We can’t talk about a country’s economic growth, digital inclusion, and daily communication without the telecom sector, which is the backbone of all these.
The Nigerian Communications Commission (NCC) recently reported that Nigeria’s internet consumption reached 973,455 terabytes in December 2024, a 36.5% increase from the previous year.
That’s 998.79 million gigabytes of data used in just one month. Despite this surge in demand, the country’s broadband penetration stood at 44.43%, far below the 70% target set in the National Broadband Plan (2020–2025).
Even more concerning, Nigeria ended 2024 with 164.9 million active telecom subscribers—down from 224.7 million the year before.
Imagine streaming a movie now costing as much as a meal, and staying online feels like a privilege reserved for the wealthy.
This sharp decline in active subscribers, even with the growing need for internet services, is leading to talks of Nigerians being unable to afford staying connected.
Inflation and currency devaluation have shot the industry’s costs of operations really high, leading to the Nigerian Communications Commission’s (NCC) recent approval of a 50% increase in telecommunications tariffs—the first such hike in over a decade—to help operators manage the high expenses.
The Need for Inclusive Resilience in the Telecom Sector
This tariff increase has struck conversations across various bodies. The Nigeria Labour Congress (NLC) has labelled the hike as “insensitive” and “unjustifiable,” especially given the current cost-of-living issue.
While telecom operators argue that the challenges leave them with no choice, consumers are wondering if affordable connectivity is becoming a thing of the past.
Inflation is wearing out disposable income, forcing consumers to prioritise essentials over data and call plans. Businesses, especially SMEs, rely heavily on telecom services, but higher costs threaten their ability to stay competitive.
The rural-urban gap in connectivity may expand, as rural consumers—who already struggle with access—may be priced out of the market.
In the midst of these challenges, the telecom sector must find ways to remain profitable without sidelining lower-income consumers. The key lies in resilient and inclusive strategies that balance affordability, sustainability, and growth.
Strategy 1: Tiered and Flexible Pricing Models
1. The Power of Segmentation in Telecom
To effectively serve a diverse customer base, telecom operators should segment their users into low-income, middle-income, and high-income categories. This segmentation allows for targeted services that meet the specific needs and financial capabilities of each group.
2. Implementing Flexible Pricing Structures
- Pay-as-you-go options: Ideal for price-sensitive users who prefer to control their spending without committing to fixed plans.
- Subscription models: Offer middle-income consumers affordable packages with predictable billing cycles.
- Premium services: Provide high-income users with enhanced features such as high-speed internet and exclusive customer support.
3. Strategy 2: Infrastructure Cost Optimisation Through Public-Private Partnerships (PPP)
1. The High Cost of Expanding Telecom Network Infrastructure
Building and maintaining telecom infrastructure, such as towers and broadband cables, require huge capital investment. Inflation further increases these costs, making it challenging for operators to expand and upgrade their networks.
2. Leveraging PPP to Reduce Financial Stress
Collaborating with government entities and development banks can help telecom operators share the financial risks associated with infrastructure projects. For example, partnerships can be formed to extend network coverage to underserved rural areas, with shared investment and benefits.
In Kenya, the government and private telecom operators have partnered to expand rural connectivity, resulting in increased access to communication services in previously underserved regions.
Initiatives like the National Optic Fibre Backbone Project and partnerships with telecom providers such as Safaricom, Telkom Kenya, and Airtel have helped boost this.
Strategy 3: Digital Transformation and AI-Driven Efficiency
1. How Digital Transformation Can Lower Costs
Leveraging digital tools and automation can simplify operations, reducing the need for manual intervention and lowering operational expenses. For instance, AI-powered network management systems can optimise bandwidth usage and predict maintenance needs, thereby reducing downtime and associated costs.
2. The Impact on End-Users
Customers benefit from faster and more efficient services, such as AI-driven customer support that can handle inquiries promptly. These efficiencies can lead to cost savings for operators, which can be passed on to consumers in the form of more affordable services.
