Rising costs compelling telcos to pass financial burden to subscribers
By Jeph Ajobaju, Chief Copy Editor
Mobile network operators (MNOs) have launched campaign to raise tariffs for calls, short message service (SMS), and data because rising costs make it impossible for them to make profit to stay afloat.
Association of Licensed Telecoms Operators of Nigeria (ALTON) Chairman Gbenga Adebayo argued the current tariffs require urgent review given the importance of telecom to the economy.
“The current pricing regime is not sustainable under the current cost scheme. What we are charging, today, is certainly not sustainable,” he said.
“It is actually only a matter of time; either it will impact on 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 times.
“We are looking at all the elements, and decisions would be made soon. But the fact remains that current rates in the sector are not sustainable in the current dispensation.”
Adebayo re-echoed the challenges in Lagos at the Nigerian Telecommunications Indigenous Content Expo (NTICE 2023), organised by Nigerian Communications Commission (NCC).
He blamed regulatory interventions for the problems in the sector and sought urgent solutions.
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Rising operational costs
The industry is reeling under the rising cost of diesel, among other challenges. Telecom operators are some of the largest consumers of diesel, using about 40 million litres monthly to power sites across the country, per The Guardian.
Diesel sold for N650 per litre before the implementation of Value Added Tax (VAT) on it in June. Now, with the removal of fuel subsidy, it sells for between N900 and N950 per litre.
ALTON last year wrote to the NCC for approval to increase by 40 per cent the cost of calls, SMS, and data.
Telcos proposed call price floor to rise from N6.4 to N8.95 and SMS from N4 to N5.61 considering the cost of doing business had increased 40 per cent.
They claimed telecom business had been harmed financially by the economic downturn during Covid-19 in 2020 and by the Ukraine/Russia war which led to a 35 per cent rise in operational expenses caused by higher energy costs.
“The current pricing regime in the industry is not sustainable. We are basically selling below cost. It is not easy to go about that but market forces should be allowed to determine prices,” Adebayo reiterated.