Much Ado About Telcos’ Agitation for Tariff Hike

Undaunted by past failure to secure the go-ahead of regulators on their bid to hike tariffs, telecoms operators have launched a new campaign to effect tariff increase to reflect the current economic realities in Nigeria, writes Emma Okonji

Like  operators in other sectors of the economy, Nigerian telecoms operators have again indicated their resolve to increase tariffs for their services.  The complaint is that the current economic realities have made nonsense of their current tariff plans. Similar tariff adjustments have been effected in virtually all the other sectors such as food, beverage, oil and gas, electricity, transportation, housing entertainment, manufacturing, and banking, among others.

However, each time telecoms operators raise the issue of tariff hikes, they are faced with strong resistance from the public, which they serve, and from the regulator, the Nigerian Communications Commission (NCC), which regulates the telecoms industry.    

The seriousness of the situation was captured by the Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo, who complained about the high cost of telecoms equipment supply, which he said has tripled over the years. He raised the issue of the high cost of diesel in running telecoms base stations, as well as the high cost of electricity and transportation, which according to him, are adversely affecting telecoms operators in maintaining quality service delivery to telecoms consumers. He said telecoms operators would no longer continue to bear the burden of the high cost of telecoms operations, insisting that telecoms operators will have to shift the cost to telecoms consumers through tariff hikes. 

Worried that telecoms operators may soon run out of business, if they continue to bear the burden of the high cost of doing telecoms business in Nigeria, without shifting the cost to consumers, coupled with the resistance from the telecoms regulator, the telecoms operators, penultimate week, took a step further to collaborate with other telecoms companies that are offering different telecoms services, to further drive their agitations for an upward review of general tariff framework.  

Collaboration 

 ALTON and The Association of Telecommunications Companies of Nigeria (ATCON), representing Mobile Network Operators (MNOs) and telecommunication companies in Nigeria, collaborated to further drive its course for the upward review of telecoms tariffs across networks.

Both associations, in a joint statement, signed by their leaders, called on the federal government to take decisive actions in addressing tariff review, regulatory independence, and other numerous issues confronting the telecommunications industry. 

While Adebayo signed on behalf of ALTON, the President of ATCON, Tony Izuagbe Emoekpere, signed on behalf of ATCON.  

According to the associations, despite the adverse economic headwinds, the telecommunications industry remains the only industry yet to review its general service pricing framework upward in the last eleven years, primarily due to regulatory constraints. They are of the view that for a fully liberalised and deregulated sector, the current price control mechanism, which is not aligned with economic realities, threatens the industry’s sustainability and can erode investors’ confidence. 

ATCON and ALTON therefore called on the government to facilitate a constructive dialogue with industry stakeholders to address pricing challenges and establish a framework that balances consumers’ affordability with operators’ financial viability. 

Members of both bodies who are key stakeholders in the telecoms industry underscored the urgent need for collaborative efforts between the public and private sectors to overcome obstacles hindering the sector’s growth and development.  

They listed the major challenges plaguing the telecoms sector to include unsustainable telecoms tariff framework, lack of regulatory independence, infrastructure deficit, harsh business environment, multiple taxation and regulations, prohibitive Right of Way (RoW) charges, inadequate electric power supply and vandalism of telecommunications infrastructure, among others.

 “By fostering a conducive regulatory environment, prioritising infrastructure development, enhancing security measures, and facilitating pricing adjustments, the government can unlock the full potential of Nigeria’s telecommunications sector, driving economic growth and societal development. ALTON and ATCON reaffirm their commitment to working collaboratively with the government to address the challenges facing the telecommunications industry in Nigeria,” the statement said.  

In the areas of assets and network infrastructure protection, both bodies are advocating a legislation that designates telecommunications infrastructure as Critical National Infrastructure (CNI). 

