Nigerian telecom operators are reportedly planning a 40 percent tariff hike that will affect the cost of data, calls and SMS. The Vanguard reported the imminent increase citing reliable sources.
According to the report, the telcos’ move to increase tariffs was necessitated by the high cost of diesel to operate their businesses, incessant harassments and frivolous taxes and levies imposed on them by all manner of agencies from the three tiers of government.
The rise in oil price has pushed the cost of diesel to above N700 per a liter, compounding the telcos’ operational cost. Other issues such as the cost of Right of Way (RoW), which is among the reasons why poor networks have persisted around the country, apparently influenced the move.
Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
The telcos told Vanguard that the tariff hike is being pursued through their umbrella body, the Association of Licensed Telecom Operators of Nigeria, ALTON. The body is understood to have already sent a letter to the Nigerian Communications Commission, NCC, seeking approval for the upward review of tariffs by 40 percent.
The telcos want to increase the N6.4 per second current cost of voice calls up to N8. 95 while SMS will move from N4. 00 to N5. 61.
According to the letter sent to the NCC by ALTON, approval for the increment should be granted based on the operational issues. A few of them were highlighted as follows: Rising cost of business operation due to high cost of diesel, and other energy sources, recent introduction of excise duty of five per cent on telecom services, and increased burden of multiple taxes and levies on the industry.
“In view of the foregoing, ALTON considers it expedient for the telecommunications sector to undergo periodic cost adjustments through the commission’s intervention to minimize the impact of the challenging economic issues faced by our members.
“Details are: Upward review of the price determination for voice and data and SMS.
“Given the state of the economy and the circa 40 per cent increase in the cost of doing business, we wish to request an interim administrative review of the mobile (voice) termination rate for voice; administrative data floor price, and cost of SMS as reflected in extant instruments.
“With respect to voice and SMS cost, ALTON respectfully requests the commission to consider a mark-up approach to address the upward price adjustment desirable for the industry,” the letter quoted by Vanguard said.
Confirming the letter, a senior official of ALTON, said: “Although we did not intend that this will be a media issue, I can confirm to you that we sent a letter to the NCC requesting upward review of tariffs.
“But this shouldn’t come to you as a surprise. We have always intimated that this is the only way to go, considering prevailing circumstances.
“Recall that while approaching the federal government to intervene on indiscriminate clamp down on our facilities, particularly the recent one in Kogi over frivolous taxes and levies by all manner of agencies, we did warn that we may be forced to increase tariffs.
“What has happened now is that as law-abiding citizens and responsible corporate entities, we are going about it the appropriate, responsible and legal way.
“For us to serve you well, we must first of all be in business,” he added.
However, if the tariff is approved, it will reverse the progress Nigeria has made in reducing the cost of calls, SMS and data in the last few years. On the other hand, if the tariff is disapproved, it may mean that the telecom industry, which has served as Nigeria’s economy’s cash cow against covid-19 headwinds, will be operating on loss.
Africa has the most expensive internet data rate in the world, a development that has been described as a setback to its internet economy. Increasing the cost of network services in the continent’s largest economy will mean a further slip into economic retrogression, especially as Nigeria relies so much on tax revenue from the telcos to upset its revenue deficit.
Last year, MTN alone was responsible for 13.5 percent of total taxes collected by Nigerian tax agencies.