Telcos groan under 40 different taxes levied by federal and state govts
By Jeph Ajobaju, Chief Copy Editor
Multiple taxation on telecom companies percolates down the line to poor network quality, says SB Morgen (SBM), a geopolitical intelligence platform that covers issues across business, security, the economy, and other socioeconomic spheres.
The telecom industry suffers disproportionately from over-taxation with a report by SBM listing more than 40 different taxes and levies on Mobile Network Operators (MNOs) carrying out services across Nigeria.
SBM found that such multiple taxation deprives MNOs of funds and results in poor network quality, with subscribers suffering the consequences.
“A clear impact of multiple taxations of telecommunications companies is the degradation of network quality,” SB Morgen said in the report titled, “Inside Nigeria’s Subnational Fiscal Crisis”.
“This mostly occurs when state authorities, in a bid to enforce compliance in payment of taxes, lock up the facilities of telecom operators and deny them access to their sites for refuelling, maintenance or fault resolution.
“The lockouts are quite often targeted at large sites, which effectively paralyses a good section of the network, causing complete network outage for the affected communities over an area that could stretch across as many as two or more adjoining states.”
The effects of network failures are not limited to the impacted telecom carrier; they may spread to others as clients transfer to other network providers when they are unable to enjoy service from their current providers.
“Telecommunications operators in Kogi State warned that the shutting down of their sites by the Kogi State government in a bid to force operators to pay more taxes and levies could lead to a communications blackout in as many as 11 states.
“State governments often lock telcos out of their facilities in a bid to collect various taxes. Oftentimes this leads to a degradation of network quality.”
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NNBP projections
The Nigerian National Broadband Plan (NNBP) 2020-2025 estimates that 4G coverage is at 37 per cent of the population and aims to cover at least 90 per cent and penetration rate of 70 per cent by 2025.
NNBP also
- Aims to deliver data download speeds of about 25Mbps in urban areas and 10Mbps in rural areas.
- Forecasts that for every 10 per cent increase in broadband penetration, Gross Domestic Product (GDP) rises 2.6 between 3.8 per cent.
Telecom contribution to GDP
Telecom contributed N14.1 trillion to GDP in 2021 against N5.3 trillion chipped in by the entire financial services sector. Ten years prior, telecom contributed N5.3 trillion and banks N1.49 trillion, according to reporting by Nairametrics
Telcos have a customer base and demand that will drive revenues and profitability in the coming years, with over 199 million active mobile users.
Telcos also have the capability and capital to diversify into other economic sectors, beginning with banking. The latest MOMO licence obtained by MTN provides it with a new source of revenue.
MTN Nigeria is worth N5 trillion.
That makes it more valuable than the combined listing of all banks, insurance companies, and financial services firms on the Nigerian Stock Exchange (NSE).