 State of Telecoms Industry  

ATCON, last week, at its Annual General Meeting (AGM), which was held in Lagos, had an extensive discussion on the dilapidating state of telecoms industry, and proffered solutions to address them. 

In discussing the state of telecoms industry in the country,  ATCON members insisted that urgent steps must be taken by the NCC for an upward review of telecoms tariffs across networks.

The members insisted that telecoms companies cannot continue to bear the burden of the high cost of doing telecoms business in Nigeria, without shifting the cost to telecoms consumers through tariff increases. 

According to them, telecoms companies risk the danger of closing down telecoms businesses in the next year, if the issue of tariff hike is not addressed by the telecoms regulator. 

President of ATCON, Tony Izuagbe Emoekpere, who opened the discussion on the state of telecoms industry in Nigeria, said there was a need to protect telecoms operators to sustain telecoms business in Nigeria, adding that the discussion with the industry regulator for tariff increase in the telecoms industry is ongoing.

Immediate past President of ATCON, Ikechukwu Nnamani, said supply cost for telecoms equipment has tripled over the years, while telecoms companies continue to bear the extra cost. 

Other members who spoke said the cost of doing telecoms business has gone exponential. According to them, the electricity bill for a single telecom company operating in Lagos jumped from N800,000 monthly to N10 million monthly, and the cost of diesel to run generators has gone up in the last six months. 

Initial Agitations  

Telecoms operators have consistently pushed for an increase in the cost of delivering telecoms services, a development that is gradually drawing a battle line between the telecoms industry regulator and the telecoms operators. 

It first started in April 2022, when ALTON wrote the NCC, demanding a 40 per cent hike in a voice call, Short Message Service (SMS), and data services, after they had reviewed the high cost of buying diesel to power their base stations, among others, but NCC turned down the request to maintain cost-effective regulation across the telecoms sector. 

Telecoms operators expressed their worries over the negative impact of the economic and security issues on the Nigerian telecommunications industry, which they said had adversely affected the cost of telecoms service delivery across networks. 

NCC’s Position  

In all the agitations from telecoms operators for a hike in telecoms tariff, NCC has continued to show some resistance, in a bid to protect the telecoms industry and the subscribers from any planned tariff hike, and to also make its position known to all that it is a consumer-centric regulator. 

NCC had in 2022, ordered MTN and Airtel to immediately reverse the hike in their data tariff plan, which they implemented on their networks in 2022. 

Telecom subscribers to MTN and Airtel, in 2022, suddenly realised that the operators had commenced a new data tariff plan, which was an upward review of the cost of their voice and data plan, without prior notice. 

Airtel, at that time, increased its monthly bundle for a data plan to N1,100 for 1.5GB monthly data; N1200 for 2GB monthly data; N1,500 for 3GB monthly data; N2,200 for 4.5GB monthly data; N2,500 for 6GB monthly data; N3,300 for 10GB monthly data; N4,400 for 11GB monthly data; N5,500 for 20GB monthly data. 

MTN also increased its monthly bundle for data plan to N1,100 for 1.5GB monthly data; N1,200 for 2GB monthly data; N1,500 for 3GB monthly data; N2,200 for 4.5GB monthly data; N2,500 for 6GB monthly data; N3,500 for 12GB; N5500 for 20GB monthly data; N6,000 for 25GB monthly data.

Following reactions from telecom subscribers, who kicked against the hike, NCC, in a statement, ordered the mobile network operators to reverse the hike, and it was immediately reversed.

Again in 2022, ALTON wrote the NCC, demanding a 40 per cent hike in telecoms tariff, and it was also rejected by the NCC. 

Reacting to ALTON’s letter that called for a 40 per cent rise in the cost of telecoms service delivery, the NCC, in a statement, said that no tariff increase will be implemented by the operators without due regulatory approval by the commission.

NCC insisted that Mobile Network Operators (MNOs) were not allowed to hike prices either individually or collectively without recourse to NCC, following the outcome of a cost study.