The National Association of Telecommunications Subscribers (NATCOMS) has urged the Nigerian Communications Commission (NCC) to approve a 10% increase in telecom tariff.
This proposal has resulted from continuously increasing operational challenges telecom companies in Nigeria are facing, primarily due to the surging costs of fuel and maintenance, which have made it difficult to sustain service quality.
NATCOMS has put forward the high financial pressures telecom operators have been under in recent years. Despite the alarming rise in operational costs, the last tariff adjustment in Nigeria was over a decade ago.
According to Mr Adeolu Ogunbanjo, National President of NATCOMS, the telecom sector has been struggling to cope with the increasing cost of key resources such as diesel and petrol, which are essential for running telecom infrastructure. These operational challenges are made worse by unreliable power supply, particularly in remote areas, which further inflates the cost of keeping the networks functional.
The sharp increase in fuel prices in recent months has made it even more difficult for telecom companies to keep pace with the rising demand for their services. For instance, diesel prices have soared by over 200% in the past year alone, placing a huge burden on operators who depend on it to power base stations and other necessary infrastructure.
The Call for a Tariff Adjustment
The proposed 10% tariff hike is seen as an unignorable move to address the financial difficulties faced by telecom operators. Ogunbanjo has stressed that this increase is necessary not just for improving service quality but also for ensuring the sustainability of the industry. Without this adjustment, telecom companies may struggle to maintain and expand their infrastructure, which could lead to service degradation or even more severe network outages in the future.
Despite its possible impact on consumer expenses, the tariff hike is a way to avoid more drastic measures such as service rationing or “load shedding,” which could cripple key sectors of the economy.
NATCOMS warns that without the necessary revenue boost, telecom companies may resort to limiting service availability in certain areas, prioritising high-revenue regions while leaving others underserved.
Service Rationing: A Potential Consequence
One of the more controversial solutions raised by operators in the sector is the idea of load shedding. In order to cut operational costs, some telecom providers have already started limiting service in specific regions, concentrating their efforts on areas where they generate the most revenue.
This practice, akin to electricity rationing in certain parts of Nigeria, has raised talks about its possible effects on critical sectors such as banking, education, and healthcare. If implemented more widely, it could severely disrupt services that are increasingly reliant on consistent telecom access, from online banking to virtual healthcare consultations.
Ogunbanjo rejects load shedding as a viable solution, warning that it would have dire consequences for businesses and individuals who rely on telecom services for daily operations. “Rationing service like this would hurt many sectors—virtual meetings, online transactions, and more—would all be jeopardised,” he said.
Exploring Alternatives
Beyond tariff adjustments, Ogunbanjo suggests that government intervention in the form of subsidies or tax relief could also ease the burden on telecom operators. Added to this, there are calls for investments in alternative energy sources such as solar power to reduce the sector’s dependence on volatile fuel prices.
Moving towards renewable energy will enable operators to lower their operating costs and become more resilient to fuel price hikes.
The current situation tells us the importance of providing telecom operators with a conducive environment to operate, through clear and supportive regulations, so that they can invest in innovation and infrastructure.
According to experts like Bismarck Rewane, managing director of Financial Derivatives, the telecom industry is currently in an “intensive care unit,” facing huge financial limitations. This points to the urgent need for both the government and the NCC to take quick action to safeguard the future of telecom services in Nigeria.
While the proposed 10% increase may seem burdensome for consumers, it is seen as necessary to maintain service quality and ensure the sustainability of the sector. However, in light of the potential adverse effects on business and essential services, stakeholders must consider all options, including government support and alternative energy solutions, to strike a balance between ensuring telecom sustainability and protecting consumers.
