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By Chinenye Anuforo
hard times await Nigerian should the Federal Government grant telecommunication companies’ request to hike tariff on calls and data.
The citizens are already battling high energy costs, inability to access foreign exchange and other challenges; so a hike in tariff by telcos will hurt businesses and households.
Telcos are justifying the planned tariff hike on the premise that virtually all the prices of goods and services in the country have skyrocketed except for the cost of data and call tariff, even though they are also hurt by inflation.
However, telecommunications operators, though agreed that there was a need for an urgent increase in cost of their services but said it cannot happen without the approval of Nigeria Communication Commission (NCC).
Speaking to Daily Sun on telephone interview, the President, Association of Telecommunications Companies of Nigeria (ATCON), Mr. Tony Izuagbe Emoekpere said even though all the operators in the industry wish to increase their prices because of the current market realities but cannot go against the law (regulation).
Recall that operators are still waiting for the recommendation of a cost-based study by KPMG, the consultant hired by the NCC. The study aims to recommend the most appropriate pricing structure for the industry, based on its findings considering the economic variables of the operating environment.
Emoekpere said the operators are waiting for the regulator’s decision on price review but the current prices of calls, data, and other telecommunication services are no longer sustainable because of the key increase in the Capital Expenditures (CAPEX) and Operating Expenditures (OPEX) of operators.
He argued that, since the operators cannot just increase the prices of their goods and services, some incentives should be considered to ease off some cost of production on them so as to sustain their businesses.
He said, “For instance, Diesel is a major requirement for operators, if there are some levies removed on that and some concession given for CAPEX expenses, the operators would be encouraged.”
To ease of the pressure on forex which is causing the inflation, he said it’s high time they look at their cost element. “The major cost element is power in terms of operations and from the CAPEX investment standpoint the major element is that, 90 per cent of all we utilise to provide our services are imported. Infact, not only the equipment are imported but also services.”
The ATCON President therefore suggested that, the operators on their own part, should think of how to domesticate some of these services to strengthen the naira.
“Some of the services that are being done by international organisations should be done locally. Anything that can be done locally or denominated in naira should be encouraged, so that the effect on dollar would be removed”, he said.
Earlier, the Chairman, Association of Licensed Telecommunication Operators of Nigeria (ALTON), Gbenga Adebayo, had voiced his concern on the current prices of calls, data, and other telecommunication services stating they are no longer favourable to operators.
He explained that even though the conversation to review prices is hard, it must be had for the industry to continue to deliver communication service in the country.
Adebayo said, “We also must have one hard conversation, I know it is difficult, but it is one we must have. The current pricing regime of the industry is not sustainable. We are basically selling below cost. It is not easy to talk about, but we cannot continue like this. We must allow market forces to determine prices. On our end, we must look at a more realistic pricing offering because today’s pricing regime is not sustainable.”
Telcos have been insisting on increasing the prices of their services following the increase in the cost of operation caused by rises in the cost of diesel and the devaluation of the naira
