In what sounded like a death knell or an epilogue as we know it in literature, the Association of Licensed Telecoms Operators of Nigeria (ALTON) chairman, Gbenga Adebayo warned that “if nothing is done, we might begin to see in the new year grim consequences unfolding, such as service shedding. Operators may be unable to provide services in some areas and at some times of the day, leaving millions disconnected. Significant economic fallout will result in businesses suffering from a lack of connectivity, stalling growth and innovation. National economic disruption will also ensue, as key sectors like security, commerce, healthcare and education, which rely heavily on telecom infrastructure, will face serious challenges.”
This is frightening, especially if such threats are carried out with full force. But can the operators act unilaterally? The answer is no, and that is where the complexities begin.
Just last week, the government agreed to demands for tariff hikes in the telecommunication industry, expected to take effect in the coming weeks. This move aims to address sustainability challenges in the telecom sector, implying that prices for calls, data, and SMS will rise for the average Nigerian.
However, the hike will fall short of the 100 percent increase requested by service providers, as the government seeks to balance sector growth while protecting Nigerians from excessive financial burdens. Bosun Tijani, the Minister of Communications, Innovation, and Digital Economy, disclosed this during an industry stakeholder forum in Abuja on January 8, 2025.
In line with this, the Nigerian Communications Commission (NCC) introduced the Guidance for the Simplification of Tariffs, signed by the NCC Chief on November 25, 2024. The guidelines aim to enhance transparency, improve consumer understanding, and foster fair competition in the telecom sector.
The guidelines, backed by the Nigerian Communications Act (2003), require telecom operators to ensure clarity in tariff structures. For instance, the guidelines stipulate that when a subscriber requests details of their tariff plan on the USSD platform, the following information must be provided:
- Name of the plan
- Validity period (if applicable)
- Rates per second and minute for on-net/off-net calls
- Rates per megabyte, kilobyte, or gigabyte
- Rates per SMS for on-net/off-net messages
- The number of add-ons subscribed to
Further provisions emphasise consumer protection, such as ensuring that bonuses on promotions are clearly stated in actual value, standalone data bundles are fairly priced, and bundle depletion prioritises shorter validity periods. The NCC has also mandated that any operator offering discounted services on third-party platforms, such as banking applications, must obtain explicit prior approval from the commission.
The powers of the NCC to regulate the sector have never been questioned. As the engineroom of Nigeria’s economy, telecommunications contribute over 14% to the Gross Domestic Product (GDP) and remain one of the largest single contributors. If the sector faces a crisis due to economic headwinds, the entire economy is at risk.
Operators, however, allege that the government may have turned telecom services into a palliative measure for Nigerians, against the wishes of mobile network operators (MNOs), thereby suffocating their businesses. They claim that the regulator is playing games, particularly by delaying or rejecting their demands for tariff increases.
The regulator, on the other hand, asserts that it operates under the powers granted by the Nigerian Communications Act (2003). Sections 108 and 109 of the Act empower the Commission to make decisions independently, ensuring consumer protection and fair competition.
Despite these powers, operators argue that some NCC regulations are outdated and fail to address the realities of modern telecom operations. A significant example occurred in 2022 when the operators requested a 10 per cent tariff increase, which was initially approved by the NCC but later reversed due to ministerial intervention. An NCC insider revealed that the minister unilaterally overturned the decision, prioritising consumer protection at the expense of the operators’ financial health.
An operator expressed concerns, stating, “It’s already very tough doing business in Nigeria. We don’t want the government to come after us with all its powers.” Analysts also criticised the regulatory environment, noting that once floor and ceiling prices are established, operators should have the latitude to adjust within those bands without requiring additional NCC approval.
The chairman of ALTON, Gbenga Adebayo, highlighted the dire challenges facing the sector. He emphasised that without a tariff review, operators cannot guarantee service availability. Rising operational costs, skyrocketing energy expenses, relentless inflation, and volatile exchange rates have placed unsustainable burdens on network operators.
“Despite these mounting pressures, tariffs have remained stagnant, leaving operators trapped in a financial quagmire,” Adebayo lamented. According to him, the resources required to maintain, expand, and modernise telecom networks are no longer available. Without intervention, the future of the sector is at grave risk.
Adebayo’s concerns point to an urgent need for dialogue and action. The telecom sector, as a critical driver of Nigeria’s economy, cannot afford to crumble under the weight of these challenges. As the government and regulators attempt to balance consumer protection with industry sustainability, the question remains: can Nigeria’s telecom sector weather the storm without significant reforms?
Keeping the sector afloat requires proactive measures, including revisiting tariff frameworks, addressing outdated regulations, and fostering a more collaborative relationship between operators and regulators. The stakes are high, not just for the telecom industry but for the Nigerian economy and society at large.
