Rising operating cost fuels multinationals price hike

Cost of doing business for many multinationals in Nigeria is a battle most face, and has led many to increase prices to meet up with incurred expenses.

Nigerians have witnessed a hike in the price of goods and services in the last one year, some of which include electricity, telecom tariff, fuel, etc. And many other service providers have proposed price hike for DSTV and GOTV users.

The National Bureau of Statistics (NBS) recently released the country’s consumer price index (CPI) which showed rebased inflation rate decreased to 24.48 percent in January up from 34.48 percent last December.

The inflation rate which reached 34.8 percent in December 2024 had averaged 33.2 percent for the year, significantly impacting operational costs and consumer purchasing power.

MultiChoice, owners of DStv, GOtv, had earlier informed customers of the impending price review, set to take effect on March 1, 2025, attributing the adjustment to rising costs of delivering premium content. However it was met with an order to maintain current prices by the Federal Competition and Consumer Protection Commission.

In its latest financials, MultiChoice stated that in the rest of africa business, the group is implementing several initiatives to support improved financials, including price adjustments to counter the impact of inflation, renegotiating content deals where feasible, restructuring select packages to enhance ARPU, optimising the DTT network, and intensifying anti-piracy initiatives.

Similarly after a long battle with Nigeria Communication Commision telcos were allowed to review their price upward by 50 percent. The phone companies wanted to boost their revenue in order to cover rising costs.

For MTN the hike is meant to support “the ability of operators to continue investing in infrastructure and innovation, ultimately benefiting consumers through improved services and connectivity, including better network quality, enhanced customer service, and greater coverage.”

Latest results released by multinationals listed on the Nigerian Exchange Limited (NGX) reveal that rising cost of goods and services in 2024 ate into their profit, 68.5 percent higher than the previous year.

Some of these multinationals include MTN, Dangote cement, Nestle, International Breweries,Nigeria Breweries, PZ Cussons, Cadbury, Axa Mansard, Unilever, Beta glass, Total Energies, and Lafarge.

A cursory review of some of the full-year 2024 results published by some of Nigeria’s largest companies reveals higher input and operational cost on a year-on-year basis.

Read also: Multinationals exit Nigerian operations to limit FX exposure

These companies spent heavily on power, and raw materials. In the full year of 2024, the energy cost surged significantly across the country. Notably, the cost of diesel sold as high as N1300 per litre in some areas of the country, while some firms had to cut down on working hours to manage costs.

For instance, MTN Nigeria reported N1.5 trillion OPEX (operational expense) in 2024, representing an increase of 76.6 percent from N860.3 billion in 2023.

The increase in OPEX and cost of sales impacted the telcos’ profit before tax, which increased by 9.2 percent to N1.3 trillion from N1.2 trillion in 2023 despite a 36 percent increase in profit by 36 percent.

Overall, the company made a loss of N400.4 billion as a result of this and revaluation of foreign currency-denominated obligations resulted in a loss after tax of

Although not a multinational, the federal government has said that for electricity tariffs to reflect the actual cost of production, some Nigerians might need to pay over 65 percent of what they are currently paying for a kilowatt/hour of electricity.

Olu Verheijen, the special adviser to President Tinubu on Energy, was quoted saying that the current power tariff would rise by about two-thirds to reflect the cost of supplying it.

She said that the higher energy tariff is required to fund the maintenance necessary to improve reliability and attract private investors into power generation and transmission.

The move to raise tariffs for a third time comes amid mounting pressure from Nigeria’s debt-burdened electricity Distribution Companies (Discos) for tariffs to be cost-reflective so they can improve their finances.

High volatility of the naira, most of last year was another painpoint for these multinationals. The naira went from being the best performing currency to the worst performing currency, and went as high as N1800/per dollar last year.

Thid has led to the exodus of many multinational from Nigeria.