Telecom operators considering a hike in the price of data, calls and SMS

Nigerians may soon have a new thing to complain about as telecom operators are considering reviewing the current pricing structure of calls, SMS, and data. According to the Association of Licensed Telecoms Operators of Nigeria (ALTON), the current structure is no longer sustainable.  

During an interview, Gbenga Adebayo, the chairman of ALTON, stated “What we are charging, today, is certainly not sustainable. It is actually only a matter of time; either it will impact on scale of service or the industry’s performance and service availability. But certainly, it is not sustainable…what we have currently. We are living on borrowed time.”  

While Adebayo declined to confirm whether Nigerians may pay more for calls, data, and SMS, his response to the question is not entirely comforting. He explained that the organization was assessing the situation and would make a decision soon. However, he concluded by reiterating that the current pricing structure had run its course. That also already hints at a potential rate hike. 

ALTON’s chairman shed light on the challenges plaguing the telecom sector at the 2023 Nigerian Telecommunications Indigenous Content Expo. Aside from citing regulatory interventions as one of the problems, he also blamed the growing cost of diesel for the sector’s woes. 

Telecom companies rely heavily on diesel to power their base stations which ensures subscribers can keep enjoying services like data and SMS. They consume roughly 40 million litres of diesel monthly, making them significant users. The cost of diesel climbed to N650 per litre following the approval of the proposed value-added tax (VAT). 

Today, the product retails for between N900 to N950 per litre thanks to the recent removal of subsidies on petroleum products. Another government policy, the unification of the foreign exchange rate, has also made it difficult for telecom operators to sustain their current business model. Unsurprisingly, MTN suffered a 29.24% dip in profit due to this policy. 

Adebayo further stated that the country’s economic slump caused by COVID-19 and the Russia-Ukraine conflict had negatively impacted telecom operations. 

Read also: Banks vs. telcos N120bn USSD debt crisis may soon be over as banks finally submit repayment plan

Potential impact of telecom rate hike 

Last year, ALTON requested a 40% hike in the price of calls, SMS, and data charges. It cited the rising cost of doing business as a major reason. That same year, the NCC ordered telecom operators to reverse the tariff hike they introduced. According to the regulator, that decision was implemented without its approval. 

Today, Nigerians are on the cusp of facing a tariff hike, and one can only wonder how this could affect the average citizen. After all, transport, food, and other essentials have significantly increased following the removal of fuel subsidies. Can they take on increased rates for SMS, data, and calls? Many will disagree. 

Meanwhile, the NCC recently called on telecom companies to consider investing in renewable energy solutions to lower their operating costs and carbon emissions. Of course, the most pressing need is the operational costs. Doing that would significantly reduce their dependence on diesel. 

But then the government also has a role to play in this. It should make sizable investments in ensuring there’s easy access to the raw materials needed for green energy products. It should also consider introducing subsidies on renewable energy sources to drive adoption among players in the telecoms scene.