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Nigerians to Pay More for Telecom Services Following NCC Approval
The Nigerian Communications Commission (NCC) has approved a 50% increase in tariffs for data, calls, and Short Message Service (SMS) across all telecom networks. This marks the first significant hike in over a decade, raising the average cost of calls by Mobile Network Operators (MNOs) to ₦16.50 per minute.
RELATED: Nigerian government set to approve telecom tariff hike amid rising operational costs
The decision followed a virtual meeting of the Industry Consumer Advisory Forum (IACF), chaired by the Minister of Communication, Innovation, and Digital Economy, Bosun Tijani. While the MNOs had initially lobbied for a 100% increase, the approval was capped at 50% in consideration of ongoing reforms aimed at sustaining the telecom sector.
Reasons Behind the Tariff Increase
1. Escalating Operational Costs:
- Energy Costs: Rising diesel prices have significantly increased the cost of powering base stations.
- Currency Depreciation: The naira’s volatility has raised the cost of importing telecom equipment.
- Inflation: Operators face mounting pressure to keep up with Nigeria’s rising inflation rate.
2. Stagnant Tariffs:
- Tariffs have remained unchanged for 11 years, leaving operators unable to offset rising expenses.
3. Economic Impact:
- Operators argue that failure to adjust tariffs could disrupt essential services in sectors such as commerce, healthcare, education, and security, all of which rely heavily on telecom infrastructure.
Industry Impact and Revenue Projections
According to the NCC’s 2023 Subscriber/Network Performance Report, the telecom industry recorded:
- 205.3 billion minutes in total outgoing local and national traffic.
- 203.2 billion minutes in total incoming local and national traffic.
- MTN Nigeria led the market with the highest traffic volume, contributing over 122 billion minutes to outgoing traffic.
Based on these figures, the tariff hike could generate an estimated ₦6.74 trillion in revenue for telecom operators by 2025, assuming call volumes remain stable. However, this estimate excludes potential adjustments due to free or discounted call promotions.
Stakeholder Reactions and Challenges
Telecom Operators:
Gbenga Adebayo, Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), emphasized that the hike is essential for maintaining operations and preventing service shedding, which could begin by January 2025 if no interventions are made.
Subscribers’ Backlash:
The National Association of Telecommunications Subscribers (NATCOMS) has strongly opposed the increase. Deolu Ogunbanjo, NATCOMS President, criticized the decision, stating:
- “This tariff adjustment will affect everyone, from large corporations to small businesses, including Point of Service (POS) operators. It will increase operational costs across the board.”
NATCOMS has vowed to challenge the tariff hike in court, advocating for a marginal increase of 5% to 10% as a more balanced alternative.
Potential Consequences for Nigerians
The tariff hike will likely impact the following areas:
- Increased Cost of Living:
- Higher call and data charges may strain household budgets, especially for low-income users.
- Impact on Businesses:
- Small and medium enterprises (SMEs), particularly those reliant on digital communication, may face rising operational costs.
- Reduced Access to Connectivity:
- The hike could widen the digital divide, limiting access to telecom services for economically disadvantaged groups.
What’s Next?
The NCC justified the increase as a step toward sustaining the telecom industry, ensuring quality service delivery, and fostering innovation. However, the pushback from consumer advocacy groups highlights the need for a balanced approach that addresses both industry sustainability and consumer affordability.
As Nigeria navigates this transition, all eyes will be on the impact of the tariff hike on its digital economy, employment, and overall socio-economic landscape.
