The 50 per cent tariff adjustments approved by the Nigerian Communication Commission(NCC) for the telecommunications companies are seriously ruffling feathers within and outside the industry. There have already been exchanges of britbats and blistering fireworks between the NCC and some critical stakeholders over the tariff hike.
For good measure, the raging fire is not about the hike per se. The obloquy is rather about the margin of the approved tariffs. Notably, virtually all the stakeholders, including the manufacturing sector and the National Association of Telecommunications Subcribers(NATCOMS), are in consensus that the telecom firms deserve tariff adjustments to continue to survive the negative economic headwinds, signposted by spiraling inflation that has led to astronomical operational costs and the capital-intensive nature of the business.
However, while NATCOMS, which is said to represent about 157 million Nigerians, is pushing for the NCC to slash the percentage from 50 per cent to 10 per cent, the Central Labour—The Nigeria Labour Congress(NLC)— is, in fact, demanding that the hike should not be more than five per cent in view of the current economic realities. The NCC and the telecom firms, however, demur. They posit that anything lower than 50 per cent will be too infinitesimal to bail the telecom firms out of the financial woods since among their critical and immediate needs is optimisation of ageing systems.
The NLC has taken serious umbrage at the seeming recalcitrance of the regulator, NCC, and has, therefore, scheduled a rally for tomorrow, Tuesday, preparatory to a possible showdown if the authorities remain unyielding. The NATCOMS too is considering possible legal option to push its position for the tariff slash to 10 per cent.
In its own case, however, one of the most virulent critics of the tariff hike, the Socio-Economic Rights and Accountability Project(SERAP), is in a hurry to legally wrestle the government, through the NCC, over the tariff adjustments. It has already filed a suit against the NCC over the issue.
SERAP, which has a predilection for always resorting to legal fireballs over public issues of interest, in the suit it filed penultimate Friday, described the tariff hike as “arbitrary, unconstitutional, unlawful,unfair and unreasonable.” The body is asking the court to determine whether or not NCC’s decision to authorise the tariff hike violates Nigerians’ freedom of expression and access to information.
“The unilateral decision by NCC to authorise the telcos to hike telecom tariffs by 50 lper cent is arbitrary and inconsistent with constitutional guarantees,” SERAP avers in the filed suit, which is yet to be mentioned for hearing.
The NLC, NATCOMS, SERAP and others, which are opposed to the 50 per cent tariff adjustments, are doing so because of the current economic tailwind. They contend that the tariff hike has come to exacerbate the already challenging economic conditions, disproportionately affecting low-income households and small businesses struggling to navigate rising inflation and a volatile economic climate.
Prior to the recent approval by the NCC, the telecom firms had been hammering on how an increase in tariffs was essential for the survival of the sector amidst the current inflation and other economic challenges in the country.
The Chief Executive Officer(CEO) of MTN Nigeria, Karl Toriola, had threatened that the telecom company might shut down if the tariffs were not reviewed. Toriola, who said this in October, 2024 during a tour of MTN’s facilities by Fellows of the Media Innovation Programme in Ibeju-Lekki, Lagos, explained that the sector was facing severe financial strains, especially from escalating diesel prices required to power base transceiver stations.
“There should be no delusion; if the tariffs do not go up, we will shut down,” he bemoaned, underscoring the urgency of tariff adjustments to reflect current economic realities. Like Toriola, others, including subscriber associations and network operators, had also voiced their concern over the economic situation of the country and its direct impact on their operations.
One of them, the Chief Executive Officer of 9mobile, Obafemi Banigbe, explained that the telecom industry had been badly hit by the current naira devaluation, forcing major telecom operators to declare significant losses.
Banigbe disclosed that the costs incurred by the telecom operators had significantly increased, citing TowerCos, which he said increased their prices by over 300 per cent. He added: “This is outside the cost of diesel, insecurity, vandalism, maintenance of sites, infrastructure upgrades, among others.”
The NCC, had in a statement penultimate Monday, announced the approval of a request by the network operators to increase tariff, however, capped the hike at a maximum of 50 per cent.
The commission, in a statement by its Director of Public Affairs, Reuben Muoka, said the adjustments, though lower than the over 100 per cent requested by the network operators, were arrived at taking into consideration ongoing industry reforms that will positively influence sustainability.
These adjustments, the statement said, will remain within the tariff bands stipulated in the 2013 NCC Cost Study, and requests will be reviewed on a case-by-case basis as is the commission’s standard practice for tariff reviews. It will be implemented in strict adherence to the recently issued NCC Guidance on Tariff Simplification, 2024.
