Wednesday, January 22, 2025 witnessed the announcement by the Nigerian Communications Commission (NCC) approving a 50% telecommunications tariff hike in Nigeria which is expected to kick off in February 2025.
Coming some 12 years after the NCC presented a price template in 2013, it would be recalled that the Minister of Communications and Digital Economy, Bosun Tijani, had earlier hinted that telecom tariffs would go up by either 30 or 50 percent in the country.
This was consequent upon the decisions of a meeting between him and operators who had proposed a 100 percent tariff increase recently.
Ironically, in a case of multiplier effect, Point of Sales Operators (POS) have also hinted at proposals to increase their service charges. And other players in the industry may just be waiting in the wings to follow suit.
By the way, what is the projected impact of the tariff regime under review on the industry operators?
According to the NCC’s 2023 annual report, a total of 22.97 billion SMS were sent and received during the year, representing an 11.38 per cent decline from the 25.92 billion recorded in 2022.
Based on the 2023 SMS traffic data, the projected earnings for 2025 could surpass N137.84 billion.
With the revised tariff of N6 per SMS, MTN – whose share of SMS traffic represents over 73 per cent of the total market – is expected to earn over N100 billion. This should comfortably secure its position as the largest beneficiary of the hike.
Next is AIRTEL which is projected to generate around N26.26 billion in revenue from its total SMS traffic of 4.38 billion, comprising 2.01 billion sent messages and 2.37 billion received.
GLOBACOM should take the third position with a total SMS count of 1.35 billion which is expected to generate N8.1 billion. This represents 5.88 per cent of the total revenue. Whereas smaller players combined are likely to see modest revenues, the telecom industry generally is projected to earn about N137.84 billion from SMS alone in 2025.
How will the proposed hike rub off on subscribers? Ceteris paribus, Nigerians may be paying N16.5 per minute for calls from N11. The cost of SMS is also expected to rise to N6 from N4, and the cost of 1GB of data – about N525 from N350.
Consequently, the new pricing will affect consumer behaviour. The reason is that more Nigerians may shift towards over-the-top messaging platforms such as WhatsApp and Telegram. These offer cost-free alternatives.
Little wonder, this planned tariff hike is generating a lot of controversy in the public space. Already, President of the National Association of Telecoms Subscribers, Adeolu Ogunbanjo, is reported to have rejected the nascent duty – warning it would worsen the taxation burden and negatively impact Nigerians.
“There was no agreement reached at the meeting with stakeholders,” Ogunbanjo has been quoted as saying. He added; “We presented our case, but nothing concrete was resolved during the meeting with the NCC in Abuja.”
The Association has vowed to institute legal proceedings if the proposed duty is implemented without addressing subscribers’ concerns.
Similarly, the Association of Telephone, Cable TV, and Internet Subscribers of Nigeria has also expressed opposition to the new tariff. President of the consumer group, Sina Bilesanmi told The PUNCH Newspaper last week; “If we don’t see tangible improvements, we will take legal action against the telcos, the NCC, and the Federal Government.”
The Nigeria Labour Congress (NLC), Trade Union Congress (TUC) and the Coalition of Northern Groups (CNG) constitute other pressure groups that have described the tariff regime as insensitive. This is in view of the worsening poverty rate in Africa’s most populous nation which could further impoverish its poor masses.
Undoubtedly, telecommunications play a critical role in the Nigerian economy by contributing massively to the GDP – next to the oil sector.
Considering increasing operational costs and the prevailing market conditions within the industry, therefore, the Observers Times may be constrained to throw its weight behind the proposal in question.
Nonetheless, the support is not without a caveat – subscriber interests must be protected through improvement in quality of services. Since denying the telcos of their request may lead to shutdown of activities, it is reckoned we might as well accept the tariff adjustment. But services, we repeat, must not fall short of expectations.
Aside relying on such administrative regulatory procedures, we suggest industry players explore other alternative funding mechanisms like raising capital through Initial Public Offerings (IPOs).
Meanwhile, the Federal Competition and Consumer Protection Commission (FCCPC) has directed telecom operators to prioritise visible and measurable improvements in network reliability, speed, accessibility, and customer service as part of any tariff adjustment.
“Consumers have consistently expressed the desire for measurable improvements in the quality of service before any tariff increases are implemented. Issues such as network congestion, dropped calls, inconsistent internet speeds, unusual data depletion, and poor customer service have remained prevalent concerns. It is, therefore, crucial that tariff adjustments directly translate into demonstrable and tangible service enhancements for consumers,” the FCCPC stressed in a release dated 22nd January 2025 and signed by Ondaje Ijagwu, its Director of Corporate Affairs.
