Telecom operators propose tariff hikes amid industry struggles

Karl Toriola, Chief Executive Officer of MTN Nigeria, has revealed that telecom operators are requesting a 100 percent increase in service rates due to rising operational costs.

Toriola, however, acknowledged that the Nigerian Communications Commission (NCC) is unlikely to approve such a significant hike given the country’s economic challenges.

He expressed optimism that regulatory authorities would make decisions to ensure the telecom sector’s sustainability.

“We are hopeful and optimistic that the realities are staring us in the face and the right decision will be taken for the sustainability of the industry,” he said.

Toriola highlighted that the telecom industry is grappling with escalating operational costs driven by inflation and the naira’s depreciation, which has jeopardised the industry’s sustainability.

“The costs we are expending are exceeding our revenue, even though we are seeing revenue growth. There is no way the industry can continue to sustain itself and provide the required quality service under this structure,” he stated.

Decade push

Toriola emphasised that the sector’s core issue is sustainability rather than profitability. “There should be no delusion; if the tariff doesn’t go up, we will shut down,” he warned.

For over a decade, telecom operators have pushed for tariff increases. In 2022, they proposed a 40 percent tariff hike, but recent financial losses have intensified their calls for further adjustments.

Urgent review

The Association of Licensed Telecommunications Operators of Nigeria (ALTON) has called for a review of tariffs to reflect the economic realities of delivering telecom services at a minimum for industry sustainability; otherwise, operators may not continue to guarantee service availability.

Speaking at the End-of-Year Dinner with Industry Stakeholders, the Chairman of Alton, Mr. Gbenga Adebayo, who said that the telecom sector is under siege, noted that there is an urgent need to address tariff issues to ensure the survival of the telecom industry.

He said immediate and decisive action must be taken for a better 2025, as the situation has become more acute and more threatening with this passing year.

Mr. Adebayo listed rising operational costs, skyrocketing energy costs, the relentless pressure of inflation, and volatile exchange rates, amongst others, as having all placed an unsustainable burden on network operators, and despite these mounting pressures, tariffs have remained stagnant, leaving operators trapped in a financial quagmire.

The ALTON chairman said the resources needed to maintain, expand, and modernise networks are simply no longer available and noted that without intervention, the future of the sector is at grave risk.

“If nothing is done, we might begin to see in the new year grim consequences unfolding, such as Service Shedding; Operators may not be able to provide services in some areas and at some times of the day, leaving millions disconnected. There will be significant economic fallout because businesses will suffer from a lack of connectivity, stalling growth and innovation. He noted

“There will also be National Economic Disruption where Key sectors like security, commerce, healthcare, and education, which rely heavily on telecom infrastructure, will face serious disruptions. Adebayo said

“As we navigate this near turbulent year for the sector, we are confident that history will judge us right for the role we have played in an attempt to rescue this sector. Stakeholders have stood together to uphold the values and importance of telecommunications in our society,” he said.

The ALTON chairman added that the time to act is now to save the telecom industry from collapsing.

Potential tariff increase

Bosun Tijani, Nigeria’s Minister of Communications, Innovation, and Digital Economy, recently hinted at a potential tariff increase, stating, “We think there may be a need for that.”

However, he stressed the need for broader reforms to ensure the telecom sector remains competitive.

“Beyond the conversation about an increase in tariff, there is so much that we need to do as a country to ensure that the sector is competitive,” Tijani said.

NCC debunks rumours

The Nigerian Communications Commission (NCC) has dismissed recent reports of a planned tariff increase by telecom operators, labelling them as false and baseless.

The commission clarified that no such hike, purported to take effect in January 2025, has been approved.

Recent media reports claimed that telecommunications companies were set to increase their tariffs in 2025.

However, an NCC senior official emphasised that the regulatory body operates under a transparent framework guided by the Nigerian Communications Act, ensuring that any potential tariff changes follow due process and involve consultations with stakeholders.