“Tariff rates have remained static since 2013, despite the increasing costs of operation faced by telecom operators. The approved adjustments are aimed at addressing the significant gap between operational costs and current tariffs, while ensuring that the delivery of services to consumers is not compromised”, the NCC said in the statement.
With the approved tariffs, Nigerians are going to pay more for phone calls, SMS and data for the first time in 12 years. The minimum acceptable price for phone calls will move from N6.40k to N9.60k per minute. On average, the cost of phone calls will rise from N11 to N16.50k per minute.
For SMS, Nigerians will pay a 50 per cent increase on existing charges of N4 per SMS sent. Each SMS will now cost N6. The 50 per cent hike in data rate means Nigerians will see a hike in the average price of N350 per gigabyte to N525 per GB.
However, NATCOMS, which has l’mqp been broaching possible legal option over the tariff hike, said even though they(NATCOMS) agreed that tariff adjustments were long overdue for the telecom firms, they can only tolerate a marginal hike of 10 percent. NATCOMS’s National President, Adeolu Ogunbanjo, told newsmen that this marginal increase was necessary to address the rising costs faced by telecoms companies.
He admonished that the government and NCC should rather brainstorm and find a workable solution to address the financial struggles of telecom companies, a sustainable solution that balances the needs of telcos with those of their customers.
Ogunbanjo revealed that the telecoms companies had also suggested load shedding as an alternative to price increase, that the operators suggested that they would provide services only in certain areas at specific times.
The NATCOMS president, however, rejected the proposed load shedding option,which he warned, would have devastating effects on key sectors of the economy. He stressed that load shedding would disrupt critical sectors, including banking, education, health and businesses, which rely heavily on telecom services, just like they are doing for electricity. It means it is going to affect our businesses.
“For instance, in Lagos State, Agege, Apapa, and Ikeja, probably they will have service today and other areas will not have; you know, they start rationing like that. That is load shedding, meaning that service is off maybe for one day in the week or something. This will affect a lot of businesses. Many things are virtual these days.
“Meetings are done online. So, if they should do that, it will affect us. And many of us use all the social media platforms to advertise our products.
When telecoms by mobile network operators also cease, it will affect us virtually,” the NATCOMS boss, therefore, warned that subscribers would hold telecom companies responsible for any disruption in services.
He cautioned that load shedding could jeopardise not just the telecom industry, but also the economy as a whole. “When you now look at the quality of service the telecoms companies are rendering these days, it is very poor and they are also complaining.
“Don’t forget that they said their operations were getting burdensome, because the rising costs of things such as petrol, diesel and some other things that will make the network function appropriately, are involved.
“They are complaining. I think in the last 11 years, they have not increased their service charge. What happened in the last 15 to 18 months, since May 29(2023), is beyond everybody. Operational costs have increased but not physically, like we see in petrol,” he said.
We believe that tariff adjustments are, indeed, long overdue in the telecommunications subsector in view of the macroeconomic changes since the last tariff hike of 2013. The volatile economic climate since May, 2023 when subsidy on fuel was removed and the naira was floated was particularly arcebic.
There was virtually no sector of the economy that had not effected hikes in its operations except the telecom subsector. So, a new regime of tariffs has been long overdue. However, we believe that since mobile telecom concerns virtually every Nigerian, both the high and the low-income earners, tariff adjustments ought to have been juxtaposed with the interest of the subscribers.
For this reason, we admonish that the 50 per cent hike be implemented in five phases over five years’ period. In other words, let the new tariff regime be implemented 10 per cent yearly for the next five years so the already overburdened Nigerians can absorb the tariffs without suffering financial hiccups that could have devastating consequences.
The beauty of an affordable tariff structure such as is currently running is that it encompasses the most vulnerable population. There is hardly any Nigerian today, however poor or depraved, who is not clutching at least the cheapest handset with a mobile network sim in tow.
This has made Nigeria one of the most vibrant mobile telecommunications as well as Internet and Computer Technology-compliant nations at least in Africa. This is in spite of the fact that Nigeria embraced the technology a bit later than many other countries. The telcos have borne great u costs and made a lot of sacrifices, especially with a regime of competitive promos they periodically embark upon that have ensured that the poorest of the poor have an access to mobile telephone advantage. This is highly commendable.
We appeal that the telcos consider the fun in all these beautiful ‘side-pluses’ and embrace the option of implementing the approved 50 per cent tariff adjustments in a five-year phased regime, so we could retain our continental telecom ‘epaulettes.’
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