Strategy 4: Expanding Alternative Revenue Streams
1. Moving Beyond Traditional Revenue Models
Relying solely on voice and data services is becoming more and more unsustainable. Diversifying into areas like financial technology (fintech), cloud services, and the Internet of Things (IoT) can open new revenue streams. This is seen in MTN’s transition to a Techco.
2. Monetising Digital Services
- Mobile money and payment solutions: Offer financial services to unbanked populations, generating transaction fees.
- Entertainment bundles: Partner with streaming services to provide bundled offerings, enhancing value for consumers.
MTN’s MoMo, Airtel Money and Safaricom’s M-Pesa are prime examples of telecom operators successfully launching into mobile financial services, greatly contributing to revenue growth.
Strategy 5: Strengthening Local Supply Chains to Mitigate FX Risks
1. The Problem of Foreign Exchange Dependency
Heavy reliance on imported equipment makes telecom operators vulnerable to currency fluctuations, increasing costs unpredictably.
2. Investing in Local Manufacturing and Partnerships
Developing local production capabilities for items like SIM cards and network components can reduce foreign exchange exposure. Partnering with local tech firms can also promote innovation and cost-effective solutions tailored to the local market.
Strategy 6: Data-Driven Decision Making for Telecom Customer Retention
1. The Cost of Customer Churn in an Economic Downturn
Losing customers can be more expensive than retaining existing ones, especially when inflation reduces consumers’ disposable income. High churn rates force telecom companies to spend more on marketing and customer acquisition, which can negatively impact already tight budgets.
2. Leveraging Big Data and Analytics for Personalised Offers
Telecom operators can use customer data analytics to identify usage patterns, predict churn risk, and design personalised retention strategies.
- Usage-based incentives: Offering discounts or data bonuses to customers who frequently recharge can encourage continued engagement.
- Loyalty rewards: Retaining long-term customers through perks such as discounted family plans or exclusive streaming deals.
MTN and Airtel have successfully used data analytics to provide dynamic pricing models, such as location-based discounts and time-sensitive data plans, reducing churn and boosting customer satisfaction.
Strategy 7: Strengthening Regulatory and Industry Collaboration in Telecom
1. The Impact of Government Policies on Telecom Viability
Government policies on taxation, spectrum licensing, and price regulations are important in determining telecom sector stability. The recent 50% tariff hike approved by the Nigerian Communications Commission (NCC) is an example of how policy decisions directly affect consumers and telecom operators.
2. Advocacy for Fair and Sustainable Policies in the Telecom Sector
Telecom companies must engage policymakers and industry regulators in constructive dialogue to ensure that tariff adjustments, tax structures, and regulatory frameworks balance profitability with affordability for consumers.
3. Encouraging Investment-Friendly Policies in the Telecom Sector
- Reducing multiple taxation: Telecom firms should advocate for streamlined tax policies to prevent excessive levies that inflate operational costs.
- Incentives for rural expansion: Government support, such as tax breaks for rural infrastructure projects, can make connectivity more accessible in underserved areas.
Regulatory frameworks can encourage competitive pricing while ensuring telecom operators remain profitable.
Summary of Key Points
Though there are economic pressures like inflation, telecom operators can thrive and ensure inclusive connectivity by implementing seven key strategies:
- Tiered and flexible pricing models to serve all income groups.
- Public-private partnerships (PPP) to reduce infrastructure costs.
- Digital transformation and AI for cost efficiency.
- Diversifying revenue streams beyond data and voice services.
- Strengthening local supply chains to reduce foreign exchange risks.
- Using data-driven strategies to retain customers.
- Collaborating with regulators to ensure fair pricing policies.
The Lot of Resilient Connectivity
With smart, adaptive strategies, telecom operators can continue to deliver quality services across all economic segments while mitigating the impact of inflation.
The telecom sector must act assertively by adopting innovative pricing, infrastructure investment, and customer-centric solutions.
Regulators, industry leaders, and consumers must collaborate to ensure that connectivity remains affordable, sustainable, and inclusive—regardless of economic conditions.
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