By Chinenye Anuforo
The Nigerian telecommunications sector is at a crossroads, with operators clamoring for a tariff increase to offset mounting operational costs, while consumers grapple with increasing cost of living. This delicate balancing act has ignited a heated debate, pitting the need for industry sustainability against the welfare of millions of subscribers.
Telecom operators argue that the current tariff structure is no longer tenable given the escalating costs of doing business. They cite factors such as the depreciating naira, soaring inflation, multiple taxation, vandalism of infrastructure and the rising cost of energy as key drivers of their financial distress.
The chief executive officer, MTN Nigeria, Carl Toriola, has been vocal about the challenges facing the industry. At a recent event, he emphasized the need for tariff adjustment to ensure the continued provision of quality services.
Toriola said: “The telecom industry is a capital-intensive sector. We have invested heavily in infrastructure to expand coverage and improve network quality. However, the operating environment has become increasingly challenging due to economic headwinds.
“Price increase has become imperative, it is now an absolute necessity because the sector is in an intensive care unit and needs urgent rescue to avoid total collapse.”
He added that the situation has impacted investments in the sector as the financial returns expected from the industry are now so low that they threaten its very survival.
“Nobody is going to put in $1 with the expected return of 60 cents on the dollar,” he said.
Gbenga Adebayo, chairman of the Association of Licensed Telecommunications Companies of Nigeria (ALTON), echoed these sentiments, saying: “The telecom industry is facing unprecedented pressures. The cost of doing business has skyrocketed and, without tariff review, the sector risks becoming unsustainable.”
Adebayo said the country’s economic woes have impacted the telcos badly, to the extent that they might not be able to service all their facilities at the same time, meaning that the area they are able to service will enjoy better services, while other areas not so lucky at the time may just have to bear epileptic services.
He questioned why government found it difficult to take advantage of different advocacies to sustain a healthy telecom sector despite these advocacies come from verified data and indices.
For the average Nigerian, the prospect of increased telecom tariffs is a bitter pill to swallow. With disposable incomes already stretched thin, the additional financial burden could have far-reaching consequences. Many consumers argued that the quality of service does not warrant a tariff hike, citing issues such as poor network coverage, frequent call drops and slow internet speeds. For instance, a boutique owner at Surulere, Mrs. Ada Nnamdi, told Daily Sun that network has been terrible in her area in recent time. She said: “I am not even enjoying making calls, as network has not been steady. Let them give us quality service.”
For a 100-level student of Lagos State University (LASU), Ayomide Tunde, “increasing tariff at this time we are, is just inhuman. Things are so expensive in recent time. I can barely eat three times in a day. If not that I cannot do without data, as I need it for research, I would have ignored it.”
Tunde however appealed to government to stop telecoms operators from increasing tariff, as they are still making huge profit, despite the harsh economy.
“Telecoms have been increasing tariff without us knowing, because how can you explain the fact that I bought 3gb of data, but it cannot last for one month. Meanwhile, three years ago, I was using one gb of data for a whole month. Operators have been stealing from us,” a resident of Ajah spoke anonymously.
On their own part, consumer advocacy groups have raised concerns about the impact of a tariff increase on digital inclusion. They argue that higher costs could limit access to essential digital services, particularly for low-income earners and those in rural areas.
The National Association of Telecoms Subscribers (NATCOMS), Mr. Adeolu Ogunbanjo, acknowledged the operators’ plight but warns against any knee-jerk reactions. “We understand the challenges faced by the telecoms industry, but any tariff increase must be justified and consumer-friendly,” Ogubanjo stated.
Contrarily, speaking to Daily Sun, the Association of Telephones, Cable TV and Internet Subscribers of Nigeria (ATCIS), national president, Sina Bilesanmi, described the timing of the proposed tariff increase as “most insensitive” given the prevailing economic challenges faced by Nigerians.
“We are concerned that this strident call for a tariff hike is most unwelcome. It will impoverish telecom subscribers further, considering the realities on ground,” Bilesanmi stated.
He highlighted the significant contribution of the telecommunications sector to Nigeria’s GDP but emphasized that this does not justify burdening consumers with increased costs. “While we understand the industry faces challenges, we believe this increase places an undue burden on consumers, many of whom are already struggling with the current economic situation,” the president of ATCIS added.
