Telecom Operators Want Tariff Hike Over Operating Costs

Citing increasing cost of business operations and the harsh economy, the telecom operators are proposing an upward review of the mobile termination rate for voice services and the institution of an interim adjustment of the telecom industry’s floor price for voice and data services.

This is coming ahead of the conclusion of a cost study and issuance of a substantive pricing regulatory framework in this regard.

To this end, telecom operators under the auspices of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) have asked the new minister of communication, innovation and digital economy, Dr. Bosun Tijani, to issue policy guidance to the Nigerian Communications Commission (NCC) to commence implementation of targeted interventions starting with an upward review of voice call rates, among others.

They also urged the new minister to address teething investment-impacting causal factors, to help deepen investment with the overall objective of driving increased CAPEX deployment for improved Quality of Service (QoS), in line with the targets of the Strategic Plan to achieve 50 per cent improvement in QoS by the end of 2024.

In a document made available to LEADERSHIP, telecoms operators averred that the cost of doing business in the country had risen sharply in the preceding months due to a myriad of factors generally impacting businesses, including macroeconomic headwinds such as inflation, currency devaluation, sustained difficulty in accessing forex at an affordable rate, rising energy costs, rising cost of securing telecommunications facilities and field personnel in the face of worsening insecurity, among others.

ALTON chairman, Engr. Gbenga Adebayo, decried the strong macroeconomic headwinds which have occasioned tough operating conditions, leading to a decline in CAPEX (Domestic) and Foreign Direct (Capital Inflow) investments into the industry by 30.37 per cent and 46.9 per cent respectively between 2021 and 2022.

Despite these challenges, Adebayo disclosed that the pricing regulatory framework had not been reviewed to account for changes in macroeconomic conditions and reflect current cost profile of operators, as such, ALTON’s members are unable to price services at a sustainable rate.

“Consumer prices in other sectors have seen a steep rise over the last six years as they adjust to reflect macroeconomic realities. However, telco prices have remained flat and even declined. Contrary to the price trends in other sectors, telcos have had to adjust for the macroeconomic headwinds caused by an increasing erosion of margins. Other highly regulated sectors such as power and insurance have implemented price increases over the last year. Insurance prices have risen 200 per cent with power raising prices by over 40 per cent.”

He noted that telecommunications was the only sector that had not experienced any price review notwithstanding local and global macroeconomic realities, adding that not only has this impaired investor confidence and depleted available investible funds necessary to optimise infrastructure for improved service delivery, but also threatened the very sustainability of telecoms operations.

On multiple taxation, ALTON chairman appealed to the minister to collaborate with the Presidential Committee on Fiscal Policy and Tax Reforms to address the perennial incidence of multiple taxation in the Nigerian telecommunications sector, including the elimination of the currently suspended excise duty on telecommunications services.

On infrastructure bill, Adebayo averred that operators have recorded several cases of vandalism of their equipment and shut down of their infrastructure by Ministries, Departments and Agencies of government and communities, as a means of compelling them to comply with their demands for spurious taxes or levies.

This is even as he tasked the House Committee to sponsor/coordinate a Critical National Infrastructure bill that will accord telecommunications infrastructure the same level of protection as other critical national assets and will provide a legal framework to guide law enforcement agencies accordingly.

In his response, the communication minister said he would look into all that had been tabled by ALTON and said the challenges were not insurmountable.

He informed the team of operators that the sector was not innovative enough in the attempt to reach the unreached people in the rural areas and unlock the services for a lot of people through technology, just as he urged operators to carry out more research and development to boost the sector.