Telcos write FRC, seek review of new yearly dues

• ALTON wants profit-based computation
Telecommunications operators have asked the Financial Reporting Council of Nigeria (FRC) to reconsider and review the new dues private companies are expected to pay yearly.

The operators under the aegis of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) said the new dues as demanded by FRC will kill businesses.

ALTON, in a document signed by the Chairman and Executive Secretary, Gbenga Adebayo, and Gbolahan Awonuga, expressed deep concerns regarding the review of the yearly payment structure under the Financial Reporting Council Amendment Act 2023 (FRC Act) particularly as it relates to non-quoted public interest companies.

ALTON explained that the new payment structure is based on a percentage of the yearly turnover of member companies, rather than the previous maximum cap of N1 million that was payable under the Act.

According to the telecoms body, Section 33(1)(d) of the Act requires private companies to pay their yearly dues based on this computation, “0.02 per cent of yearly turnover of N25 million and below; 0.025 per cent of yearly turnover of more than N25 million but not more than N50 million; 0.03 per cent of yearly turnover of more than N50 million but not more than N500 million; 0.04 per cent of yearly turnover of more than N500 million but not more than N1 billion; 0.045 per cent of yearly turnover of more than N1 billion but not more than N10 billion and 0.05 per cent of yearly turnover of more than N10 billion.”

However, in the letter dated September 13, 2024 and addressed to the Executive Secretary/CEO, FRC, Dr Rabiu Olowo, ALTON, which said FRC acknowledged receipt of it but yet to respond to the letter since last September, noted that Section 33(1) (c) of the Act determines the yearly dues payable by quoted companies regarding a percentage of their market capitalisation up to a predetermined lower amount, which is more favourable to publicly-quoted entities compared to the non-publicly quoted entities.

“For example, a publicly quoted company with a market capitalisation of N1 trillion will be required to pay the sum of N25million as annual dues, whilst a non-publicly quoted company will be required to pay 0.05 per cent of N1 trillion amounting to N500 million. We are concerned about the huge disparity in the amounts payable as annual fees by entities having the same turnover figure deserves to be addressed in the face of the harsh operating environment in the country,” it stated.

The telecoms body said while it understood the rationale behind this review, implementing the new structure would pose significant challenges for operators, especially in light of the prevailing harsh economic conditions in the country.

ALTON said the telecommunications industry in Nigeria has been facing numerous headwinds, including rising operating costs and foreign exchange fluctuations, stressing the current payment structure will place an undue burden on our members, potentially impacting their ability to maintain operations and continue providing critical services to the Nigerian public.

In lieu of the above, ALTON urged FRC to consider the following suggestions including computation of yearly dues based on profit and not revenue and reintroduction of a pre-determined Cap on the FRC dues.

The body explained that by virtue of the nature of the telecommunications industry, members deploy significant capital towards carrying out their operations and bridging the telecommunications gap within the country. ALTON said as such, there is a great disparity between the revenue of these companies and the profit, that they declare.

“For example, a company might have a turnover of N200 billion and declare a profit of only N15 billion and it would be unfair for such a company to pay FRC dues based on its revenue. We consequently request that the FRC uses its good office to consider the computation of the annual dues for companies within the telecommunications industry, based on their profit as opposed to revenue,” it stated.

Also, ALTON noted that the new Act in Section 33 (1)(c) computes the yearly dues payable by public companies based on their market capitalisation but subject to a predetermined cap.

It explained that for example, a public company with a market capitalisation of N500 billion will either pay 0.0025 per cent of this amount or N20 million, whichever is lower, while on the other hand, a private company with the same revenue will pay N250 million. This disparity is significant and unfair to private companies.

Considering the foregoing, ALTON “respectfully requests you to use your good office to change the basis of computing the annual dues payable based on either of the options mentioned above”.

“We are committed to working constructively with the FRC to find a mutually acceptable resolution to this matter. We would be more than willing to arrange a meeting with your office to discuss this issue in detail and explore alternative solutions or payment arrangements that would be more manageable for our member companies,” it stated.