Stakeholders within the telecommunications sector, particularly Mobile Network Operators (MNOs), have sounded a resounding alarm over the current pricing structure governing calls, short message service (SMS), and data services.
These industry players under the Association of Licensed Telecoms Operators of Nigeria (ALTON), emphasize that the present pricing scheme is untenable given the prevailing cost dynamics within the country.
Current price unsustainable
Highlighting the critical significance of the telecom sector to the nation’s economy, ALTON Chairman Gbenga Adebayo conveyed his concerns in an interview with The Guardian. Adebayo asserted stated,
- “What we are charging, today, is certainly not sustainable. It is only a matter of time; either it will impact the scale of service or the industry’s performance and service availability. But certainly, it is not sustainable…what we have currently. We are living on borrowed time.”
While Adebayo refrained from confirming an immediate tariff hike, he indicated that comprehensive evaluations were in progress. He underscored that the prevailing rates within the sector cannot persist in the present environment.
Adebayo reiterated these concerns during the Nigerian Telecommunications Indigenous Content Expo (NTICE 2023) held in Lagos. The event, organized by the Nigerian Communications Commission (NCC), served as a platform for Adebayo to implore urgent attention to the challenges confronting telecom operators and the broader industry.
He additionally held regulatory interventions accountable for contributing to the sector’s difficulties.
Previous call for an increase in the rate
Last year, the telecom industry’s representative body petitioned the Nigerian Communications Commission (NCC) seeking approval for a substantial 40% increase in the costs associated with calls, SMS, and data services.
Adebayo reiterated,
- “The current pricing regime in the industry is not sustainable. We are selling below cost. It is not easy to go about that, but market forces should be allowed to determine prices.”
In 2022, telecom companies proposed adjustments to the price floor for calls, suggesting a hike from N6.4 to N8.95, and an increase in the SMS price cap from N4 to N5.61. The operators justified their petition by pointing out a 40% increase in the cost of conducting business within the nation.
Increase in operational expenses.
They further elaborated on the financial impact of Nigeria’s economic downturn in 2020 and the ongoing Ukraine/Russia conflict, which resulted in a 35% surge in operational expenses due to heightened energy costs.