The Nigerian Communications Commission (NCC) has approved a 40 percent increase in telecom tariffs. This decision follows an earlier 100 percent tariff increase proposal by telecommunications companies, aiming to address the mounting operational costs in the sector. This increase will affect the cost of phone calls, SMS, and data bundles, raising concerns about affordability and digital inclusivity for millions of Nigerians. As the Tariffs take effect, the cost of phone calls will climb from ₦11 to ₦15.40 per minute, SMS charges will rise from ₦4 to ₦5.60, and a 1GB data bundle will now cost at least ₦1,400.
Telecommunications operators justify these increases as necessary to offset rising expenses. For many, these adjustments mean tighter household budgets and limited access to essential digital services, potentially deepening the digital divide across the country. Moreover, the sector has witnessed rapid growth in recent years, contributing to the national economy. By mid-2024, its share of the Gross Domestic Product (GDP) had risen to 16.36 percent from 10.30 percent in 2019, underscoring its importance. In contrast, the sector is now battling severe economic challenges.
Rising economic pressures are behind the surge in telecom service costs.
Inflation rose to about a 30-year high of 34.6 percent in November 2024. As a result, the depreciation of the Naira against major currencies has further strained telecom companies reliant on imported technology, increasing their operational costs. These economic situations have forced the sector operators to seek tariff adjustments to sustain operations. Rising energy costs and unstable Power Supply have compounded the financial pressures, leaving companies with limited options. This scenario reflects broader economic trends, where Inflation and currency Volatility have hampered many industries’ profitability and development.
Meanwhile, over the past five years, the cost of the sector services in the country has fluctuated. In 2019, Nigerians enjoyed relatively stable prices, with voice calls averaging ₦11 per minute and 1GB of data costing about ₦1,000. On the other hand, by 2020, the COVID-19 pandemic dramatically increased demand for telecom services as millions turned to online platforms for work and education. Despite this surge, prices remained unchanged as operators prioritised customer retention during the crisis.
Broader implications for digital inclusion and access issues.
In subsequent years, the sector’s challenges began to mount. In 2021, inflation peaked at 18.77 percent, and operators faced rising costs due to currency depreciation and an unstable economical environment. This period saw telecom companies reporting substantial Revenue growth, yet operational expenses eroded profitability. By 2022, the government introduced new taxes, including a 12.5 percent excise duty on telecom services, further straining operators and consumers. The resultant tariff increases raised widespread dissatisfaction but were deemed necessary by industry players to maintain service delivery.
However, the rising costs of telecom services have broader implications for the country’s digital inclusion efforts. Higher tariffs risk widening the digital divide, particularly among low-income and rural populations. For many, access to affordable communication services is critical for e-learning, healthcare, and job opportunities. The tariff increase threatens to make these essential services less accessible, undermining efforts to bridge the digital gap and promote inclusive growth. Small businesses and startups are particularly vulnerable to these cost increases. Connectivity is a lifeline for these enterprises, enabling them to engage with clients, market products, and drive innovation. Higher costs could stifle their growth, reducing their contributions to the economy.
Related Article: MTN Nigeria proposes 100% tariff increase
Despite the challenges, these sectors remain a critical driver of economic activity. Its resilience over the years underscores its potential to adapt and thrive even in difficult circumstances. However, sustaining this growth requires a concerted effort to address the underlying economic issues affecting the sector. Stakeholders must prioritise policies that stabilise inflation, improve the power supply, and enhance the availability of foreign exchange to support telecom operations. Also, Collaboration between government and operators is essential to ensure that price adjustments do not affect consumers. This includes exploring subsidies, Tax reliefs, or other incentives to mitigate the financial burden on subscribers.