ADEYEMI ADEPETUN writes that the telecoms sector shared significantly from the troubles that headlined 2024 but hopes to stay afloat amid several unresolved issues this year.
Today, the world ushered in another year with the hope that it brings the much-expected ease after the harrowing experiences of 2024. This is not limited to individuals; businesses equally had it very rough and tough with many shutting down and others exiting the Nigerian space.
Virtually all the sectors felt the impact of the current handlers’ mismanagement of the economy. The resilience of the ICT/telecoms sector was stretched last year, necessitating various calls from stakeholders to retool the industry from increased cyber threats and eventual attacks to calls refusing to connect and Internet surfing at its lowest ebb. Startups also experienced a drop in funding, even as there was a major slump in Foreign Direct Investments (FDI) into the sector, which led to partial or no major investments by operators in the year.
While the NIN-SIM audit brought some sanity to telephone subscriptions, it exposed the rot perpetrated by some operators in the sector. Operators reported several cases of vandalism of their infrastructure, amid cases of theft. There was a partial resolution of the protracted N250 billion Unstructured Supplementary Service Data (USSD) debt between deposit money banks (DMBs) and telecoms operators. The crisis had lingered for about five years. However, the matter that headlined 2024 majorly, even till yesterday, was the agitation by telecoms operators for tariff hikes in the sector.
According to the operators, despite these adverse economic headwinds of 2024, the telecommunications industry remained the only sector that has yet to effect any general tariff increase for its services in the last five years due to regulatory and political restrictions limiting the MNOs’ ability to react to the increased cost of doing business. The current price regime was instituted 11 years ago.
The operators equally complained of bureaucracy and increasing over-regulation of the industry, which didn’t used to be the story of the sector. But they can observe changes that are adverse, and the industry is reeling in pain.
ALTON doubts sector’s survival
THE Nigerian Communications Commission (NCC) insisted that a cost-based industry study (as was done before) is needed to determine the need for a hike in tariff, which will first be discussed by the Board (of which it has none for now) among other criteria, the telecoms operators under the aegis of Association of Licensed Telecoms Operators of Nigeria (ALTON) is pessimistic about the survival of the sector in 2025.
The Chairman of ALTON, Gbenga Adebayo, asserted that the survival of the telecoms sector demands immediate and bold reform for its sustainability.
In the address, titled: ‘Before the Final Call – Telecom – As Sector under Seige’, he said: “This not a time for further deliberation or delayed decisions.
“The survival of the telecoms sector demands immediate and bold reform for its sustainability, our tariffs must be reviewed to reflect the economic realities of delivering telecoms services at a minimum for industry sustainability. Without this, operators cannot continue to guarantee service availability.”
Adebayo reiterated even with greater urgency that Nigeria is in the last days for the survival of the telecoms sector, sternly warning that if immediate and decisive action is not taken, the hope for a better 2025 will never materialise.
Is the sector under siege?
WHILE the ALTON boss admitted that the challenges operators are facing are not new, he said they became more acute and threatening in 2024.
According to him, rising operational costs, skyrocketing energy costs, the relentless pressure of inflation, and volatile exchange rates, amongst others have all placed an unsustainable burden on network operators.
“Despite these mounting pressures, tariffs have remained stagnant, leaving operators trapped in a financial quagmire. The resources needed to maintain, expand, and modernize our networks are simply no longer available. Without intervention, the future of this sector is at grave risk,” he said.
He further warned that if nothing is done, Nigeria might begin to see in the New Year, grim consequences unfolding.
Such consequences, according to ALTON, include service shedding as operators may not be able to provide services in some areas and at some times of the day leaving millions disconnected.
This will lead to significant economic fallout as businesses will suffer from a lack of connectivity, stalling growth and innovation.
There will also be national economic disruption where key sectors such as security, commerce, healthcare, and education which rely heavily on telecom infrastructure, will face serious disruptions.
The ALTON chairman further said that history will judge operators right for the role they have played in rescuing this sector.
Need for increased investments
SURVIVAL of the $76 billion sector also relies on increased investments, especially in bridging current infrastructure deficits. The sub-sector has remained the pedestal for the entire ICT sector, contributing 16.3 per cent to the country’s gross domestic product (GDP).
