The move, which has led to objections from various quarters, was authorised by the Nigerian Communications Commission (NCC) to address expensive costs of operations in the sector.

Deolu Ogunbanjo, president of NATCOMS, said the decision was made without adequate consultation with stakeholders. He described it as an unfair burden on Nigerians already facing economic difficulties. Speaking in Lagos, Ogunbanjo said, “This will affect everyone from the biggest industry to the smallest company, such as the Point of Service (POS) operators. It will increase operational costs.”

While acknowledging the challenges faced by telecom operators, Ogunbanjo suggested a more moderate increase of 5% to 10% would have been sufficient. He also proposed alternative strategies for raising funds, such as Initial Public Offerings (IPOs), to reduce the financial burden on subscribers. 

“Operators can allow Nigerians to invest in their companies through IPOs rather than imposing such a steep tariff increase. A 50% hike is unacceptable,” he added.

NCC Defends Decision

In its defence, the NCC argued that the tariff adjustment was necessary to sustain the industry. According to a statement by its Director of Public Affairs, Dr Reuben Muoka, the commission approved the increase after extensive consultations with stakeholders. 

It noted that some operators had requested a 100% hike but the NCC capped the adjustment at 50% to strike a balance between industry sustainability and consumer protection.

“These adjustments will support the ability of operators to continue investing in infrastructure and innovation, ultimately benefiting consumers through improved services and connectivity,” the NCC stated. 

The commission also emphasised the need for transparency, mandating operators to educate the public on the new rates and ensure measurable service improvements.

Mixed Reactions to the Increase

Subscriber groups and consumer advocates have condemned the hike. The Association of Cable TVs, Internet and Telecom Subscribers of Nigeria (ATCIS-Nigeria) described the increase as punitive and ill-timed, given the rising cost of living. 

ATCIS President Sina Bilesanmi accused the government of prioritising corporate interests over consumer welfare, saying, “This increase will further strain the finances of struggling Nigerians.”

Ogunbanjo reiterated a similar warning, stating that the hike could force many small businesses to shut down. He reaffirmed NATCOMS’ plan to file a fresh lawsuit to challenge the decision, describing it as a “provocative and disproportionate” measure.

On the other hand, industry stakeholders have defended the need for higher tariffs. The Association of Telecom Companies of Nigeria (ATCON) argued that the adjustment was overdue, given the high costs of operations and the long gap since the last tariff review.

ATCON President Tony Emoekpere noted that while the 100% hike requested by telecom operators might seem excessive, the 50% approval reflects current economic realities. “The delay in addressing tariff rates over the years made this adjustment inevitable,” he explained.

The tariff increase is expected to impact data, calls, and SMS charges, raising issues about affordability for many Nigerians.

While the NCC has assured that the adjustments will support better network quality and broader coverage, consumers are calling for greater transparency and fairness in implementing the new rates.

Phone calls will now cost N18.33 per minute, SMS rising to N6.67, and a 1GB data bundle now priced at N479.17. 

This increase will affect daily communication and data usage, especially for Nigerians already hit with inflation and high costs of living. 

Users could increase reliance on platforms like WhatsApp and others for calls and messages but what about those without smartphones?

Well, let’s break down the proposed tariffs and analyze their financial impact on consumers and businesses.

The Breakdown of New Tariffs

The proposed 60% tariff increase will apply across mobile services, with the following adjusted costs:

• Phone Calls: The cost of making phone calls will jump from N11 to N18.33 per minute, a rise of N7.33 (66.5% increase).
• SMS: The price for sending text messages will increase from N4 to N6.67, a jump of N2.67 (66.75% increase).
• 1GB Data Bundle: The cost for 1GB of mobile data will increase from N287.5 to N479.17, an increase of N191.67 (66.67% increase).

These increases already show a considerable burden on consumers, especially considering the price elasticity of demand for mobile services. With these hikes, consumers may need to adjust their usage patterns, reducing their reliance on mobile communication or exploring more affordable alternatives.

Mathematical Analysis of the Impact

To better understand the financial impact, let’s apply a few calculations to daily telecom expenses based on average usage:

• Phone Call Costs: If a user spends 30 minutes per day on calls:
• • • Current cost: 30 minutes × N11 = N330 per day
    • New cost: 30 minutes × N18.33 = N550 per day
    • Increase: N550 – N330 = N220 increase per day
    • Annual cost increase: N220 × 365 = N80,300 annually

• SMS Costs: If a user sends 10 SMS messages daily:

• • • Current cost: 10 messages × N4 = N40 per day
    • New cost: 10 messages × N6.67 = N66.70 per day
    • Increase: N66.70 – N40 = N26.70 increase per day
    • Annual cost increase: N26.70 × 365 = N9,745.50 annually

• Data Bundle Costs: If a user purchases one 1GB data bundle every 3 days:

• • Current cost: N287.5 × 122 = N35,075 annually
  • New cost: N479.17 × 122 = N58,472.74 annually
  • Increase: N58,472.74 – N35,075 = N23,397.74 increase annually

Cumulative Impact on the Consumer

Taking the average consumer who spends on calls, SMS, and data bundles:

• Total annual cost increase for calls, SMS, and data:

• • Calls: N80,300
  • SMS: N9,745.50
  • Data: N23,397.74
  • Total increase: N80,300 + N9,745.50 + N23,397.74 = N113,443.24 annually

For an average Nigerian, this could wildly stretch their monthly budget. With over 200 million mobile subscribers in Nigeria, this surge in prices could splash through the economy, affecting consumer spending, business operations, and digital accessibility for underserved communities.

