Nigeria’s telecommunications industry is raising concerns over the financial burden posed by the new payment structure introduced under the Financial Reporting Council Amendment Act 2023. Telecom operators, through the Association of Licensed Telecommunications Operators of Nigeria (ALTON), have appealed for a more balanced approach, particularly for non-publicly quoted companies.
Previously, annual dues to the Financial Reporting Council of Nigeria (FRCN) were capped at a maximum of N1 million. However, the amended Act now calculates payments as a percentage of a company’s annual turnover, which significantly increases the financial obligations of many telecom firms.
In a formal letter addressed to Rabiu Olowo, the Executive Secretary/CEO of FRCN, ALTON outlined the revised fee structure as follows:
- 0.02% of turnover for companies earning N25 million or less
- 0.025% for those earning between N25 million and N50 million
- 0.03% for turnover between N50 million and N500 million
- 0.04% for turnover between N500 million and N1 billion
- 0.045% for earnings between N1 billion and N10 billion
- 0.05% for companies generating more than N10 billion annually
Telecom operators argue that this model disproportionately affects non-publicly quoted firms, making it harder for them to sustain operations while continuing to provide essential services. The association pointed out that publicly listed companies are required to pay annual dues based on their market capitalization, which is subject to a pre-determined lower limit.
For example, a publicly quoted company with a market value of N1 trillion is expected to pay N25 million annually. In contrast, a non-quoted company with the same turnover would be obligated to pay N500 million, creating a significant disparity in financial obligations.
Concerns Over Rising Costs and Economic Pressures
ALTON acknowledged the government’s intent behind the revised fee structure but emphasized that its execution could create major financial strain, especially in the face of Nigeria’s current economic challenges.
“The telecommunications sector is already grappling with rising operational costs, volatile foreign exchange rates, and other economic headwinds,” the association stated.
The telecom industry has long been a backbone of Nigeria’s digital economy, contributing significantly to GDP and job creation. However, the rising cost of doing business threatens future investments and service affordability. If the new fees remain unchanged, smaller telecom firms and emerging players could struggle to survive, ultimately affecting consumers and industry growth.
A Call for Policy Adjustments
To prevent adverse effects on the industry, ALTON has urged the FRCN to reconsider its approach. The group is advocating for:
- A fixed cap on annual dues for non-publicly quoted companies, similar to the structure used for quoted firms.
- A shift from revenue-based fees to profit-based calculations, ensuring that companies are taxed on actual earnings rather than gross revenue, which does not account for operating expenses.
Industry stakeholders argue that a more equitable system would allow telecom firms to remain competitive and continue expanding services across Nigeria. If the FRCN does not reconsider its approach, some companies may face tough financial choices, including reduced investment in network expansion, job cuts, or even increased service costs for consumers.
The ball is now in the government’s court—will policymakers make adjustments to support business growth, or will these new regulations place additional pressure on one of Nigeria’s most vital industries?
