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NCC pegs new international termination rate at 10 cents/min

By Adeyemi Adepetun
31 August 2022   |   2:42 am
The Nigerian Communications Commission (NCC) has made an upward review of the international termination rate (ITR) earlier pegged at $0.045 to $0.10 per minute in a bid to address concerns

Nigerian Communications Commission PHOTO:Twitter

New ITR takes effect from September 1

The Nigerian Communications Commission (NCC) has made an upward review of the international termination rate (ITR) earlier pegged at $0.045 to $0.10 per minute in a bid to address concerns between International Data Access operators (IDA), Mobile Network Operators (MNOs) and international carriers.

There have been concerns among the players about the need to have a fixed rate in order to ensure that the interests of all parties are addressed.

To this end, the new termination rate of $0.10 per minute will take effect from tomorrow, September 1.

ITR is the rate paid to local operators by international operators to terminate calls in Nigeria.

According to the NCC, a fixed rate will ensure transparency in pricing by all and support the Commission’s effort to monitor compliance by all operators.

To give effect to this, representatives of MNOs and IDAs had initially proposed a fixed ITR at $0.08 and $0.15 respectively, for the commission’s consideration. However, after a thorough evaluation, the commission resolved to peg the rate at $0.10

Earlier in the year, IDAs had cried out that the $0.045, which was to be remitted in dollars, would cripple their business and make them just labour for the MNOs.

Indeed, last month, an official of one of the MNOs told The Guardian that the IDAs owed telecoms operators over $8 million in the first six months of the year after the $0.045 termination rate came into effect.

However, a new document released yesterday, and signed by the Executive Vice Chairman, NCC, Prof. Umar Danbatta, titled: ‘Determination of Mobile (Voice) International Termination Rate (As Amended) Issued by the NCC and dated August 25, 2022,” the commission agreed, after various consultations that there were indeed post-implementation challenges, which necessitated the need for further engagements with relevant stakeholders.

According to the telecoms regulator, there was a public hearing with the members of the House Committee on Communications of the National Assembly on March 17, where it was resolved that the commission should further engage with the IDAs and the MNOs to further understand their respective concerns as a basis towards a fair and amicable resolution of the challenges.

As such, NCC, in the 16-page document, said it had several meetings with IDAs and MNOs, specifically on April 6 and June 21, 2022.

From the meetings, NCC accused MNOs of discriminatory pricing. “While the Determination had set a floor price of $0.045 and gave the MNOs room to negotiate on commercial terms with carriers, there were related indications that MNOs took advantage of this latitude to engage partners to the detriment of the Nigerian transit/IDA operators.

“To check the incidence of such anti-competitive disposition, it was agreed by all parties at the meetings that a fixed rate should be adopted by the Commission, in place of the floor rate, which had provided a platform for negotiations with various carriers at a rate above the floor. It was further agreed that the present Determination should be amended to include this new fixed rate. The position was further underscored by the fact that the floor price of $0.045, while being the lowest rate in Africa, does not support predictability and monitoring, with a little positive impact on a healthy national balance of payment position,” NCC added.

Besides, the document explained that the meeting also considered the impact created by the present tax regime on the relative price offerings between the MNOs, other international carriers and the IDAs.

The document revealed that while invoices issued to IDAs include a Value Added Tax (VAT) rate of 7.5 per cent, other international carriers do not have to pay the same, making such carriers enjoy a relative price advantage over the IDAs.

As such, “it was the consensus of all that taxes and other costs borne exclusively by the IDAs be taken into consideration in arriving at the rate of terminating international in-bound traffic by them. The pricing asymmetry on the ITR will allow local IDA players to accommodate taxes and other related costs in a way that guarantees their competitiveness within the international carrier market and aligns with the subsisting principle and policy on local content.”

To give effect to this, the document revealed that it was unanimously agreed that the NCC adopt the same asymmetric corridor contained in the subsisting MTR Determination of 2018, in which big operators terminate at N4.70 in the networks of small operators, while small operators terminate at N3.90 in the networks of big operators. This difference translates to 21 per cent and should represent the discount to be enjoyed by the IDA operators on all inbound international traffic terminations.

In carrying out this new determination, NCC said it held meetings with the Central Bank of Nigeria on June 29, where it informed the apex bank of the international traffic flows, value chains and forex remittance challenges.

MEANWHILE, sources within the IDAs commended the NCC and NASS for coming to listen to their pleas and doing what is necessary.

A source said there was wide consultation by the NCC, IDAs and MNOs, taking into consideration the interest of the nation.