A 50% increase in telecommunications rates has been approved by the Nigerian Communications Commission (NCC), increasing the cost of calls from ₦11 to ₦16.5 per minute, SMS from ₦4 to ₦6, and 1GB of data from ₦350 to ₦525. According to estimates from 2023, telecom operators might make an estimated ₦6.74 trillion by 2025 as a result of this increase. With expected revenues of over ₦4 trillion as a result of its dominance in both incoming and outgoing traffic, the research shows that MTN will profit the most. Although they make up a far smaller portion of the total, Airtel, Glo, and smaller operators like Smile and Ntel are all anticipated to earn higher revenues.
It is anticipated that SMS sales will reach ₦137.84 billion in 2025, with MTN once again dominating the market. The tariff adjustment deals with growing operating expenses that haven’t changed since 2013. The rise, which is intended to strike a balance between Consumer Protection and market sustainability, is less than the 100% jump that operators had originally demanded, the NCC stressed. The decision will follow the tariff bands and rules set forth by the NCC and was made after stakeholder engagements. However, the financial strain on Nigerians has drawn criticism from consumer advocacy organisations.
Telecommunications operators have argued in favour of the pricing rise.
While some organisations, such as the National Association of Telecoms Subscribers, have flatly rejected the increases, others have conditionally supported it, citing the need for increased Economic Growth and better service quality. They promote alternate fundraising strategies, like telecom operators’ public share sales, and issue warnings about possible legal action. Concerns have been raised that the rise may cause users to turn to free messaging services like Telegram and WhatsApp. The NCC guaranteed that the change will enhance connectivity, infrastructure, and service quality.
Strict oversight will be in place to guarantee compliance and quantifiable service improvements during the February 2025 deployment. Due to rising operating costs, telecom operators have argued in favour of the pricing rise. In response to these worries, the NCC said the change is intended to close the large disparity between operating expenses and income without sacrificing service quality. Consumer advocacy organisations, however, have voiced concerns. Telecom operators have been urged by the National Association of Telecommunications Subscribers (NATCOMS) to look into Capital Market funding and other alternative funding options rather than enacting significant price increases.
Lessening the impact of tariff hikes on customers.
Several alternatives to tariff hikes should be taken into consideration in order to lessen the impact on customers, particularly those with lower incomes. Government and telecom operator partnerships may make it easier to construct Infrastructure and improve operational effectiveness, which would lessen the need for tariff hikes. To counteract growing operating costs, the government can provide telecom companies with Tax breaks or subsidies, allowing them to keep or even lower pricing. Telecom companies can raise the money they need for expansion and operating requirements without burdening customers by encouraging them to do so through initial public offerings (IPOs) or other capital market vehicles.
Operators have been advised by NATCOMS to take into account these financial relief options. In an effort to improve telecom carriers’ quality of service (QoS), the NCC has proposed new rules. Traffic congestion, call setup success rates, drop call rates, and other metrics are among the Key Performance Indicators (KPIs) for network services that are specified in the QoS Regulations 2024. If telecom businesses don’t follow these guidelines, they risk fines of ₦5 million for each infraction and an extra ₦500,000 every day until they comply.
Related Article: Impact of telecom tariff hikes on Nigerians https://asknigeria.com/impact-of-telecom-tariff-hike-on-nigerians/
Alternative communication channels and data-driven services may become more popular as a result of the pricing increase. Customers may depend more and more on internet-based communication tools like Telegram and WhatsApp as voice and SMS services are more costly. The need for reasonably priced data plans may increase as a result of this trend, forcing telecom providers to modify their service portfolios. In keeping with the NCC’s goals of increasing Broadband penetration and enhancing service quality, the industry may also witness a rise in network infrastructure investments to accommodate the growing reliance on data services.