Friday, June 14, 2024

Nigerian Telecom Giants Seek NCC Nod For Tariff Hike

Telecommunications operators in the country including MTN Nigeria and Globacom have asked for Federal Government approval through the Nigerian Communications Commission to raise their tariff.

The development came after foreign exchange losses and rising energy costs forced some of the operators to post losses last year.

The telcos’ proposal to raise their tariff came barely 24 hours after MultiChoice, a South African pay television company raised its tariff. Several companies including Discos and brewing companies have also raised their prices in recent times.

On Thursday, the telcos, under the aegis of the Association of Licensed Telecom Companies of Nigeria and the Association of Telecom Companies of Nigeria, issued a joint statement asking the government to expedite the approval.

The two bodies in their statement explained, “Despite the adverse economic headwinds, the telecommunications industry remains the only industry yet to review its general service pricing framework upward in the last 11 years, primarily due to regulatory constraints.

“For a fully liberalised and deregulated sector, the current price control mechanism, which is not aligned with economic realities, threatens the industry’s sustainability and can erode investors’ confidence.”

Telecoms Investments in Nigeria Grow To $77bn– NCC

The associations called on the federal government to facilitate a constructive dialogue with industry stakeholders to address pricing challenges and establish a framework that balances consumers’ affordability with operators’ financial viability.

The telecom industry appears to be among a few sectors that have yet to review their prices despite the rising inflation in the country amid other economic challenges. They blamed this on the regulatory restraints that have been preventing them from pricing appropriately.

The NCC regulates prices in the telecom industry, and telecom operators are not allowed to implement any price changes without the regulator’s approval. The regulator has said a cost-based study is being conducted to determine if it would approve price increments for the operators.

The Chairman, Association of Licensed Telecoms Operators of Nigeria, Gbenga Adebayo, said in a publication on Thursday that cost reflective tariff was non-negotiable.

“We have seen the impact of price control in other segments of the economy, like power. If providers cannot operate sustainable business models, then they’ll stop investing. When that happens, the existing infrastructure starts to crumble.

“For power, a consumer can choose to take ownership of the solution by buying a generator, or a solar panel. For fuel, the government can step in as a provider of the last resort and manage a subsidy regime that mitigates the impact on the population. Those options are not available in the telecoms sector. There is no self-help solution,” he explained.

The industry has faced significant increases in operational costs occasioned by the scarcity of foreign exchange, network expansion, and upgrades, which have also negatively affected the bottom lines of the operators.

Investment in the sector has also dwindled to $134m in 2023 from $456.8m in the previous year, a decline of $322m, according to the National Bureau of Statistics.

The decline represented a decrease of approximately 70.5 per cent.

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