After over a decade of stagnant telecom end user tariff regime, the Federal Government, yesterday gave an indication that indeed, there will be a review, but not the 100per cent pushed for the mobile network operators (MNOs), themorningstar.com.ng reports on the implications of the development.
For most part of last year, the push for an upward review of telecom end user tariff occupied the front burners with MNOs and consumer rights bodies advancing why there should be an approval and why there should not.
And in the first week of 2025, the matter dominated public discourse with a stern warning that the industry faced a grim future if the regulator of the sector, the (Nigerian Communications Commission) failed to heed the call for adjustment.
Chairman, Association of Licensed Telecommunications Operators of Nigeria (ALTON), Gbenga Adebayo, outlined the true picture of the telecoms business during his remarks at the organisation’s end-of-year dinner.
Adebayo cautioned: “If nothing is done, we might begin to see grim outcomes, such as service shedding. Operators may not be able to provide services in certain areas or during some times of the day, leaving millions of Nigerians disconnected.
“The economic fallout will be significant, with businesses suffering from a lack of connectivity, stalling growth and innovation. Key sectors like security, commerce, healthcare, and education, which rely heavily on telecom infrastructure, will face serious disruptions.
“This is not a time for further deliberation or delayed decisions. The survival of the telecom sector demands immediate and bold reform for its sustainability.
“Our tariffs must be reviewed to reflect the economic realities of delivering telecom services at a minimum for industry sustainability. Without this, operators cannot continue to guarantee service availability.
“We are in the last days for the survival of this sector, and if immediate and decisive action is not taken, the hope for a better 2025 will remain just that—a hope.”
Last year, MTN Nigeria CEO Karl Olutokun Toriola, said the telecoms sector was on the intensive care unit (ICU), gasping for breath, warning that if nothing was done to salvage it, it will die the way NITEL died.
And just last week, he appeared on a local television station to address the sector’s challenges, also calling for an urgent review of tariffs. He demanded a 100 per cent hike.
Adebayo also said the challenges confronting the sector business are not new, but have become more serious in the last year.
Rising operational costs, increasing energy prices, inflationary pressures, and changing exchange rates have all created an unsustainable pressure on businesses, he had argued.
“Despite these mounting pressures, tariffs have remained stagnant, leaving operators trapped in a financial quagmire. The resources needed to maintain, expand, and modernise our networks are simply no longer available. Without intervention, the future of this sector is at grave risk,” Adebayo said.
CEO, 9mobile, Obafemi Banigbe as well as the CEO, Airtel Nigeria, Dinesh Balsingh, added the voices to the conversation.
Banigbe said: So I would not necessarily focus on what percentage is better, whether it’s 100per cent or whether it is 30 or 40 or 60 or 70 per cent. The most important thing is that we need to look at the pricing regime where we are in. We know that our market is regulated. So because our market is regulated, we need to start thinking around the whole concept of market-reflective tariff, which is reflecting the realities on the ground, which will balance the need for sustainability and with the concern for affordability that our customers out there are concerned about.
“So, affordability will then remain a concern in defining how we put up a price point that is market-reflective, that is also able to allow us to generate enough cash flow to cover our costs and to reinvest in the business. So, from the policymaker point of view as well, I’m sure they are also considering the concept, the whole idea of affordability. And I’m sure that’s one of the reasons why government has really dragged its foot in being able to address this whole conversation around tariff increase.”
Balsingh said the adjustments will directly enhance the quality of connectivity for Nigerians, saying the focus is to ensure that no one is left behind in the country’s digital transformation journey.
He said the tariff hike is in response to the economic realities of rising operational and capital costs, saying the proposed tariff adjustments aim to ensure the long-term sustainability of the sector while unlocking significant benefits for consumers.
“For over a decade, tariffs have remained static despite the dramatic increase in operating expenses, which have surged by over 300 per cent in the last 18 to 24 months alone. To continue providing high-quality services and meeting the growing demand for digital connectivity, it has become essential to realign our pricing structure with economic realities.
