Telcos Make Case for Tariff Hike, Says Current Regime No Longer Sustainable

Stakeholders within the telecommunications sector, particularly Mobile Network Operators (MNOs), have highlighted challenges inhabiting and stunting the growth of the sector in Nigeria, with particular emphasizes on issues of unsustainable tariff regime, fibre optic cable cuts, as well as forex issues/inflationary environments.

L-R: Lead, Business Champions Program, Presidential Enabling Business Environment Council (PEBEC), Temiloluwa Oluokun; Chief Operations Officer, IHS Towers, Kazeem Oladepo; Managing Director & Chief Executive Officer, Airtel Nigeria, Carl Cruz; Chief Executive Officer, Financial Derivatives Company (FDC), Bismarck Rewane; Anchor, Arise News, Rolake Akinkugbe-Filani; Chief Executive Officer, MainOne, Funke Opeke; and Chief Executive Officer, Federal Competition and Consumer Protection Commission (FCCPC), Olatunji Bello; during the Telecoms Industry 2.0 Townhall event, on Tuesday, 13th August, 2024, at Four Points Hotel, Victoria Island, Lagos.

They disclosed this on Tuesday at the Telecoms Industry 2.0: The Next Investment Frontier in Nigeria, organised by Financial Derivatives Company (FDC) in Lagos.

Speaking at the event, Karl Toriola, chief executive officer (CEO) of MTN Nigeria, said the country’s telecommunications sector is “in a deep crisis” stressing that the industry is at the brink of losing its viability if nothing is done to review the current tariff regime.

He noted that despite the growth over the past two decades of liberalisation, the sector is now threatened by inflationary environments and unsustainable pricing regime.

Toriola said price increase has become imperative, noting that it is now an “absolute necessity”.

He stated that there is an urgent need to rescue the sector from collapse as it is “in an intensive care unit ICU”.

Highlighting why investors may not continue to invest in the industry, Toriola said that the fundamental goal of any investor is to get efficiency or profitable return on investment which he noted is now abysmally low and is threatening the survival of the industry.

According to him, “No investor is going to put in $1 and receive 60 cents as return on investment,” adding that without deliberate efforts to change the current tariff regime, the flow of new investment into the sector could dry up entirely.

He said the static pricing is no longer sustainable.

“There’s no way under the surface of the earth, in the kind of inflationary environment and forex devaluation that we’ve seen, that an industry can maintain the same prices for 11 years,” he said.

“The telecoms sector has faced escalating costs across boards — from the cost of capital to the soaring expenses of maintaining infrastructure like base stations and diesel generators.

“Without adjustments to pricing, the industry’s ability to function and attract investment is in jeopardy.”

Engr. Gbenga Adebayo, Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON) speaking at the event re-echoed Toriola’s call for immediate upward review of the current tariff plan in order to save sector from further troubles.

He stressed that the current price regime is no longer sustainable due to the rising operational cost, occasioned by forex devaluation, and soaring expenses of maintaining infrastructure such as base stations and diesel generators.

Adebayo said the rising cost challenge is seriously threatening the survival of telecom businesses in Nigeria.