Telcos May Cough out N720Bn to Power Services- Punch

The cost of powering telecommunication services could hit N60bn per month and N720bn in one year if the cost of diesel reaches N1500/litre as hinted by marketers of the product.

The Punch quoting industry data estimated that mobile telecommunication operators use an average of 40 million litres of diesel per month to power telecom sites.

This, therefore, means that telecoms firms can spend as much as N720bn in powering their services in 12 months.

The Natural Oil and Gas Suppliers Association (NOGASA), recently told journalists in Abuja that there was a shortage of diesel in the nation and it was also affecting petrol stations since trucks could not convey diesel to them.

Bennett Korie, national president, NOGASA, said, “If you go round now, you will see that about 75 per cent of filling stations in Nigeria have gone out of business.

“There is no diesel to take fuel to their stations. All of them are going down. And it is not that the fuel is not there, but the cost of bringing it to the stations is too high. We know that the crisis between Ukraine and Russia has contributed badly, but the government has to do something fast, otherwise, we are going to buy diesel in the next two weeks at N1000 to N1500/litre.”

He added that diesel was currently being sold for N850/litre. According to the Association of Licensed Telecoms Operators of Nigeria (ALTON), the telecom industry was one of the largest consumers of diesel in the nation accounting for about 35 per cent of operators’ costs.

In a recent letter to the Nigerian Communications Commission (NCC), ALTON had lamented the high cost of providing telecom services in the nation, hinting at the need for a price review of these services to reflect market prices.

It said, “The telecommunication industry has been heavily financially impacted following Nigeria’s economic recession in 2020 and the effect of the ongoing Ukraine/Russia crisis.

“This has resulted to an increase in energy costs (which constitutes an appreciable 35 per cent of ALTON’s members’ operating expenses).

“Consequently, the cost of diesel required to power operators’ towers, base stations, and offices rose by a staggering 233 per cent from N225 per litre in January 2022 to over N750 per litre in March 2022.”

In the letter, ALTON suggested a 40 per cent upward review in the cost of calls, SMS, and data. This would have increased the floor price of calls from N6.4 to N8.95 and the price cap of SMS from N4 to N5.61.

According to industry statistics from the National Communications Commission (NCC), the operating cost of GSM operators was N1.39tn in 2019. It increased by 0.24 per cent to N1.4tn in 2020 and by 18.85 per cent to N1.66tn in 2021.

The data revealed that operators had 38,288 base stations at the end of 2021. A source in one of the telecom companies added that each base station had two diesel-powered generators.

Commenting, a source at ALTON, who did not want to be named because of the delicacy of the matter, said, “They said about N1,000/litre. Diesel is the source of our energy, and it will affect us.