MTN Nigeria will prioritise securing its core telecommunications business before allocating additional capital to new digital ventures, including fintech and artificial intelligence, as it weighs the cost of improving network quality against opportunities for growth beyond connectivity.
Karl Toriola, chief executive officer of MTN Nigeria, said the company must first ensure its existing network business is adequately funded before determining how much capital can be committed to other opportunities.
“We must first anchor and secure that business. Then you ask yourself, how much do I have left and what is the scale of the opportunity for the other businesses?” Toriola said in Lagos.
This highlights the investment trade-offs facing the telecommunications operator as it explores new sources of revenue while maintaining the infrastructure that supports its existing services.
For MTN, the challenge is balancing spending on fibre, base stations and network quality with investments in businesses that could generate additional growth but may take years to deliver substantial cash returns.
Toriola said three factors shape the company’s ability to fund new opportunities which are access to capital, shareholders’ expectations for cash generation and the time required for investments to pay off.
Although MTN generally has access to capital, he said, shareholders expect the company to generate cash, making it difficult to balance the relatively faster returns from conventional telecommunications services with the longer investment cycles associated with newer businesses.
He cited fintech as an example, saying such businesses can require six to 10 years of investment before generating significant cash.
The company must therefore assess whether an opportunity offers sufficient potential to justify the resources committed to it without weakening its existing operations.
“There’s no perfect answer,” Toriola said, describing the allocation of capital between connectivity and newer businesses as one of the major issues MTN’s board considers each year.
Growth beyond connectivity
MTN’s interest in adjacent businesses reflects the need to identify new sources of growth as expansion in its traditional telecommunications market eventually slows.
Toriola said companies must look towards industries that complement their existing assets and capabilities to sustain growth over time.
Financial services emerged as one of such opportunities for MTN across Africa. However, he said the company’s entry into Nigeria’s financial services market faced resistance from traditional banks.
He noted that the resistance did not address the needs of customers who remained underserved by existing financial institutions.
The emergence of digital financial service providers such as OPay and Moniepoint illustrates how businesses have expanded access to services through alternative channels.
Toriola also stressed that strategies successful in one African market cannot automatically be replicated in another. Nigeria’s financial services environment, including its instant interbank transfer infrastructure, requires companies to develop capabilities suited to local conditions.
MTN has consequently had to bring in people with a deeper understanding of the Nigerian market, he said.
AI investment requires discipline
Artificial intelligence presents another opportunity for MTN, although Toriola acknowledged that the technology’s ultimate impact remains uncertain.
“I am myself learning about AI,” he said, describing the technology as potentially transformative while cautioning that its eventual impact is difficult to predict.
He said companies must distinguish between technologies that attract attention and those capable of materially changing their business.
When evaluating an investment, Toriola said he asks whether the opportunity could significantly alter MTN’s growth trajectory. If a project would remain relatively insignificant even under the most optimistic scenario, he is sceptical about committing substantial resources to it.
However, he acknowledged that an overly cautious approach could cause a company to overlook promising innovations.
He cited mobile money as an example of a service whose potential might not initially have been obvious but which went on to address a practical problem which is enabling people to transfer money without depending entirely on traditional banking channels.
Toriola said companies must allow employees to experiment with new ideas while ensuring those experiments do not expose the wider business to disproportionate risk.
The challenge for MTN is to pursue innovations capable of creating meaningful new revenue streams without compromising the telecommunications infrastructure on which its existing business depends.
Folake Balogun is a technology journalist covering Africa’s digital economy, with a focus on startups, fintechs, venture capital, artificial intelligence, and emerging technologies. Her work explores the intersection of technology, business, and society, highlighting how innovation is reshaping industries and everyday life across Africa and global markets. She translates complex trends into insightful and impactful stories for a wider audience.
