Cautious optimism as consumers, telcos prepare for new tariff regime

With a new tariff regime for Nigeria’s telecoms sector now a done deal, what is in the hike for millions of subscribers who have continued to bear with poor services? Is it going to be a win-win for both operators and telephone users, ADEYEMI ADEPETUN interrogates in this report.   

The poor state of telephony services in the country has continued for long. It has lingered for many years, pitching subscribers against the operators.

Complaints of network freezing, while calls are on, faster depletion of data, inability to access bonus offerings, drop calls and poor customer services, zero coverage have dogged Nigeria’s $76 billion telecoms sector.

Poor services are not limited to a particular region, it cuts across all states. From Lagos to Uyo, Ondo to Anambra, Kebbi to Ebonyi and Zamfara to Kwara, the agony of telephone users has continued unabated. The experience of many subscribers in Nigeria has been grossly poor across the four major networks (MTN, Glo, 9mobile and Airtel).

The introduction of mobile number portability (MNP) on April 22, 2013, which allows consumers to dump a particular operator for another, has yielded no fruit.

Incredibly, the Nigerian Communications Commission (NCC) Key Performance Indicator (KPIs), which measures the quality of service (QoS) rendered by telecommunications companies in Nigeria appears confused having not been able to detect errors. These KPIs include Call Setup Success Rate (CSSR), which measures the percentage of calls that are successfully set up, Drop Call Rate (DCR), which measures the percentage of calls that are dropped, Standalone Dedicated Channel (SDCCH) congestion, measuring the level of congestion on the standalone dedicated channel, Traffic Channel (TCH) congestion, measuring the level of congestion on the traffic channel, among others.

Ironically, all the telcos are said to meet these criteria, even above the thresholds, further compounding the woes of the about 160 million active subscribers in the country.

Amid these service gaps, the telecommunications operators have asked for a 100 per cent tariff increase with the claim that the current pricing regime in the sector is no longer sustainable and more importantly, the need to further invest and expand services.

Of course, the last time a tariff hike was implemented in the industry was 11 years ago, while other sectors of the economy have increased rates in one form or the other. This is even as the sluggish economy continued to batter the telecoms industry, owing to rising inflation, foreign exchange fluctuations, insecurity and rising energy costs, among others.

However, with the operators almost on the verge of having their wishes come to pass with a possible tariff hike anytime soon following the commitment of the Federal Government, albeit moderately, the question in the minds of many subscribers is if the new tariff hike will translate into improved telephony service.

Unending complaints by operators
TELECOMS operators have stressed that to overcome the current challenges, including currency devaluation, inflation and the overall Nigerian economic downturn in the past months, a tariff hike is needed.

With a commitment to improved services, MTN Nigeria’s Chief Executive Officer, Dr Karl Toriola, during a recent interview highlighted the diverse challenges the Nigerian telecommunications industry had to scale through in the past year due to the state of the Nigerian economy, emphasising the need for tariff adjustments to ensure the sustainability of the sector.

“2024 was a very torrid year for the entire telecoms industry. We are the largest operators, so we were probably able to be a bit more resilient, but it’s been very difficult,” he said.

Dr Toriola cited the major factors, that contributed to the challenges of telecoms operations in 2024, noting that the cost of operations of the telecoms firm now exceeds its revenue.

“The difficulty was triggered by the currency devaluation and inflation, which happened on a very rapid scale. What this has done is that it has driven the cost of operations up so significantly, that by the end of the year, we are spending more to keep operations up and running than we are generating in revenue and that is not sustainable,” Toriola said.

He noted that the tariff increase will enable telecom operators to build the capacity needed to provide quality services. “What the tariff adjustment allows us to do is to continue to reinvest, because we need to build capacity, build resilience, put in additional generators and alternative power supply systems for stable and high-quality networks,” Toriola said.

More importantly, he emphasised that the operations of telecom operators are threatened due to present challenges and that tariff adjustments are needed for the sector to survive.

The CEO of Airtel Nigeria, Dinesh Balsingh, represented by Femi Adeniran, the firm’s media spokesperson at a function, said that the economic realities of rising operational and capital costs necessitated the proposed tariff adjustments.

Balsingh said that for telecommunications companies to deliver superior connectivity and foster digital inclusion, there is a need for tariff adjustment.

“The economic realities of rising operational and capital costs necessitated the proposed tariff adjustments. This is aimed at ensuring the long-term sustainability of the sector while unlocking significant benefits for Nigerian consumers,” he said.

The Chief Executive Officer of 9mobile, Obafemi Banigbe, also joined the call, saying the industry has been badly hit by the current naira devaluation, which has caused major telecoms operators to declare significant losses since last year’s quarter.

Banigbe said all the costs incurred by operators in the country have increased significantly, jumping by almost three times. He stressed that towers alone increased their prices by over 300 per cent, “this is an outside hike in diesel cost, insecurity, vandalism, maintenance of sites, infrastructure upgrades, among others.

“The only way to survive is to increase tariffs; even government (Customs) charges have increased. What they charge us has increased tremendously. We need to act fast to keep the sector going. The industry must get free market opportunities to increase tariffs on services.”

