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In what sounded like a death knell or an epilogue as we know it in literature, Association of Licenced Telecoms Operators of Nigeria (ALTON) chairman, Gbenga Adebayo, warned that “if nothing is done, we might begin to see in the new year grim consequences unfolding, such as Service Shedding. 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 lack of connectivity, stalling growth and innovation. There will also be national economic disruption where key sectors like security, commerce, healthcare, and education which rely heavily on telecom infrastructure, will face serious disruptions.”
RELATED: MTN CEO, telecom industry leaders call for urgent price hike amid economic challenges
This is frightening should the threat be carried out with full force. But can the operators act unilaterally? The answer is no and that is where the game begins.
Tariff hikes and sustainability challenges in telecom
Only last week the government agreed to demands for tariff hikes in the telecommunication industry. This is expected in the coming weeks, as the government aims to address sustainability challenges in the telecom sector. This implies that prices of calls, data and SMS will go up for the average Nigerian.
However, the hike will fall short of the 100 percent increase requested by service providers, with the government seeking to balance sector growth and protecting Nigerians from excessive financial burdens. Bosun Tijani, the minister of communications, innovation, and digital economy, disclosed this during an industry stakeholder forum in Abuja on Wednesday January 8,2025.
Guidance for Simplification of Tariffs
Similarly, the NCC introduced the Guidance for the Simplification of Tariffs signed out by NCC Chief on November 25,2024 stating among other things that: “This Guidance is pursuant to the regulatory powers of the Nigerian Communications Commission (Commission) under Sections 3, 108 and 109 of the Nigerian Communications Act 2003 (Act) as well as relevant subsidiary legislations empowering the Commission in that regard. It is also in furtherance of the mandate of the Commission to regulate communications services and ensure consumer protection in the sector.
“The Commission hereby issues this Amended Guidance for the simplification of tariff plans, bundles and promotional activities that include tariffs. This Guidance is designed to enhance transparency, improve consumer understanding and foster fair competition”.
It doesn’t stop there as the guidelines also elaborate on what is possible: “For the USSD platform, the following information should be included when a subscriber requests details of their tariff plan
- Name of Plan
- Validity Period (if applicable) Indicate rate per second (and rate per minute) on-net/off-net
- Indicate rate per megabyte/kilobyte/gigabyte
- Indicate rate per SMS on-net/off-net
- The number of Add-ons subscribed to
Additional Conditions for Tariff Approvals
Operators must offer standalone data bundles, at fair prices to avoid tying consumers with products they do not need Bonuses on promotions must be stated in actual value. For all tariff plans, both the Main and Bonus accounts must deplete at rates within stipulated price floors and caps.
Bundles with shorter validity periods should be prioritized for depletion. Options for subscribers who exhaust their bundle allowance within the stipulated validity period should include:
- Purchase of a top-up bundle
- Purchase of a new bundle
- Switch to the default rate of his/her plan
Any Operator wishing to offer services on third-party platforms (Banking applications, etc.) at discounted rates must obtain and comply with the explicit approval received from the Commission (Hot Deals, personalized/ below-the-line offers, Cashback etc.)
Existing personalised offers approved by the Commission can remain active for the duration of the validity period of the approval. However, the Commission will continue to monitor the market and make necessary interventions when required.
Below-the-line/personalised offers, Fixed/Fixed Wireless Services, and Device Financing Propositions must be presented for the Commission’s prior approval process.
Telecom headwinds and a troubled economy
No one has ever challenged the powers of telecommunications regulators, the Nigerian Communications Commission (NCC) to regulate the sector which is believed to be the engine room of the economy.
With over 14% contributions to the Gross Domestic Product’s (GDP) and one of the biggest single contributors, telecommunication affects every fabric of the Nigerian life.
Understandably then, if the sector players experience haemorrhage as a result of economic headwinds, then the economy is truly troubled.
The operators complain loudly that government may have decided to give out telecom services as palliative to Nigerians against the wishes of of Mobile Network Operators (MNOS) therefore suffocating their business.
They alleged that the regulator is playing games, especially against the backdrop of its inability to hearken to their cries of tariff hike.
But the regulator thinks differently as it says the Nigerian Communications Act (2003) especially sections 108 and 109 empowered it to treat such issues in that regard.
The position and powers of the regulator have never been questioned by any of the industry stakeholders. What the operators are saying, for instance, is that some of the regulations by the Commission are so stale that they have little or no impact on modern business operations that can lead to growth or renewal of the industry.
Ministerial politics over price hike
At the time, NCC lost the voice to proclaim the provisions of the Act in Sections 108 and 109 which have no tolerance for the meddlesomeness of a minister or even the President of the Republic if he wanted to supervene. The operators did not also test the provisions of the Act in the Court.
One operator confessed in trepidation that “it’s already very tough doing business in Nigeria. We don’t want the government to come after use with all its powers.” One analyst summed up the NCC imbroglio at a time a minister’s unnecessary place in the gallery truncated the 10% tariff hike which ended up as a Greek gift. And later short lived thus creating telecommunications as palliative to subscribers who do not have an idea of what operators are living through.
Even the operators are obviously ignorant of the floor price template as another analysis summed it up: “Once a Floor and a Ceiling have been put in place, playing within the band doesn’t need the approval of the NCC,” another source affirmed.
