FG, Telcos set for showdown over tariff hike
Govt says no approval for increase as operators insist on upward review Call may cost N53/minute, 1GB data N2,800 Subscribers kick
Zakariyya Adaramola
The federal government and telecommunications operators under the auspices of the Association of Licensed Telecommunication Operators of Nigeria (ALTON) are set for a showdown over the latter’s proposed 40 per cent hike on calls and data tariffs in the country.
ALTON had in a letter, which has now been confirmed by the Nigerian Communications Commission (NCC) proposed a 40 per cent hike in call and SMS tariffs.
The operators said their decision was necessary considering the rising cost of business in the country.
The letter said the fee for calls will increase from N6.4 to N8.95 per second (N53.7 per minute) while the price cap for SMS will increase from N4 to N5.61. Though the letter was silent on data cost, Daily Trust gathered that one gigabyte of data will cost between N2800 and N3200 depending on the operators.
ALTON 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.
It noted that the war had resulted in a 35 per cent increase in their operating expenses due to an increase in energy costs.
ALTON added that the introduction of the five per cent 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,” the letter signed by ALTON Chairman, Engr Gbenga Adebayo 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.
However, the federal government through the NCC has kicked against the proposed hike. The commission said though the operators had written to it over the planned hike, it had yet to approve their demand.
“The operators themselves know that we have a laid down procedures for tariff review. We have yet to do any of the procedures so how can they talk of increase? For now, there will not be any price review in the industry until the procedures are followed”, NCC’s Spokesman, Dr Ikechukwu Adinde told Daily Trust.
But ALTON insisted yesterday on the increase, citing the high cost of diesel and its implications on the generally high cost of business as reasons.
ALTON Chairman, Gbenga Adebayo said: “We are concerned that unless there is an intervention to save this sector, operators will have no choice but to begin a process of price review. The state of security in our country is also of concern, we commend all our security agencies for the work they do to keep us all safe, the impact of the general state of security on the country is that we are not able to provide 24/7 support in certain areas as it is unsafe to send out service personnel to some parts of the country and to other at certain times of the day. ‘’
Daily Trust findings have shown that Nigeria has one of the lowest calls and data rates in Africa. One gigabyte cost an average of $50 (N27, 500) in most African countries, according to Statista.
But in Nigeria, it costs just between N1500 and N2000, depending on the operators and the packages chosen by subscribers.
Malawi, Benin, Chad and Namibia have the most elevated prices for mobile data, positioning among the 10 countries with the highest prices for data globally.
But Sudan has the lowest in Africa as one gigabyte costs $0.27.
Few factors influence the elevated prices of mobile data in Africa, such as the lack of infrastructure. In June 2020, around 56 per cent of the population in SubSaharan Africa lived within a range of 25 kilometers from fiber networks. Furthermore, the level of taxation in the mobile sector counted also as a major barrier to more affordable internet. Taxes and fees paid by mobile operators in Sub-Saharan Africa correspond to 26 per cent of the sector’s market revenue.
Meanwhile, the National Association of Telecommunications Subscribers (NATCOMS) has warned against the planned tariff hike.
NATCOMS President, Deolu Ogunbanjo said the federal government should not allow any hike in tariffs lest Nigerians will be pushed to the wall.
Ogunbanjo said the impact of revenue loss by operators due to the 71million subscribers banned from making calls was huge on the telcos.
He, therefore, urged the FG to allow 71million subscribers banned from making calls to use their lines to make calls so that the operators could have more revenue.