Tariff Hike: Telcos Threaten Load Shedding, Cite Harsh Operating Conditions

Leading telecom operators in Nigeria have threatened to implement load shedding measures in response to the Nigerian Communications Commission’s (NCC) reluctance to address their demands for a tariff hike.

Load shedding is a deliberate shutdown of telecom services in a part or parts, generally to prevent the failure of the entire system when the demand strains the capacity of the system.

Telecom operators, citing the rising cost of operations, including the increased prices of diesel, infrastructure maintenance, and a depreciating naira, have called on the NCC to approve a tariff increase to help mitigate their financial burdens.

For instance, MTN, with a subscriber base of 79.7 million as of December 2023, reported a first loss after tax of N137 billion since its 2019 listing on the Nigerian Stock Exchange in 2023. The telco incurred FX losses of N740 billion ($815.79 million at N907.1/$).

Airtel Africa, which had 50.9 million subscribers in Nigeria as of March 2024, reported a loss after tax of $89 million for its full year ended March 2024, primarily due to FX headwinds in Nigeria and Malawi. It lost $1.26 billion to derivative and FX exposures, with $770 million attributed to the naira’s devaluation.

This has led to dwindled investment in the telecoms sector, Carl Cruz, chief executive officer of Airtel Nigeria, stated, adding that, “The devaluation of the Naira moving from N420/dollar to N760/dollar in a month’s time, to about N1500/dollar today, had indeed affected telecoms industry who rely heavily on importation of infrastructure to grow the sector.’

In the same vein, Karl Toriola, CEO, MTN Nigeria, said operators are reluctant to invest, simply because of the high operating cost and the devaluation of naira, among other issues that have marred the growth of the sector.

According to him, “the telecoms sector in Nigeria is now in an intensive care unit (ICU) gasping for breath, while calling on the government to intervene. The sector is facing a lot of challenges of which if urgent action is not taken, it will dry up. The truth is that investors are not going to come to invest in the sector if the fundamental issues are not addressed. To rescue the sector from collapsing, there is a need to increase prices of telecom services.”

Despite repeated pleas, the regulatory body has remained silent on the issue, causing frustration and uncertainty among industry players.

The situation has escalated, with telecom operators warning that if the tariff hike is not granted, they may be forced to adopt load shedding—a strategy that would involve rationing network availability during certain periods. This could lead to disruptions in mobile and internet services, affecting millions of Nigerians who rely on these services for communication, business, and access to essential information.

“With the high operating cost and the delay on the part of the government to allow operators to increase prices of telecoms services, operators may adopt the method of load shedding in the sector.

“We may decide to give network to some areas, while others may not have network, just to cut down operating cost for survival of the industry,” Engr. Gbenga Adebayo, chairman, Association of Licensed Telecom Operators of Nigeria (ALTON), told Leadership.

Meanwhile, the NCC has yet to release an official statement addressing the operators’ demands or the looming threat of service disruptions.