The ALTON chairman noted that stakeholders have worked diligently over the years to sustain the telecommunications sector by upholding its values and importance in society.
“However, let me be clear: our work is far from over. It is not enough to have kept the sector afloat; we must now focus on securing its future. The sustainability challenges we face today are not just a passing storm – they are a clarion call for decisive action to ensure that this industry thrives for generations to come.”
Due to increasing operational costs, telecom operators in Nigeria have been clamouring for a tariff increase since last year. In a joint statement by the Association of Licensed Telecom Operators of Nigeria (ALTON) and the Association of Telecommunication Companies of Nigeria (ATCON), the operators highlighted that the telecom industry is the only sector that has not reviewed its prices despite the country’s rising inflation and other economic pressures warranting such an increment.
They attributed this to regulatory restraints that prevent them from pricing appropriately. The Nigerian Communications Commission (NCC), which regulates the telecom industry, does not allow operators to implement any price change without prior approval. The NCC has stated that a cost-based study is ongoing to determine whether it would approve price increments for the operators.
However, the proposals submitted in 2022 and 2024 were truncated in August 2024. ALTON decided to shelve the plans, citing alleged misrepresentation. The operators explained that their good intentions to secure a slight adjustment in end-user tariffs for voice calls and data services were misunderstood, leading them to pause the push for increments.
Under the aegis of ALTON, telecom operators had sought the Federal Government’s approval, through the NCC, to adjust call and data tariffs to reflect the rising costs of operation. However, the NCC declined their request, a decision insiders claim was driven by political expediency. In response, the telcos argued that their services should not be used as palliatives to mitigate the effects of the country’s ongoing economic hardships.
In May 2022, mobile network operators (MNOs) proposed a 40 per cent tariff increase. Under the auspices of ALTON, they requested a hike in call and SMS tariffs, citing the rising cost of doing business. A letter to the NCC proposed that call fees increase from ₦6.4 to ₦8.95, while the price cap for SMS should rise from ₦4 to ₦5.61.
The association emphasised that the telecommunications industry had been financially strained by the economic downturn during the COVID-19 pandemic and the ongoing Russia-Ukraine war. ALTON also pointed out that the introduction of a 5 per cent excise duty on telecom service providers has exacerbated the burden of multiple taxes and levies on the sector.
“ALTON considers it expedient for the telecommunications sector to undergo periodic cost adjustments through the commission’s intervention to minimise the impact of the challenging economic issues faced by our members,” the association stated.
The operators urged the NCC to approve an upward review of price determinations for voice, data, and SMS services. They requested an interim administrative review of the mobile (voice) termination rate for voice calls, the administrative data floor price, and the cost of SMS, as reflected in existing regulations.
“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 services in Nigeria. Excerpts from the report are attached and marked ‘Annexure 2’ to provide further illustration,” the association added.
On national television, MTN CEO Karl Toriola expressed his views on the matter. He called for a 100 per cent tariff adjustment, noting that the entire telecom industry was aligned on the need for such an increment due to shared economic challenges. While acknowledging the government’s sensitivity to the financial pressures faced by consumers due to inflation and currency devaluation, Toriola remained optimistic that the proposed tariff adjustments would eventually be approved.
Toriola also emphasised the significant positive impact of telecommunications on Nigeria’s economy. However, he lamented the lack of sufficient encouragement from the government. He argued that a tariff increase was essential to sustaining the industry, although he acknowledged that this issue has multiple facets that require careful consideration.
“So, I’m not sure they will give us 100 per cent, but I am optimistic they will give us something substantial. Perhaps progressively, over the year, we can have smaller adjustments that will help us get back to where we need to be,” Toriola said.
He also highlighted that almost every other sector in the country, including aviation and power, has implemented tariff hikes, leaving the telecom industry as an outlier. According to him, global statistics indicate that Nigeria has some of the lowest tariffs for data and voice services in the world, ranking second or third lowest globally.
Toriola suggested revisiting the Floor Price Determination reports from 2016 and 2020 and other studies conducted on cost-based pricing. He argued that these studies present opportunities to address the industry’s challenges and provide solutions that could ease the burdens faced by the NCC and other stakeholders.
Interestingly, none of the telecom operators has reached the maximum threshold of ₦50 per minute for calls, primarily due to intense competition among them. Operators are undercutting one another to gain subscribers, inadvertently undermining the push for tariff adjustments.
As the debate over tariff increases continues, it is clear that the telecom sector is at a crossroads. While operators seek financial sustainability, the government and regulatory bodies must balance these demands with the need to protect consumers. The question remains: how can the sector achieve a win-win solution that ensures its survival and growth without overburdening Nigerians?
