Russia, you are increasing the cost of everything! Yes, “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.” I smile because someone somewhere will go to court to block it. Hello, DStv playbook is always available: the status quo must be maintained and price cannot be increased.

Seriously, I hope the telcos are not thinking of increasing prices by 40%. With the record numbers the two publicly traded ones are reporting, there is no reason for that price increase. Doing that would be unfair.

I am a capitalist but anyone who tells you that telcos need to jack up prices to survive is lying. I look at the margins these companies are holding, and am unable to see a justification for the white lies. The healthiest sector in the Nigerian economy is the telecom sector. It needs to make money but hitting the customers with 40% more would be an own-goal.

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.

Nigerian Telcos Seek Approval from NCC to Increase Network Tariff by 40%

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.

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.

Finding the balance between what you can afford to pay and what the employee is worth

A huge challenge that young startups face is securing good talents to build the business. Many founders admit that they have to compete for talents with the more established brands, who mostly have better remuneration and terms of service. The newer startups are thus left with those employees who may not have the required level of expertise they need to grow at the right place, simply because those are the ones they can afford to pay.

While there is no straightforward approach to this discussion, there is usually no cause for hard feelings, because recruiters know that most talents will go for better-paying jobs, then start at the bottom of ladder with a startup.

It is usually not a cause for hard feelings, because recruiters know that most talents will go for better-paying jobs, then start at the bottom of ladder with a startup. So, even though you know the employee deserves more pay based on expertise, experience, and value, you are constrained to offer what your startup can afford to pay. On the other end, what you can afford to pay could really be way below what that talent is willing to settle for at that point in his career.

The question now is how do you find a balance between what you can afford to pay talent and what the talent is truly worth? How do you manage to secure that talent (you really need) to work for you? Even when you get them to work for you, how do you ensure that they stay long enough to make the desired impact?

Up your offer and hire the talent you need not the talent you can afford!

Take this scenario. Your company is having financial challenges because you cannot seem to keep your books together. You make your calculations and figure that you cannot afford to hire a chartered accountant just now, so you choose to keep laboring your administrative assistant with the task of financial records (which he or she does manually). So, in your reasoning, you are saving money by not hiring the right talent. Three months down, you discover that you are losing even more money.

My suggestion is to hire the talent you need and prevent losses. Every staff is either coming on board to increase your revenue or reduce your losses. If that talent will significantly achieve one or both, then you should up your offer. It may require you to take a pay cut in the short-term, or cut back on some other expenses. If your calculation shows that you will benefit in the long term, take the step.

Offer better terms of service

Money is not the only reason people accept or refuse offers, so if it is truly impossible to increase the pay you are offering to the talent, then consider offering other terms that could be convenient. You could offer them a chance to work remotely on one weekday, flexible work hours (if your business permits it), end-of-year profit-sharing (if the team hits or surpasses its targets), etc. Study your business and decide on which one or two you can incorporate into your offer.

Offer an incentive to stay longer

It is one thing to get the right talents and another to keep them on long enough to make an impact. To keep your talents long enough on the team, you could consider an appropriate incentive. For instance, some startups could offer conditional equity. At the end of two years of working with the company, the employee gets a percentage of equity or may be given an opportunity to buy into the company. This works in two ways. It gives the talent a sense of ownership and could really improve the input to the growth of the startup. Secondly, they stay long enough to get the benefit or incentive as has been stated. You do not have to go with these exact examples. Pick something that suits your business, and is strong enough to keep your talents. With the right incentives, talents will stay and build the brand.