Operating costs of telcos rise on hiking prices of diesel, other inputs
By Jeph Ajobaju, Chief Copy Editor
Telecom firms’ operating costs rose 18.74 per cent from N1.39 trillion in 2020 to N1.65 trillion in 2021, as gleaned from the “2021 Subscriber/Network Data Annual Report” by the Nigerian Communications Commission (NCC).
The Association of Licensed Telecommunications Operators of Nigeria (ALTON) lamented in April 2022 how the rising cost of diesel impacts negatively on costs and urged Abuja to intervene.
“Diesel is now very expensive, from N250 to over N700 [per litre]. All network planning, operational expenses, and planned projection for the year is based on the fact diesel prices.
“This has increased. Today, you know the implication of that. This is one problem; cost has gone up,” ALTON President Gbenga Adebayo said.
“We will be approaching the government for some form of intervention. But we are mindful of the high cost of living, and the implication of this on the economy and citizens. And so, we are not going to talk about direct price increases.
“But we will be approaching the government for some kind of intervention to cushion the effect of these changes on us as an industry.”
Industry data shows mobile networks use an average 40 million litres of diesel per month to power their sites.
Therefore, the cost of powering telecom services could reach N60 billion a month and N720 billion a year if diesel price rises to N1,500 per litre as marketers warn.
ALTON said the telecom sector is one of the largest consumers of diesel, which accounts for about 35 per cent of operators’ costs.
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ALTON wants price review of services
ALTON also wrote to the NCC in April about the high cost of providing telecom services, seeking a price review services to reflect market prices.
“The telecommunication industry has been heavily financially impacted following Nigeria’s economic recession in 2020 and the effect of the ongoing Ukraine/Russia crisis,” the letter said, according to The PUNCH.
“This has resulted in an increase in energy costs (which constitutes an appreciable 35 per cent of ALTON’s members’ operating expenses).
“Consequently, the cost of diesel required to power operators’ towers, base stations, and offices rose by a staggering 233 per cent from N225 per litre in January 2022 to over N750 per litre in March 2022.”
ALTON requested a 40 per cent rise in the cost of calls from N6.4 to N8.95, SMS from N4 to N5.61 as well as the price of data.
The NCC turned down the request.