MTN Nigeria is growing fast. But keeping that growth powered is getting more expensive.
About 95% of MTN Nigeria’s network still relies on diesel generators, according to MTN Group President and CEO Ralph Mupita. Only about 5% is connected to the electricity grid.
That dependence is becoming a major financial issue.
Energy now represents more than 30% of MTN Nigeria’s operating expenses, with diesel accounting for most of the cost, Mupita said during the company’s presentation of its six-month results for the period ended June 30, 2026.
And the pressure may not have peaked yet.
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Diesel increases can take months to show up
MTN Nigeria’s energy costs do not immediately track changes in diesel prices.
The company’s contracts are structured around the average diesel price recorded in the preceding quarter. That creates a built-in lag between a fuel-price increase and its impact on reported expenses.
So the higher prices recorded in the second quarter are expected to feed into third-quarter costs. Higher third-quarter prices would then affect the fourth quarter.
In practical terms, one quarter’s fuel shock can keep affecting MTN’s margins well into the next one.
That matters because diesel prices rose alongside higher global oil prices during the period, adding another layer of cost to an operation already heavily dependent on generators.
Data demand is rising at the same time
The energy squeeze comes as MTN continues spending aggressively to expand network capacity.
Nigeria remains one of the group’s key growth markets, with customers consuming increasingly large amounts of mobile data.
During the first quarter, MTN added 2.7 million customers on a net basis, while average data consumption reached 14.8GB per customer.
That demand is forcing continued investment in the network.
MTN said its capital intensity in Nigeria exceeded 20% during the period as it expanded mobile capacity and pushed further into home connectivity.
The company is targeting that market through a combination of:
- Fixed wireless access
- Fibre connectivity
- Expanded mobile-network capacity
The growth opportunity is substantial. So is the energy challenge.
Every new network site and every additional piece of equipment creates another load that needs reliable power. When that power comes predominantly from diesel generators, network expansion can also increase the cost base.
MTN expects Nigeria to remain at the lower end of its margin range
Despite the cost pressure, MTN remains bullish about the Nigerian market.
Mupita pointed to continued customer growth, strong data consumption and improving macroeconomic conditions during the period. He also said naira stability and foreign-exchange liquidity at prevailing rates were not creating major operational difficulties for the business.
But diesel remains a significant constraint.
MTN expects Nigeria to remain within its existing medium-term guidance for service revenue and EBITDA margin. However, management now expects performance to sit towards the bottom of the EBITDA margin range because of elevated energy costs.
That lower end is approximately 53%.
The implication is important: MTN is still seeing growth, but a larger share of that growth is being absorbed by the cost of powering the network.
Airtime advance adds another drag
Fuel is not the only issue weighing on MTN Nigeria.
The company also suffered a revenue setback after Nigeria’s competition authorities ordered the suspension of its airtime advance service in April.
MTN subsequently reduced its airtime-advance customer base to roughly one-quarter of its first-quarter level, according to Mupita.
The disruption affected April, May and June revenue and contributed to weaker service-revenue performance during the quarter.
There is, however, a potential recovery ahead.
MTN later received approval to begin restoring the airtime-advance service through four vendors. Management expects the move to support recovery during the second half of 2026.
But a full rebound will take time.
The new vendors need to establish operating experience and optimise their systems before the business can return to previous performance levels.
AI could help reduce the power bill
MTN is also looking beyond traditional cost-cutting.
The group is increasingly using artificial intelligence to improve operational efficiency, including efforts to reduce the amount of electricity consumed at network sites.
In South Africa, MTN conducted a proof of concept in the Western Cape using AI to optimise power consumption. Management described the results as successful and plans to expand the approach nationally.
The broader efficiency programme is expected to run for two to three years, reflecting MTN’s focus on changing the underlying cost structure rather than relying solely on short-term spending cuts.
For Nigeria, that strategy could become particularly valuable.
When almost the entire network depends on diesel generation, even modest improvements in power efficiency can have a meaningful effect on operating costs.
The bigger challenge: turning growth into profit
MTN Nigeria has several powerful growth drivers working in its favour: more subscribers, heavier data usage and rising demand for home connectivity.
But the economics of that growth are becoming more complicated.
The company has to expand network capacity to serve customers. That expansion requires more equipment. More equipment requires more power. And with 95% of the network running on diesel generators, higher fuel prices can quickly erode the financial benefit of stronger demand.
That leaves MTN facing a difficult balancing act.
Nigeria’s connectivity market is growing. The question is how efficiently MTN can power that growth.