In Search of Middle Ground on New Telecoms Tariff

Last week, the Minister of Communications, Innovation and Digital Economy, Dr. Bosun Tijani, in a last-ditch effort to resolve the logjam over the agitation for 100 per cent rise in telecoms tariff said the government is trying to maintain the balance by protecting consumers and ensure that the telecoms operators can continue to invest significantly, writes Emma Okonji

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t is now official that a new tariff template for the telecoms sector will be unveiled anytime from now. This is in response to the mounting agitations by telecoms firms for a more realistic tariff template.

It was a call that started in April 2022, when telecoms operators, through its umbrella body, the Association of Licensed Telecoms Operators of Nigeria (ALTON), wrote the telecoms industry regulator, the Nigerian Communications Commission (NCC), demanding a 40 per cent hike in voice and data tariff, to enable them to cope with the high cost of delivering telecoms services across the country.

Giving an official indication of a tariff increase, the Minister of Communications, Innovation and Digital Economy, Dr. Bosun Tijani, in a meeting with a meeting with the NCC and the CEOs of telecoms operators, in Abuja on Wednesday assured telecoms’ operators of a possible tariff hike, even though he said the hike would not be as high as 100 per cent, as currently being proposed by telecoms operators.

 “You have seen over the past weeks that there has been agitation from the telecoms companies to increase tariffs. They are requesting a 100 per cent tariff increase, but it will not be 100 per cent. The NCC will soon come up with a clear directive on how we will go about it.

“We want to strike the balance as a government, to protect our people, and also protect and ensure that the telecoms operators can continue to invest significantly,” the minister said. 

Just as the call for a tariff hike has been vehemently resisted by different industry groups representing the interests of telecoms consumers, ALTON has however warned that any further delay in reviewing the current tariff plan could lead to the collapse of the telecoms sector in 2025.

Tariff Hike Request

The Chief Executive Officer of MTN Nigeria, Karl Toriola, had expressed the need for telcos to increase tariffs as a measure of sustainability. Toriola made this known during a recent interview with ARISE NEWS Channel, in which he highlighted the sector’s current state, its potential for aiding economic growth, and the need for reforms to ensure its advancement and sustainability.

“We’ve put forward requests of approximately 100 per cent tariff increase to the regulators. I doubt they are going to approve that quantum of increase because they are very sensitive to the current economic situation in the country,” he said.

Toriola however expressed optimism about the implementation of reforms that will enable the telecoms sector’s sustenance, considering the obvious challenges it is presently faced with. “We’re hopeful and optimistic that the realities are staring us in the face and the right decisions will be taken for the sustainability of the industry,” Toriola said.

As the conversations for tariff hikes intensify, Airtel Nigeria CEO, Dinesh Balsingh has also reaffirmed the need for tariff adjustment, saying it will boost the quality of service delivery across networks, for the benefit of telecoms consumers.

In response to the economic realities of rising operational and capital costs, Balsingh noted that the proposed tariff adjustments aimed to ensure the long-term sustainability of the sector while unlocking significant benefits for Nigerian consumers.

In an op-ed authored by Balsingh in which he contextualised the necessity of the tariff adjustments, he said: “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.”

The proposed tariff adjustments will not only ensure the sector’s sustainability but will also bring significant improvements to service delivery, Balsingh said, adding that the adjustments will directly enhance the quality of connectivity for Nigerians.

Also, the CEO of 9mobile, Obafemi Banigbe, while addressing the issue of telecoms industry sustainability and the call for tariff increase, during a recent online media interaction, said the telecoms industry has contributed immensely to Nigeria’s GDP and the entire digital economy of Nigeria over the last 20 years.

He, however, said every business must be in a position to generate revenue that can cover its cost and be able to reinvest back into the business.

Opposing Forces

 Opposing the request for a telecoms tariff hike, members of the National Association of Telecoms Subscribers (NATCOMS), have condemned the planned hike, insisting that it negates the interests of telecoms consumers and that it will bring further hardship on subscribers. 

National President of NATCOMS, Chief Deolu Ogunbanjo, who vehemently kicked against it, said with the planned tariff hike, a voice call will rise from N11.00 to N15.40 per minute, short message services will jump from N4.00 to N5.60 and one GB data bundle will move from N1,000 to N1,400 at 40 per cent increase in telecons tariff. 

According to Ogunbanjo, “This represents additional digital costs that consumers will have to square up with at the beginning of a new year among other harsh economic realities of Nigeria of today. This, undoubtedly, is against public interest. NATCOMS sees the planned increment as an official policy to price telecom services out of the reach of the generality of the citizens of the country. 

“Telecoms services are taxable services under the Value Added Tax Act. The Act was amended in 2019 by the Finance Act of that year to raise the tax rate from 5 per cent to 7.5 per cent which was 50 per cent increment and the increment has been borne by the consumers of telecoms services. That increment brought about untold hardship to our members many of who have been forced to cut back on their telecommunication requirements.”

Ogunbanjo warned that NATCOMS would drag telecoms operators and the NCC to court, should there be any increase in telecoms tariff.

The Association of Telephones, Cable TV, and Internet Subscribers (ATCIS) has also kicked against the request for the planned tariff hike. 

ATCIS President, Mr. Sina Bilesanmi, told THISDAY that telecoms subscribers were not getting value for their money and that ATCIS would continue to oppose such planned tariff hikes until telecoms operators fix their networks and offer quality service. 

Implications

 Worried about the opposing forces that do not seem to understand the pain points of telecoms operators, the operators have said such continuous opposition coupled with the delay in the approval for upward review of the current tariff plan, largely contributed to the low investment in the telecoms sector last year.

“Investors will not come if the pricing is not right. And if people are not sure of having a return on their investment, they will not invest in the sector. The regulator therefore needs to respond to the issue of industry sustainability to boost investors’ confidence,” the operators advised.

Warning

 Telecom operators under the aegis of the Association of Licensed Telecoms Operators of Nigeria (ALTON) have warned that the sector would risk total collapse in 2025 if telecoms tariffs are not reviewed upwards. 

The operators gave the warning at the end-of-year dinner organised for its members in Lagos, in December, stressing the need for government to revisit the issue of a tariff hike as earlier demanded by the telcos. 

They were of the view that if nothing was done about tariff hikes, the operators may not be able to sustain the industry in 2025.

Chairman of ALTON and spokesman for telecoms operators, Mr. Gbenga Adebayo, said: “I must say it again with even greater urgency that we are in the last days for the survival of this sector. “If nothing is done, we might begin to see in the new year, grim consequences unfolding, such as service shedding; and operators may not be able to provide services in some areas and at some times of the day leaving millions disconnected. There will be significant economic fallout, because businesses will suffer from a lack of connectivity, stalling growth and innovation.”