue in naira, cedi or as the case might be. When local currencies depreciate, telcos get hit hard. 

To neutralise this threat, Dawid advised African telcos to always borrow in local currency where available and “shift more investment toward software rather than hardware.” He also said they should grow the core of revenue streams from local services, such as data, calls and mobile money.

Also Read: How Africa lost $1.12 billion to govt-imposed internet shutdowns in 2025.

Navigating complex market conditions with offering affordable costs, African telcos must diversify revenue streams. This holds the key to sustainability and how well they can expand their capital base.

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