The ATCIS urged the Nigerian Communications Commission (NCC) to intervene, saying: “We urge the telecom companies to show restraint in implementing these increases and to explore ways to minimize the impact on vulnerable consumers.”
The Nigerian Communications Commission (NCC) finds itself in a precarious position, caught between the demands of the industry and the interests of consumers. The regulator has a dual mandate: to promote competition and protect consumer rights.
A reliable source at NCC while acknowledging the challenges faced by the telecoms industry, emphasized the commission’s commitment to ensuring affordability and accessibility of telecom services. “We are aware of the operators’ concerns, but any tariff increase must be based on sound economic principles and must not adversely impact consumers,” the source stated.
The NCC had earlier told journalists that it has initiated a stakeholder engagement process to gather input on the proposed tariff adjustments. The commission has also vowed to intensify its monitoring activities to ensure that operators comply with quality of service standards.
Finding a sustainable solution to the telecom tariff conundrum requires a collaborative approach involving all stakeholders.
Industry experts suggested that telecom operators should explore ways to reduce operational costs, such as through energy efficiency initiatives, infrastructure sharing, and digital transformation.
Specifically, the chief executive officer, Jidaw Systems Limited, Mr. Jide Awe, argued that the situation is a tough one. He said: “There are no easy answers. It’s essentially a dilemma that requires a balancing act to resolve. Nigeria’s telecom sector is really facing challenging times. The sector’s players are obviously grappling with increasing operational costs.
“These have been driven by rising inflation, currency devaluation and the impact of fuel subsidy removal. The cost of maintaining and upgrading equipment, investing in new technologies and retaining the required human capital is also on the rise. Their demand for a tariff increase is therefore quite understandable.
“The operators argue with good reason that without increased tariffs, they may find it difficult to maintain service quality, sustain their infrastructure, invest in new technologies, or even remain financially viable.”
He also argued that Nigerian consumers are already under considerable financial strain due to the rising cost of living. Any increase in telecom tariffs could worsen this situation, making it more difficult for individuals and businesses to afford essential communication services.
“This is particularly concerning given that telecommunications have become an indispensable part of daily life. It plays a critical role in everything from banking and economic opportunities to education. Indeed, in today’s world, the right of citizens to digital inclusion has been recognized as a fundamental right,” he pointed out.
He therefore stated that while the cry of telecom operators is clear, it is equally essential to carefully consider the socio-economic impact on citizens.
Awe suggested the NCC must balance these two concerns – the needs of the telecom sector for continued growth and sustainability with the economic realities faced by Nigerian consumers.
“Telecom operators should be encouraged to introduce different pricing models with varying tariffs, innovative service packages and flexible service bundling. These can offer different value considerations based on consumer needs and financial capacity. Any changes or increases should also be implemented gradually with effective consumer protection in place.”
He also argued that since the removal of the fuel subsidy is partly responsible for the current economic challenges and the intended goal of this removal is to free up government resources for more targeted and sustainable interventions, the telecom sector should benefit from some of these savings.
“Given its indispensable role in ensuring all citizens have access to digital inclusion, this would align with the government’s strategic goal of improving the quality of life of citizens. It must however be implemented in a viable and strategic manner.
“Additionally, the potential to leverage the Universal Service Provision Fund (USPF) should be considered. Subsidies, grants, tax relief, incentives, import duty exemptions on essential telecom equipment, and the promotion of innovative and energy-efficient equipment should be explored creatively and purposefully to support telecom operators, reduce the burden on consumers, and prevent significant tariff increases.”
Awe therefore recommended innovative ways of supporting low-income consumers and more effective digital inclusion initiatives (such as digital literacy programs, community-based internet access, and internet services), that are free or low-cost, should be introduced. According to him, “it is crucial to ensure that these initiatives are tailored to the needs of those that will be most affected.”
He advised that realistic Public-Private Partnerships (PPPs) need to be developed to achieve these goals. “Collaboration can extend beyond industry and government to include academia, to include research into cost-reduction solutions for this area.
Regular interactions among stakeholders, including government, the NCC, telecom operators, consumer advocacy groups, and other relevant parties, are essential. These interactions will be useful for sharing practical experiences, listening genuinely to concerns, as well as monitoring, and evaluation of regulatory and strategic interventions. This engagement will build trust, understanding, and the capacity to develop innovative solutions to these complex issues faced by the sector that are balanced, acceptable, and fair to all,” the Jidaw boss said.