Airtel CEO says 100% tariff hike is required for telecom sustainability in Nigeria

Airtel Nigeria’s Chief Executive Officer, Dinesh Balsingh, has explained that approving the proposed 100% tariff hike is the only way the Nigerian government can ensure long-term sustainability in the telecom sector. 

Recall that Nigerian telecommunications operators recently proposed a 100 per cent tariff hike on voice, data, and digital offerings to the Nigerian Communications Commission (NCC), noting that the demand is paramount for the sector’s sustainability and not for profitability.

While expressing his opinions, the Airtel Chief reinstates the sector’s commitment to delivering strong connectivity and fostering digital inclusion. He then pointed out that a tariff adjustment approval would further fuel their goals and ambitions.

Balsingh added that mobile operators have experienced a 300 per cent increase in operating costs over the past few months. This makes tariff hikes inevitable.  

“For over a decade, tariffs have remained static despite the dramatic increase in operating expenses, which have surged by over 300 per cent in the last 18 to 24 months alone. To continue providing high-quality services and meeting the growing demand for digital connectivity, it has become essential to realign our pricing structure with economic realities,” he said. 

He expressed that there have been continuous network upgrades and a need to expand telecommunications infrastructure to cater to the increasing demand for digital services across various sectors of the country.

“The increasing demand for digital services across sectors such as education, banking, and healthcare requires us to continually upgrade our networks to deliver more capacity and improve service quality. These investments come at a cost, that must be shared proportionally to guarantee long-term viability,” Balsingh added. 

Balsingh also said the tariff hike will enable mobile operators to expand coverage, strengthen network security, and introduce cutting-edge technologies. He noted that the adjustments will directly enhance the quality of connectivity for Nigerians to ensure that no one is left behind in the country’s digital transformation journey.

On Airtel Nigeria, the boss emphasized that the company remains committed to supporting Nigeria’s vision of becoming a digital economy leader in Africa, empowering businesses, driving innovation, and fostering inclusive growth. He added that Airtel will ensure that adjustments are implemented with affordability in mind while ensuring minimal impact on consumers. 

“Our commitment to quality service remains unwavering. While significant tariff adjustments have become necessary, we understand the importance of gradual implementation to support our customers’ financial positions. This step will enable us to invest in capacity, expand coverage, and enhance service delivery, ensuring Nigeria remains competitive in the global digital landscape,” he said.

Another major stakeholder in the industry, Karl Toriola, MTN Chief Executive Officer last week emphasized the need for sustainability, considering the telecommunications sector as a holding pillar of Nigeria’s economy. He added that the sector has experienced tough economic times owing to inflation and naira devaluation, just like every other sector.

“Sustainability is at the heart of what is driving the economy. If you don’t have a sustainable industry, the economy and well-being of the people will be affected. Yes, everyone in Nigeria has gone through difficult times in the last two years due to economic challenges: inflation, and naira depreciation among others. For us, we are not talking about profitability, but sustainability. Profitability will come on a long-term basis,” Toriola expressed.

Defending the need for tariff adjustment, Toriola noted that operators bore several raw materials costs such as batteries, fibre cables, and base station towers. This also includes operating costs for software licensing fees which have been on a consistent increase.

“If you imagine a company that four or five years ago, earned N1 trillion and was making 10 per cent profit- N100 billion, looking at this, the total cost put together was N900 billion. Subsequently, two or three things happened like devaluation of the naira. The official exchange has gone up from about N420/$ or N450/$ to N1550/$ at the end of the year. So, that has driven our cost structures up drastically. Diesel has gone from pre-COVID-19 times of N200-N300/litre to N1000; petrol has gone up severalfold. This is even as power generation and the cost of procuring materials have equally gone up,” he added.

This move for a tariff hike by telecom operators is the first in the past 11 years. Telecommunications companies are cut within a red line of dealing with increasing operational costs. Hence, they are seeking approval for a 100% tariff increase with the belief that this will help cover the rising operating cost.

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