Nigeria’s multiple and aggressive implementation of taxation on telecommunications companies is the cause of bad network quality. This was disclosed in a report released by SB Morgen titled “Inside Nigeria’s Subnational Fiscal Crisis”.
The report stated that the telecommunications industry appears to suffer disproportionately from this over taxation in Nigeria. The report also revealed that there are over 40 different taxes and levies meted out upon the Mobile Network Operators (MNOs) carrying out telecom services in Nigeria.
However, the aggressive taxation of this sector has led to the degradation of network quality causing Nigerians to suffer the consequences.
What the report is saying
The report stated that the poor network quality is an evident result of telecoms corporations’ numerous taxation. It said, ”A clear impact of multiple taxations of telecommunications companies is the degradation of network quality. This mostly occurs when state authorities, in a bid to enforce compliance in payment of taxes, lock up the facilities of telecom operators and deny them access to their sites for refuelling, maintenance or fault resolution.”
The report stated that the regulator’s forceful lockout of telcos would result in catastrophic network disruptions, affecting a large number of Nigerians.
The report said, “The lockouts are quite often targeted at large sites, which effectively paralyses a good section of the network, causing complete network outage for the affected communities over an area that could stretch across as many as two or more adjoining states.”
According to the report, the effects of such network failures are not limited to the impacted telecommunications network but may spread to others as affected clients transfer to other network providers when they are unable to enjoy service from their current network providers.
The report said, “telecommunications operators in Kogi State warned that the shutting down of their sites by the Kogi State government in a bid to force operators to pay more taxes and levies could lead to a communications blackout in as many as 11 states.”
The report added that “State governments often lock telcos out of their facilities in a bid to collect various taxes. Oftentimes this leads to a degradation of network quality”
What you should know
- The Nigerian National Broadband Plan 2020-2025 estimates that 4G coverage is at 37% and has a target of achieving coverage of at least 90% of the population and a penetration rate of 70% by the end of the plan’s lifetime and delivering data download speeds of about 25Mbps in urban areas and 10Mbps in rural areas.
- It also forecasts that for every 10% increase in broadband penetration, the country’s Gross Domestic Product (GDP) rises by 2.6-3.8%, making this an economically significant initiative.
- According to Nigeria’s GDP data, the telecommunications sector had a nominal GDP of N14.1 trillion as of December 2021 compared to N5.3 trillion for the entire financial services sector.10 years ago (2021), Telecommunication Sector has a nominal GDP of N5.3 trillion while banks had a GDP nominal size of N1.49 trillion.
- Telcos have a customer base and demand that will drive increased revenues and profitability in the coming years, with over 199 million active mobile users. Telcos also have the capability and capital to diversify into other areas of the economy, beginning with banking. MTN’s latest MOMO license provides the company with a new source of revenue.
- Nairametrics reported that Nigeria’s telecommunications behemoth, MTN Nigeria, is now worth N5 trillion, making it more valuable than all banks, insurance companies, and financial services firms listed on the Nigerian Stock Exchange combined.
