Network providers under the Association of Licensed Telecommunication Operators of Nigeria have, in a Letter titled ‘Impact of the Economic and Security Issues on the Telecommunications Sector,’The Nigerian Communications Commission (NCC) proposed a 40% increase in tariffs for calls, text, and data. This was due to increased costs of doing business and worsening inflation in Nigeria.
According to the association’s proposal, call prices will rise from ₦6.4 to ₦8.95, while the SMS price cap will rise from ₦4 to ₦5.61.
The GSM operators argue that the telecommunications business has been harmed financially due to the country’s economic downturn in 2020 and the ongoing Ukraine/Russia issue, consequently increasing energy costs, increasing their operating expenses by 35 percent. In addition, they mentioned that business costs have risen 40% over the past year.
They went on to say that the recent imposition of a 5% excise charge on telecom services had added to the industry’s burden of many taxes and levies.
ALTON’s letter read in part, “The commission may not be aware that the Nigerian Electricity Regulatory Commission (the power sector) conducted a review on electricity tariffs in November 2020 to address the economic headwinds mentioned above..
“In view of the foregoing, ALTON considers it expedient for the telecommunications sector to undergo periodic cost adjustments through the commission’s intervention in order to minimise the impact of the challenging economic issues faced by our members. Here are the details:
“Upward review of the price determination for voice and data and SMS. Due to the current economic situation and the approximate 40% increase in the cost-of-doing business, we request an interim administrative evaluation of the mobile voice termination rate for voice and administrative data, as well as the cost of SMS, as indicated in existing instruments.
“With respect to voice an SMS cost, ALTON respectfully requests the commission to consider a mark-up approach to address the upward price adjustment desirable for the industry. We have enclosed herein and marked as ‘Annexure 1’our proposal in that regard.
“For data services, we wish to request that the commission implements the recommendations in the August 2020 KPMG report on the determination of cost-based pricing for wholesale and retail broadband service in Nigeria. Excerpts from the report, are attached and marked ‘Annexure 2’ to provide a further illustration.
“In implementing the said recommendations, however, we recommend that the 40 per cent increase in the cost of doing business be factored in to arrive at a cost price per GB in view of the current economic situation.”
ALTON advised ALTON to advise the commission to help the industry by providing alternative forms of punishment to punitive monetary sanctions, extend the payment timelines for regulatory levies or fees and convince the Federal Government that a telecoms infrastructure executive order is critical national infrastructure. This will reduce costs in replacing stolen and damaged equipment.
What will a tariff increase have on Nigerians?
Interview with Leadership Newspaper, the Head, Operations at ALTON, said, “since 2003, we didn’t review the tariff, not because it has been all great, (like other sectors, telecommunication industry was financially impacted following Nigeria’s economic recession in 2020), but because, we didn’t want to add unnecessary financial burden on Nigerians.
“However, in recent times, the high cost of operation has become unbearable, ALTON’s head of operations said, adding, “The cost of doing business in Nigeria has increased tremendously in the past years, and operators could no longer bear the loss. For instance, the high cost of diesel, multiple taxation and insecurity are the major reasons why operators are clamouring for an increase in call and SMS tariff.”
According to the NCC, there is 198,123,431 mobile (GSM) active lines in Nigeria as of February 2022. This represents over 40% of Nigeria’s population knowing that users usually use more than one SIM card.
But, with the country’s inflation rate currently at 15.70%; and a decreasing purchasing power, Nigerians already say that the proposed hike in tariffs, notwithstanding the claimed increase in operational costs, may be coming at the wrong time.
Deolu Ogunbanjo (President, National Association of Telecoms Subscribers) stated that operators shouldn’t increase the suffering of Nigerians through increasing tariffs.
He said that operators should appeal to the Federal Government for an unconditional lifting of the ban on more than 70 million subscribers who haven’t linked their Subscriber Identity Module with their National Identity Number (NIN) to originating calls via their mobile phones.
Sina Bilesanmi, President of the Association of Telephone, Cable and Internet Subscribers of Nigeria, stated that any increase in tariffs now would be detrimental to consumers already disadvantaged by government policies.
The chief of ACTIS stated that QoS does not support any increase in the end user tariff and suggested that operators should first improve their service quality before considering a tariff hike.
“Yes we know the operators are also affected by the pains the ordinary man on the streets feels but it will not be the best for them to increase tariff now. If they do it, it will be an increase in the suffering of the people,” he said.
Nigerians on twitter
@VanityIsBliss: I hear telecoms or network providers in Nigeria wants to increase their call tariffs and data by 40%… I think its about time I stop posting videos and Gifs, maybe it’s time I delete Instagram, TikTok, and all those data-consuming video apps…😂😂
@rowlason: Nigerians have had mercy on Nigeria’s call and data tariffs! How are we going to survive this government? Worst of all, there has been no increase in the average citizen’s income. We ask God to help us navigate this horrible situation in Nigeria.