Telcos Choked by 49 Taxes, Levies, Others

Telecom operators in Nigeria is said to pay at least 49 different taxes and levies to the three tiers of government and other non-state actors.

It was gathered at the weekend that they are coerced to pay or their base transceiver stations (BTS) would be shut at the risk of compromising quality of service (QoS).

Added to these is the Right of Way (RoW) fees and further increases under the Finance Act 2023 (such as upward review of Tertiary Education Trust Fund Tax from 2.5per cent to three, imposition of Value Added Tax (VAT) on cell towers or BTS, imposition of import levy on goods, removal of capital allowance on telecommunications goods and services under Section 32 of the amended Companies Income Tax Act), among others.

This is further compounded by the increase in Legislative Bills seeking to impose new taxes and levies on private organisations (including telecom operators) at the National and state Houses of Assemblies.

According to a document prepared by the Association of Licensed Telecom Operators of Nigeria (ALTON), the impact of the increase in automotive gas oil (AGO) also has dire consequences for telecoms operations, particularly in the colocation segment.

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“The 300 per cent increase in diesel cost which was implemented at the beginning of the year, humongous indebtedness in the industry, lack of access to and increased rate of foreign exchange to service their operations, dire levels of insecurity across the country with increased theft and damage to our members sites, have all prevented our members from running their business efficiently and profitably.  This new challenge of the introduction of the 7.5 per cent VAT, now suspended, will not only further impact our members operating capital, but it will also erode their profit margins, discourage investments, stifle growth, result in loss of employment and ultimately dovetail in a progressively reduced gross domestic product (GDP),” the document stated.

The document restated the commitment of the telcos to the improvement of QoS and, indeed, quality of experience for all subscribers which they argued is evidenced by the continued investments in network coverage and capacity to improve overall quality of service for the benefit of our esteemed customers.

“However, ALTON’s members have continued to encounter strong macro-economic headwinds which have occasioned tough operating conditions, leading to a decline in CAPEX (Domestic) and Foreign Direct (Capital Inflow) Investments into the industry by 30.37per cent and 46.9 per cent respectively between 2021 and 2022.

“It is ALTON’s considered view that a number of teething investment-impacting causal factors need to be definitively addressed to help deepen investment with the overall objective of driving increased CAPEX deployment for overall QoS improvement in line with the targets of the Strategic Plan to achieve 50per cent improvement in QoS by the end of 2024,” the document noted.