FG Mum Over Request By Telcos To Raise Tariffs

Nearly two weeks after telecommunications operators issued a statement seeking the approval of the federal government to increase tariffs on their services, the federal government has yet to make any official statement on the matter.

The telcos, under the aegis of the Association of Licensed Telecom Companies of Nigeria and the Association of Telecom Companies of Nigeria, issued a joint statement asking the government through the Nigerian Communications Commission (NCC) to expedite the approval.

The two bodies, in their statement, based the proposed increase on the increasing difficulty in doing business following the forex crisis and the losses incurred by the telcos.
The statement said, “Despite the adverse economic headwinds, the telecommunications industry remains the only industry yet to review its general service pricing framework upward in the last 11 years, primarily due to regulatory constraints.

“For a fully liberalised and deregulated sector, the current price control mechanism, which is not aligned with economic realities, threatens the industry’s sustainability and can erode investors’ confidence.”
However, since this request was made the government has not responded, which might be an indication that it may not approve the tariff hike because of the hardship it will impose on Nigerians already facing enormous hardship.

Efforts to reach the minister of Communications, Innovation and Digital Economy, Bosun Tijjani, did not yield fruit as he could not be reached for comments.

A source within the NCC told our correspondent that the government might not grant the price hike request out of concern for Nigerian consumers. He added that the approval will not be given until the government had done cost-based studies to ascertain the impact on telcos based on micro and macro variables.

Telecommunications operators in the country, including MTN Nigeria and Globacom, had asked for the approval due to foreign exchange losses and rising energy costs which forced some of the operators to post losses last year.

The telcos appear to be taking a cue to raise tariffs from MultiChoice, a South African pay television company, which raised its tariff. Several companies including electricity firms (DisCos) and brewing companies have also raised their prices in recent times.

The telecom associations urged the government to facilitate a constructive dialogue with industry stakeholders to address pricing challenges and establish a framework that balances consumers’ affordability with operators’ financial viability.

The telecom industry appears to be among a few sectors that have yet to review their prices despite the rising inflation in the country amid other economic challenges. They blamed this on the regulatory restraints that had been preventing them from pricing appropriately.
The associations have reportedly made similar proposals in the past but former minister of communications and digital economy, Prof. Isa Pantami, refused to allow the tariff hike.
The chairman, Association of Licensed Telecom Operators of Nigeria, Gbenga Adebayo, was quoted as saying that cost reflective tariff was non-negotiable.

“We have seen the impact of price control in other segments of the economy, like power. If providers cannot operate sustainable business models, then they’ll stop investing. When that happens, the existing infrastructure starts to crumble.

“For power, a consumer can choose to take ownership of the solution by buying a generator, or a solar panel. For fuel, the government can step in as a provider of the last resort and manage a subsidy regime that mitigates the impact on the population. Those options are not available in the telecoms sector. There is no self-help solution,” he explained.

Due to the difficult operating environment, investment in the sector has reportedly dwindled to $134m in 2023 from $456.8m in the previous year, a decline of $322m, according to the National Bureau of Statistics. This represents a decrease of approximately 70.5 per cent.