How a 40% increase in call, data tariff will affect Nigerians

Godfrey Elimian
*Telecom operators say increased operational cost is the reason for hike in tariff
Telecoms operators ask NCC for increase in tariff
Nigerians to pay more tariffs for calls and other

Network providers, under the Association of Licensed Telecommunication Operators of Nigeria (ALTON), have, in a letter titled ‘Impact of the Economic and Security Issues on the Telecommunications Sector,’ to the Nigerian Communications Commission (NCC), proposed an increase in tariffs on calls, text and data by 40%, citing the increased cost of doing business and worsening inflation in the country.

According to the association’s proposal, call prices will rise from ₦6.4 to ₦8.95, while the SMS price cap will rise from ₦4 to ₦5.61.

The GSM operators argue that the telecommunications business has been harmed financially due to the country’s economic downturn in 2020 and the ongoing Ukraine/Russia issue, consequently increasing energy costs, increasing their operating expenses by 35 per cent. They also mentioned that the cost of doing business had risen by 40% in the past years.

They went on to say that the recent imposition of a 5% excise charge on telecom services had added to the industry’s burden of many taxes and levies.

Read also: NCC says 5G service will be available in Nigeria by August 24, issues letters of licence to MTN, Mafab

ALTON’s letter read in part, “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:

Nigerians To Pay More As GSM Operators Plan 40% Tariff Hike - 9jaflaver

“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 has advised the commission to assist the industry by exploring and providing other forms of punishing operators other than punitive monetary sanctions; extend the payment timeline for relevant regulatory levies and fees, and persuade the Federal Government to sign an executive order declaring telecoms infrastructure as critical national infrastructure to reduce costs spent replacing damaged and stolen equipment.

What are the implications of a tariff hike for Nigerians?

In an interview with Leadership Newspaper, the Head, Operations at ALTON, said, “since 2003, we didn’t review the tariff, not because it has been all great, (like other sectors, telecommunication industry was financially impacted following Nigeria’s economic recession in 2020), but because, we didn’t want to add unnecessary financial burden on Nigerians.

“However, in recent times, the high cost of operation has become unbearable, ALTON’s head of operations said, adding, “The cost of doing business in Nigeria has increased tremendously in the past years, and operators could no longer bear the loss. For instance, the high cost of diesel, multiple taxation and insecurity are the major reasons why operators are clamouring for an increase in call and SMS tariff.”

According to the NCC, there are 198,123,431 mobile (GSM) active lines in Nigeria as of February 2022. This represents over 40% of Nigeria’s population knowing that users usually use more than one SIM card.

But, with the country’s inflation rate currently at 15.70%; and a decreasing purchasing power, Nigerians already say that the proposed hike in tariffs, notwithstanding the claimed increase in operational costs, may be coming at the wrong time.

The President, National Association of Telecoms Subscribers (NATCOMS), Deolu Ogunbanjo, said operators should not increase the suffering of Nigerians by increasing tariffs.

According to him, what the operators should be appealing to the Federal Government to do is to unconditionally lift the ban imposed on over 70 million subscribers who have not linked their Subscriber Identity Module (SIM) with their National Identity Number (NIN) from originating calls from their mobile phones.

Also speaking, the President, Association of Telephone, Cable and Internet Subscribers of Nigeria (ACTIS), Sina Bilesanmi, said any increase in tariff now will be bad for the consumers who are already impoverished by government policies.

The ACTIS chief said the quality of service (QoS) does not even support any hike in end user tariff, adding that the operators must first improve service quality before contemplating tariff hike.

“Yes we know the operators are also affected by the pains the ordinary man on the streets feels but it will not be the best for them to increase tariff now. If they do it, it will be an increase in the suffering of the people,” he said.

Nigerians on Twitter

@VanityIsBliss: I hear telecoms or network providers in Nigeria wants to increase their call tariffs and data by 40%… I think its about time I stop posting videos and Gifs, maybe it’s time I delete Instagram, TikTok, and all those data consuming video apps…😂😂

@rowlason: Data and call tariff hike; Nigeria have mercy on us naa! Hike on everything, how are we going to survive this govt? The worst is that there is no corresponding increase in the income of the average citizens. May God help us navigate through this inhumane situation in Nigeria.

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