“By enabling us to expand coverage, strengthen network security, and introduce cutting-edge technologies, the adjustments will directly enhance the quality of connectivity for Nigerians. Our priority is to ensure that no one is left behind in the country’s digital transformation journey.
“The increasing demand for digital services across sectors such as education, banking, and healthcare requires us to continually upgrade our networks to deliver more capacity and improve service quality. These investments come at a cost, one that must be shared proportionally to guarantee long-term viability.”
The tariff adjustments will not only ensure the sector’s sustainability but also bring significant improvements to service delivery.
Balsingh emphasized that these adjustments will be implemented with affordability in mind, ensuring minimal impact on consumers. The company remains steadfast in its commitment to supporting Nigeria’s vision of becoming a digital economy leader in Africa, empowering businesses, driving innovation, and fostering inclusive growth.
“Our commitment to quality service remains unwavering. While significant tariff adjustments have become necessary, we understand the importance of gradual implementation to support our customers’ financial positions. This step will enable us to invest in capacity, expand coverage, and enhance service delivery, ensuring Nigeria remains competitive in the global digital landscape,” he said.
Broader implications of tariff hike
Rising telecom fees could have significant broader economic implications, particularly for digital inclusion. Higher costs may widen the digital divide, making it more difficult for low-income earners and rural communities to access essential services such as e-learning, tele-medicine, and other digital job opportunities.
The impact may also extend to economic activities, especially for small and medium enterprises (SMEs) that rely heavily on their mobile devices to run their businesses.
Those that would be worse affected are those that have built their business around social platforms such as Facebook, Instagram, WhatsApp and others.
Increased connectivity costs could limit their ability to stay connected, stifling innovation and hindering overall growth and expansion.
Realizing the importance of connectivity to global prosperity, United Nations (UN) Agency for Digital Technologies, the International Telecommunication Union (ITU), last year unveiled $4.8 billion in investment commitments toward boosting connectivity in Nigeria and other parts of the world.
The announcement brings the total pledges aimed at closing the digital divide through ITU’s Partner2Connect Digital Coalition (P2C) to $50.96 billion, over half the $100 billion goal set for 2026.
The pledges to Partner2Connect, ITU’s platform to advance universal meaningful connectivity, were announced during the opening day of the World Summit on the Information Society (WSIS)+20 Forum High-Level Event in Geneva, Switzerland.
Hiking tariffs also has implications for the growth of broadband penetration in the country. According to the World Bank, a 10per cent increase in broadband penetration can increase Gross Domestic Product (GDP) growth by 1.21 percentage points in developed countries, and 1.38 percentage points in low- and middle-income countries.
For the MNOs, a hike in tariff is a welcome development as it will allow them to expand infrastructure and deliver quality services to customers. “The end users are going to benefit from the deal. It is going to be a win-win situation to everyone,” one operator said.
It would be recalled that in 2022, ALTON had formally written a letter to the NCC demanding a 40 per cent tariff hike.
The letter which was sighted by our correpsondent, read: “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. We have enclosed herein and marked Annexure 1 of 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 Gigabyte in view of the current economic situation.”
The group also highlighted other demands to the commission such as to explore other penalties for operators other than punitive monetary sanctions, extend the payment timeline of relevant regulatory levies and fees, prevail on the Federal Government to sign the executive order declaring telecoms infrastructure as critical national infrastructure to mitigate cost spent replacing damaged and stolen infrastructures, among others.
It added that the Mobile (Voice) Termination Rate (MTR) for voice, administrative data floor price and cost of SMS as reflected in extant instruments should also be increased.
The ALTON letter added: “For large operators, a new interim MTR of N5.46 from N3.90 reflecting 40 per cent increase in the cost of business. For small operators, the new interim MTR of N6.58 from N4.70 reflects a 40 per cent increase in the cost of business.”
