Telecommunications giants in Nigeria, including MTN Nigeria and Globacom, are seeking approval from the Federal Government, via the Nigerian Communications Commission (NCC), to adjust their tariffs. This move follows financial setbacks due to foreign exchange losses and increasing energy expenses, which resulted in some operators reporting losses last year.
The request for tariff adjustments comes shortly after MultiChoice, a South African pay television company, raised its tariffs, joining several other companies, including Discos and brewing companies, in recent price hikes.
In a joint statement issued by the Association of Licensed Telecom Companies of Nigeria and the Association of Telecom Companies of Nigeria, the telcos underscored the need for tariff revisions to align with economic realities. They highlighted that the telecommunications industry, despite facing economic challenges, has not adjusted its pricing framework for over a decade due to regulatory constraints, threatening its sustainability and investor confidence.
The industry bodies called on the government to engage in constructive dialogue to address pricing challenges and establish a framework that balances consumer affordability with operators’ financial viability.
Despite rising inflation and operational costs, the telecom sector has refrained from price adjustments due to regulatory restrictions. The NCC, which regulates telecom prices, requires approval for any tariff changes, currently conducting a cost-based study to evaluate operators’ requests.
Gbenga Adebayo, Chairman of the Association of Licensed Telecoms Operators of Nigeria, emphasized the necessity of cost-reflective tariffs for sustainable business models, citing the detrimental impact of price controls on infrastructure and investment.
Operational costs have surged due to foreign exchange fluctuations, network expansions, and upgrades, leading to a significant decline in sector investments. MTN Nigeria Plc reported a substantial loss for the fiscal year 2023, primarily attributed to forex market liberalization. Similarly, Airtel Africa witnessed a sharp decline in post-tax profit due to forex devaluation.
Telecom operators warn of potential shutdowns if tariffs remain unchanged, citing insufficient revenue to cover operational expenses, particularly the soaring costs of diesel, a critical component for powering base stations. The industry emphasizes the urgent need for regulatory support to ensure the continuity of vital communication services amidst challenging economic conditions.