Painfully, Foreign Direct Investments (FDIs) into the sector plummeted by $99.02 million in quarter three of 2024, according to data from the National Bureau of Statistics (NBS).
According to the NBS Capital Importation report, the telecoms sector attracted $14.4 million in Q3, a sharp decline from the $113.42 investments recorded in Q2. This implied that the FDI to the sector slumped by 87 per cent in the period under review.
The data showed that on a year-on-year basis, the Q3 2024 capital importation for the telecoms sector also represented a 77 per cent decline when compared with the $64.05 million recorded in the same period last year.
ALTON’s sister body, the Association of Telecommunications Companies of Nigeria (ATCON) called on the Federal Government (FG) to address the infrastructural deficit, economic constraints and systemic challenges of broadband Internet expansion.
The association’s president, Tony Emoekpere, speaking on ways to address the barriers and gaps in broadband connectivity in the New Year, especially in pushing the frontiers of the Nigerian National Broadband Plan 2020-2025 agenda, observed that urban regions like Lagos are enjoying faster and more reliable connectivity compared to underserved rural areas, where infrastructure gaps persist.
“The barriers to broadband Internet expansion in Nigeria reflect a combination of infrastructure deficits, economic constraints, and systemic challenges. Addressing these is critical for achieving equitable digital inclusion and supporting the country’s economic growth,” Emoekpere said.
The ATCON president affirms the gap in the deployment of broadband infrastructure, particularly in rural and underserved areas.
“The limited penetration of fibre-optic networks and inadequate last-mile connections prevent equitable access to high-speed Internet. The affordability of Internet access remains a critical issue. Broadband services and devices are still too expensive for many Nigerians, especially those in lower-income brackets.
“Moreover, Mobile Network Operators (MNOs) have faced stagnant tariffs for years despite increasing operational expenses and capital expenditure (CapEx) due to challenges such as rising energy costs and a depreciating naira,” he said.
To improve the quality of Internet connectivity, therefore, Emoekpere called for tariff adjustments and economic incentives for MNOs due to rising operational and capital costs. MNOs should be permitted to implement controlled tariff increases to account for rising operational and capital costs.
“In parallel, the government can provide tax breaks or subsidies to ease consumer affordability while ensuring operators can sustain their infrastructure investments,” the ATCON president said.
Resolution of N250b USSD debt
WITH partial resolution around the protracted N250 billion USSD debt, following last week’s joint directive from the Central Bank of Nigeria (CBN) and the NCC that DMBs should pay up the debt on or before July 2, 2025, Adebayo stressed the importance of getting the fund, which according to him, would be useful in upgrading and expanding telecoms infrastructure.
The CBN and NCC gave the directive in a circular, titled: “2nd Joint Circular of the Central Bank of Nigeria and the Nigerian Communications Commission on the Resolution of the USSD Debt Issue between Deposit Money Banks and Mobile Network Operators.”
The circular, issued on Dec. 20, 2024, was signed by the Ag Director of the CBN Payments System Management Department, Oladimeji Taiwo, and NCC Head of Legal and Regulatory Services, Chizua Whyte.
Some of the terms for the resolution of the dispute as directed by the two regulators are that 60 per cent of all pre-API invoices must be paid as full and final settlement.
The payment plans (lump sum or instalments) must be agreed upon between a concerned bank and mobile operator by January 2, 2025. Those instalments must be based on equal monthly payments with full payment due by July 2, 2025.
The banks must pay 85 per cent of all outstanding invoices issued after the implementation of APIs (i.e., February 2022) by December 31, 2024.
Similarly, 85 per cent of future invoices must be liquidated within one month of service.
“That the transition to end-user billing will be activated only for DMBs and MNOs that comply with the payment terms,” the circular noted.
Securing 2025 and beyond
DESPITE the dire warnings, ALTON believes a better 2025 is still possible, provided the country acts now.
“Let this be the moment when we come together, acknowledge the urgency of the situation, and commit to saving this sector. If we fail to act, history will record that we had countless warnings, yet we allowed inaction to jeopardize one of the most critical pillars of Nigeria’s development.
“But if we succeed, 2025 can be the year we turn things around—a year of hope, resilience, and sustainability for the telecoms industry.
“The time for action is now. Let us not wait until it is too late. ALTON stands ready to work with all stakeholders to ensure the survival and prosperity of this sector,” Adebayo stated.