How will this Affect the Economy?

This telecom tariff increase will likely hit low-income individuals and small businesses hardest, as they rely on affordable communication to maintain both personal and professional interactions. The costs could lead to:

• Reduced Digital Access: With higher data costs, individuals may limit their online presence, curtailing opportunities for education, remote work, and e-commerce, thereby deepening the digital divide.
• Business Strain: Small businesses, particularly those relying on mobile phones for customer interactions and mobile banking services, may face increased operational costs, prospectively slowing down economic growth.
• Increased Costs of Living: Since mobile communication is a key aspect of daily life in Nigeria, higher telecom charges could contribute to an overall rise in the cost of living, making it harder for Nigerians to cope with inflation.

Conclusion and Recommendations

The proposed telecom tariff increase of 60% will undoubtedly add really high financial stress on consumers. While the government and telecom operators argue that the increase is necessary to sustain the industry due to high costs of operations, the burden on Nigerians could have far-reaching effects.

To mitigate the impact, the government could consider implementing subsidies for low-income users, promoting digital literacy, and investing in infrastructure that reduces the cost of telecom services. 

Ultimately, it all boils down to the country’s economy and a balance from the government.

At Airtel Nigeria, we are committed to delivering world-class connectivity to millions of Nigerians, enabling economic growth, empowering businesses, and enhancing lives.

We understand that the future technology needs of the country, as ushered in by the highspeed 5G era of AI, Cloud computing, Data science applications, and Blockchain, should be directing significant investments towards building a resilient network.

However, the industry faces significant challenges that require a closer look as we strive to maintain the high standards that our customers deserve.

Increased Intensity of Investments: The increasing demand for digital services across sectors such as education, media, banking, transportation, and manufacturing has come with an increased demand on telecom capacity.

Upgrading networks to deliver more data capacity is key to a sustainable future. To help ensure that the Nigerian economy keeps pace with the global improvements in technology and communications while supporting the aspirations of consumers, we also take on the responsibility of executing new technology and system upgrades as well as improved security.

Data security is now more than ever a priority as more and more people upload personal information online.

All of these require significant investments which are sourced from the international markets at costs denominated in US Dollars.

In the past three to four years, for instance, the dollar has gone from exchanging for about N500 to over N1,600.

This more than three-fold increase in foreign exchange conversion exponentially increases the cost of investments required to run a good quality network.

In addition to this unprecedented hike in capital expenditure, the operating costs have surged dramatically, with operating expenses rising by over 300% in the last 18 to 24 months alone.

While several critical areas of the business are impacted, I would, for expediency, focus on three of those areas: Rising Energy Cost, Infrastructure Challenges, and a Commitment to Quality Service.

Rising Energy Costs: Powering telecommunication infrastructure requires significant energy resources. Energy is the single largest operating cost for running a network. With increasing global energy prices and while efforts are ongoing to fully stabilize power supply in Nigeria, Airtel Nigeria and other operators in the sector are incurring soaring costs to keep networks running seamlessly.

Infrastructure Challenges: The industry continues to grapple with rampant fiber cuts and vandalization of critical infrastructure. These incidents not only disrupt services but also demand substantial investments to repair and maintain facilities.

Commitment to Quality Service: Despite these challenges, Airtel Nigeria has remained steadfast in ensuring quality of service. From expanding 4G and 5G networks to meeting growing demand in urban and rural areas, we have painstakingly absorbed the rising costs of these obligations to avoid compromising the customer experience and ensuring Nigerians, regardless of their location, have access to mobile communication and remain connected to the digital economy.

Telecommunications operators have worked tirelessly to sustain services despite keeping tariffs unchanged for the last 10 years.

While tariffs have remained static for over a decade, the economic realities necessitate a review to ensure the sustainability of services hence our recent application to the government for tariff adjustment which if approved will be a step towards addressing this imbalance. It is not a decision taken lightly but one borne out of the need to guarantee continued investment in network expansion, technology upgrades, and improved service delivery.

The telecommunications sector is pivotal to Nigeria’s ambition to become a digital economy leader in Africa.

Meeting this aspiration requires operators to make substantial investments in network infrastructure, spectrum acquisition, and innovative solutions. These investments come at a cost, one that must be shared proportionally to ensure long-term viability.

At Airtel Nigeria, we remain resolute in our commitment to:

Delivering Quality Services: As the government continues to monitor operators’ compliance with service quality standards. Airtel is dedicated to surpassing these benchmarks, ensuring customers experience uninterrupted and superior connectivity.

Driving Economic Growth: By expanding our network and enhancing digital inclusivity, we are enabling the government’s economy turnaround agenda and fostering opportunities for all Nigerians.

Being a Reliable Partner: Despite industry challenges, we are steadfast in our role as a trusted partner in Nigeria’s digital transformation journey.

While significant tariff adjustments have become warranted for the sustainability of the industry, Airtel has always been sensitive to affordability and understand that the price adjustments must be done gradually to support our customers’ financial positions.

We believe that an approval of revised tariffs will empower operators to invest in capacity, expand coverage to underserved areas, aim for advanced security on the networks, and improve service quality and network availability while ensuring that Nigeria remains competitive in the global digital landscape.

As we navigate the present imperatives together, we urge all stakeholders, including customers, regulators, and partners to recognize the importance of building a resilient telecommunications ecosystem.

Airtel Nigeria remains committed to delivering unmatched value while supporting the nation’s economic development.

*Dinesh Balsingh is the Managing Director/CEO of Airtel Nigeria.