Declining investments as a concern
THE declaration by Banigbe that for improved market share and expansion, 9mobile would need about $3 billion, showed the gap in investment in the sector.

Indeed, capital importation data released by the Nigeria Bureau of Statistics (NBS) showed that the telecoms sector attracted investments worth $14.74 million in Q3 2024, a sharp 76.99 per cent Y-o-Y decline from $64.05 million in Q3 2023. On a quarter-on-quarter (Q-o-Q) basis, foreign capital inflow into the sector plunged by 87 per cent, down from $113.42 million in Q2 2024.

According to sector analysts, the telecommunications sector faces economic challenges, as evidenced by declining industry metrics. The sector’s GDP growth rate dropped to 6.78 per cent in real terms in Q3 2024, down from 7.74 per cent in the same period of the previous year. Data from the NCC highlighted a significant decline in active mobile subscriptions, which fell by 29.07 per cent to 157.60 million in October 2024, compared to 226.19 million in October 2023. This drop has however been attributed to the NIN-SIM audit.

The Chairman of the Association of Licensed Telecommunications Companies of Nigeria (ALTON), Gbenga Adebayo, expressed concerns about the sustainability of the telecoms industry in Nigeria amid current macroeconomic conditions.
Adebayo explained that the industry had significant challenges, including a lack of motivation for investment, citing the absence of concessions and incentives from the government.

“If operators can get some concessions and incentives from the government to stimulate investment, then that’s good, but with that not happening, it makes it difficult,” he said.

The ALTON chairman emphasised that the industry had been discussing ways to ensure sustainability for a while, but the current situation was becoming increasingly dire. “We are beginning to see some signs of distress,” he warned.

Subscribers want action
SUBSCRIBERS appeared undeterred by tariff hike sentiments, but rather by how they would get value for money.

The President of the National Association of Telecommunications Subscribers
(NATCOMS) President, Chief Deolu Ogungbanjo, called for greater accountability and improved service standards from telecom operators.

Ogunbanjo, who had earlier appealed to the Federal Government to only approve a 10 per cent marginal increase to enable operators to sustain their services and invest in necessary infrastructure upgrades, noted that a hike in the region of 40 per cent and above would disproportionately affect low-income subscribers and could hinder access to essential communication services.

Sister subscriber group, the Association of Telephones, Cable TV and Internet Subscribers of Nigeria (ATCIS) urged telecom operators to improve and expand services.

ATCIS, which opposed tariff hikes, said price increments will overburden Nigerians, especially at a time like this.

The President, Sina Bilesanmi posited that telecoms operators, especially the mobile network operators (MNOs) should first ensure that the current poor services Nigerians are paying for be corrected, improved upon and expanded to underserved areas.

Possibly more spectrum
ONE-time Acting Executive Vice Chairman (EVC/CEO) of the Nigerian Communications Commission (NCC) and the immediate past (EVC/CEO), of the National Agency for Science and Engineering Infrastructure (NASENI), Dr Bashir Gwandu, noted that proper spectrum management is very important for smooth telecommunications service operations.

Gwandu disclosed that since the country uses wireless communications, both coverage and capacity are affected by either the spectrum or infrastructure. He said interference can disrupt quality.

“With telecoms, signal power has to be higher than the power of the interfering noise for the message to get across. So, for people on the fringes of cell coverage, the receiving signal power has to be high enough above the noise otherwise the signal will be lost. The call can also drop whenever there is no continuity of coverage between cells.

“Therefore, the network designers and regulators need to ensure that there are no gaps that are uncovered between different coverage cells. If there are no gaps that are uncovered, the hand-over between cells is seamless,” he stated.

He submitted that if there is sufficient spectrum (meaning there are many carriers of the signal) then more communication signals from more people or systems can be accommodated. “However, if the size of the spectrum slot is limited, it may not carry so much. The only other way is to have what we call frequency re-use, meaning more tower sites, and more infrastructure spending. So, either you have more spectrum or more tower sites (and thus more capital expenditure and operational costs).

“This is why we as engineers, always try to support the country in getting more spectrum allocation because when you have more spectrum allocations, you are saved from spending more on tower sites and thus can charge lower tariffs. Also, we focus on some spectrum like the 600MHz or 700MHz band which can use one tower site to cover an area where, for example, you will need more than three tower sites including generators, etc, to cover the same if using a higher band like the 2.6GHz band.”

A call for action
NONETHELESS, while the sector is hopeful about tariff adjustment, Adebayo, ALTON Chairman, said the commitment and eventual approval of tariff hike, would be a positive development for the industry, saying this leaves the operators with a huge obligation as an industry, which is to improve on service delivery.

“So, after the approval is granted, what it leads us to is to do a lot more in terms of our part of the responsibility margin, which includes improving on the quality of service, expanding to more areas and delivering good access to Nigerians. We are optimistic until a final nod is given, the signs are positive and we are hopeful the sector will see rapid changes after now,” Adebayo stressed.