Perhaps in trying to enjoy this regulatory latitude, the operators in 2022 requested for, and got a 10 percent tariff increase on voice and data services from the NCC. The Commission reversed itself after a few days, saying the priority of the Minister Isa Pantami was to protect the citizens and ensure justice for all stakeholders. An NCC source told this writer that the reversal was unilaterally done by the minister who coerced the regulator to receive the fall.”
No tariff review, no guarantee service availability
Telecom industry is under heavy burden according to ALTON Chairman, Adebayo.
Emphasizing that without the tariff review, operators cannot continue to guarantee service availability, the ALTON Chairman said though the challenges being faced by the telcos are not new, they have become more acute and more threatening with this passing year.
He noted that rising operational costs, skyrocketing energy costs, the relentless pressure of inflation, and volatile exchange rates, amongst others, have all placed an unsustainable burden on network operators.
Adebayo added that despite these mounting pressures, tariffs have remained stagnant, leaving operators trapped in a financial quagmire.
According to him, the resources needed to maintain, expand, and modernize telecom networks are no longer available and without intervention, “the future of this sector is at grave risk.”
Keeping the sector afloat
The ALTON Chairman noted that stakeholders have done their best over the years to sustain the sector by upholding the values and importance of telecommunications in society.
“However, let me be clear: our work is far from over. It is not enough to have kept the sector afloat; we must now focus on securing its future. The sustainability challenges we face today are not just a passing storm—they are a clarion call for decisive action to ensure that this industry thrives for generations to come.
Due to the increasing costs, telecom operators in Nigeria have since last year been clamouring for an increase in tariffs.
In a joint statement by the Association of Licensed Telecom Operators of Nigeria (ALTON) and The Association of Telecommunication Companies of Nigeria (ATCON), the operators said the telecom industry is the only industry that has not reviewed its prices despite the rising inflation in the country and other economic realities that warrant increment.
They blamed this on the regulatory restraints that have been preventing them from pricing appropriately.
The Nigerian Communications Commission (NCC) regulates prices in the telecom industry and telecom operators are not allowed to implement any price change without the regulator’s approval.
Struggling for a cost-based tariff hike
The regulator has said a cost-based study is being conducted to determine if it would approve price increments for the operators.
But the 2022 and 2024 proposals as announced by Toriola were truncated in August 2024 when ALTON traded off the proposals because of alleged misrepresentation saying the misrepresentation of the good intention of telecom operators to secure a slight adjustment on end-user tariff on voice calls and data services has led to the carriers slowing down on the push.
The operators, acting under the aegis of Association of Licensed Telecom Operators of Nigeria (ALTON), had sought the imprimatur of the Federal Government, via the Nigerian Communications Commission (NCC), to adjust call and data tariff to reflect cost of operation in the country.
The NCC had refused to accede to their demand, a decision insiders said was based on political expediency. In a pushback, the telcos had said their services should not be used as palliative to cushion the impact of ongoing economic hardships in the country.
In May 2022, the mobile network operators (MNOS) proposed 40% increase in tariffs. The operators under the auspices of Association of Licensed Telecommunication Operators of Nigeria (ALTON), proposed a 40 per cent hike in call and SMS tariffs. The operators said the decision was necessary considering the rising cost of doing business.
A letter to the NCC said the fee for calls will increase from N6.4 to N8.95 while the price cap for SMS will increase from N4 to N5.61. The association said the telecommunications industry had been financially challenged by an economic downturn that occurred during the COVID-19 pandemic in 2020 and the ongoing Russia-Ukraine war.
Burden of 5% excise duty on telcos
ALTON added that the introduction of the five percent excise duty on telecom service providers has heightened the burden of multiple taxes and levies on the industry.
“ALTON considers it expedient for the telecommunications sector to undergo periodic cost adjustments through the commission’s intervention in order to minimise the impact of the challenging economic issues faced by our members,” it said.
“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 for 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.
“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,” it added.
When he spoke unanimously on national TV Toriola said “We at MTN believe we need adjustment of about 100 per cent, I think the industry is pretty much aligned because we are all experiencing the same headwinds. Now, the government is very sensitive to squeezing consumers’ wallets with the pressures that have come from inflation and currency devaluation on consumers.
Misplaced optimism for 100% hike
Toriola was very optimistic that the government of Nigeria will accede to the proposed 100% tariff increase eventually all things being equal. Toriola carried the cross and burden of the embattled sector when he spoke on national television last week Friday.
While bragging that telecommunications had impacted positively on the economy (he was right anyway) he is worried that not much encouragement has come from government.
But that is where he miscalculated.
Although he felt justified that a tariff increase is sine qua non, there are several untapped layers of this question.
“So, I’m not sure they will give us 100 per cent, but I am optimistic they will give us something substantial and maybe progressively over the course of the year we can have smaller adjustments that will help us to get back to where we need to be,” Toriola said.
The MTN CEO said that almost every other sector in the country, including aviation and power have increased tariffs except the telecoms industry.
According to him, all the bodies that look into the statistics of the telecoms industry globally have disclosed that Nigeria has probably the second or third lowest tariffs in the world on data as well as on voice.
If Toriola and his strange bedfellows return to the Floor price determination of 2016 and 2020 and the various studies carried out in that regard, he will see a number of windows that could address the nightmare and save both the regulator Nigerian Communications Commission (NCC) and the rest of us these agonizing times.
Strangely, none of the operators has hit the maximum threshold of 50 naira per minute because of the competition to outdo each other by playing to the gallery in order to play smart and scurry subscribers’ attentions.
