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Telecommunication services are to go up by 40% in Nigeria should the Nigerian Communications Commission (NCC) accept a proposal by telecom operators.
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Telcos have proposed a new price floor of calls from N6.4 to N8.95 while the price cap of SMS will rise from N4 to N5.61 to reflect what they termed as market realities underscored by an inflationary cost of providing services in the country.
In a letter titled, ‘Impact of the Economic and Security Issues on the Telecommunications Sector,’ to the telecom regulator by the Association of Licensed Telecommunication Operators of Nigeria (ALTON), the umbrella body for telcos argued that cost of doing business in Nigeria has risen well above 40% in the last few years.
ALTON which has MTN, Glo, Airtel and Etisalat as members, said the telecommunication industry has been negatively, financially impacted following the economic recession in 2020 and the effect of the ongoing Ukraine/Russia crisis.
An increase in energy costs has also increased overall operating expenses by 35% including the introduction of the recent excise duty of 5% on telecom services.
Part of the letter reads:
“As the commission may be aware, the power sector under the supervision of its Nigerian Electricity Regulatory Commission of the power sector in November 2020 undertook a review of electricity tariffs to cater for the economic headwinds reported above.
“In view of the foregoing, 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. Details are hereunder:
“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.
“With respect to voice an SMS cost, ALTON respectfully requests the commission to consider a mark-up approach to address the upward price adjustment desirable for the industry. We have enclosed herein and marked as ‘Annexure 1’our proposal in that regard.
“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.
“In implementing the said recommendations, however, we recommend that the 40 per cent increase in the cost of doing business be factored in to arrive at a cost price per GB in view of the current economic situation.”
ALTON is led by its Chairman, Gbenga Adebayo.
