As Nigerians continue to face rising costs for essential goods and services, including food, transport, housing, and utilities, there is now growing concern that telecom tariffs may soon see another significant increase. This is due to mounting pressure from major telecom operators—MTN, Airtel, Globacom, and 9mobile—who are intensifying their calls for the government’s telecommunications regulatory body, the Nigerian Communications Commission (NCC), to fast-track approval for hikes in the tariffs for voice and data services.
These telecom companies, which form the core of the Association of Licensed Telecom Operators of Nigeria (ALTON), argue that the current pricing structure is unsustainable given the harsh economic realities. According to the operators, the rising operational costs, the depreciating value of the Nigerian naira, and escalating fuel prices—particularly diesel—are forcing them into a corner. They contend that while businesses in other sectors are free to adjust their prices in line with market conditions, they, as regulated entities, are dependent on the approval of the NCC before they can implement any price increases.
The urgency of the request has intensified over the past few months, exacerbated by the significant decline in the naira’s value against major foreign currencies and the removal of fuel subsidies by the government. These factors have led to sharply higher costs of running telecom networks, which depend heavily on diesel for powering base stations, and the continued devaluation of the naira, making imported equipment and services much more expensive.
Despite these challenges, the NCC has indicated it cannot approve tariff hikes until the ongoing cost-based study, conducted by consultants from KPMG, is concluded. The study aims to assess the cost of providing telecom services in Nigeria and recommend a suitable tariff structure based on the current economic environment. However, telecom operators are frustrated by the slow pace of the review and are pushing for faster action, arguing that the current tariffs no longer reflect the reality of the market.
The telecommunications sector remains a key player in Nigeria’s economy, with active mobile subscriptions reaching over 220 million by August 2023. However, the industry’s financial strain is evident, as spending on airtime and data by Nigerians surged by over 32% in the first nine months of 2023, according to financial reports from major telecom players like MTN Nigeria and Airtel Africa. Despite this growth, the operators claim that their ability to sustain operations under the current tariff structure is increasingly precarious.
Tony Izuagbe Emoekpere, the President of the Association of Telecommunications Companies of Nigeria (ATCON), acknowledged in an interview that all telecom operators are keen on adjusting their prices, but are bound by legal and regulatory constraints. He stressed the need for some form of concession or regulatory easing, particularly on critical cost elements like diesel and capital expenditures (CAPEX). Emoekpere suggested that the government consider removing certain levies on diesel, as well as granting telecom companies some relief on CAPEX, to reduce the pressure on their bottom lines.
Furthermore, Emoekpere proposed that localizing certain telecom services could help mitigate the impact of foreign exchange fluctuations. By shifting some services currently outsourced to international vendors to local providers, the industry could reduce its reliance on foreign currency and, in turn, help stabilize the naira.
Similarly, Gbenga Adebayo, Chairman of ALTON, voiced concern over the sustainability of the current pricing regime. He argued that the telecom sector is now “selling below cost,” which is no longer viable. Although the prospect of increasing tariffs is a delicate and difficult conversation, Adebayo emphasized the need to allow market forces to drive pricing decisions for the industry’s long-term health. He stressed that the industry must adopt a more realistic pricing model to remain competitive and continue to provide essential communication services to Nigerians.
In conclusion, the telecom operators are advocating for swift regulatory action to align their pricing structure with the current economic conditions. The operators argue that failure to adjust the tariffs in the face of rising operational costs may severely hamper their ability to provide reliable services and sustain growth in the sector. While the NCC continues to deliberate on the matter, the pressure from telecom companies and their stakeholders to act quickly is mounting.
