The telecommunications sector stands as a pivotal force in driving Nigeria’s economic and social progress. In an increasingly interconnected world, the imperative for an improved telecom sector has never been more urgent, ADEYEMI ADEPETUN writes.

Nigeria’s telecommunications sector, once a beacon of rapid growth and a key driver of the nation’s economy, is showing signs of a troubling slowdown. While the sector has undeniably revolutionised communication and access to information, a confluence of challenges is leading to a perceptible “foot-dragging,” hindering further progress and threatening to derail the country’s digital ambitions.
  
For years, Nigeria’s telecoms industry was a success story. The liberalisation of the sector in the early 2000s unleashed a wave of investment, leading to explosive growth in mobile phone penetration and Internet access. This expansion fueled economic activity, created jobs, and empowered millions of Nigerians. However, the initial momentum appears to be waning.
  
Fast forward to the first quarter of 2025, the atmosphere appears to be changing, starting with the clamour for an increase in tariff, which eventually saw operators getting 50 per cent from the initial 100 per cent demand.
  
The unwavering position of the telcos in this debate has been that this increase is necessitated by rising operational costs. On the other hand, consumers suspect that this is simply a new burdensome price increase in the current landscape of ever-increasing prices.
  
As Nigerians dig deeper into their pockets to pay for data and calls, and telcos justify the hike with claims of necessary infrastructure upgrades, a critical question lingers: are these increases truly about sustainability, or are telcos simply padding their profits?

The case for sustainability
A report by SBM Intelligence, titled: ‘The Price of Everything,’ painted a harrowing picture of Nigeria’s economy over the years, one marked by relentless inflation, dwindling purchasing power, and rising living costs. Prices in the market seem to rise almost daily, but perhaps the most jarring was the doubling of petrol prices following the removal of fuel subsidies in 2024. 
  
SBM Intelligence reports on the cost of mobility: “As petrol prices rise, the cost of moving goods and people increases, creating a domino effect that inflates the prices of goods and services across the economy. This is particularly detrimental in Nigeria, where the transportation sector heavily relies on petrol, and alternative energy sources remain underdeveloped.”
  
Telecommunication companies argued that tariff adjustments are a necessity, not a luxury. The industry has been grappling with rising costs, particularly due to the depreciation of the naira and soaring diesel prices, which significantly impact network operations. Maintaining base stations, expanding fibre-optic networks, and rolling out 5G infrastructure requires substantial investment.
  
Beyond inflation, regulatory compliance and government-imposed levies also weigh heavily on telecom operators. Spectrum licensing fees, taxation by the government, unavoidable security costs in volatile regions, and the repeated expenditure on repairing vandalised infrastructure all add to their financial burden. Telcos argued that without price adjustments, sustaining quality service would be nearly impossible.

Profit or not
FOR the telcos, the tariff hike is a survival measure. Critics argued that the move is more about protecting profit margins than maintaining service quality. Many point to the financial reports of major telecom providers, which show that despite economic challenges, these companies continue to report healthy revenues and profit growth.
  
For the average Nigerian, the tariff increase means spending more on essential services. Small businesses, content creators, and remote workers who rely heavily on Internet connectivity are particularly affected. With no viable alternatives in sight, the situation is even tougher for low-income earners, as beloved daily and weekly data bundles have either become more expensive or disappeared entirely. 
  
Critics have raised concerns that this increase may completely exclude low-income users from digital access. In the meantime, netizens have made vows to reduce their data usage, by switching off mobile data when not in use or limiting online conversations to only what’s necessary.
  
A major point of contention is whether this increase will translate to better service. Nigerians complain of slow Internet speeds, network congestion, and frequent downtimes, issues that persist despite the implemented tariff increase. If consumers are paying more, why aren’t they seeing significant improvements in service quality?

Beckoning reality
THE Nigerian telecommunications sector has experienced significant growth over the past decade, becoming a cornerstone of the nation’s economy. From contributing 7.6 per cent to Nigeria’s GDP in 2014, the sector’s share nearly doubled to 14.58 per cent by the first quarter of 2024. This expansion has been driven by increased adoption of data services and the rise of mobile money. 
  
However, beneath this growth lies a web of financial challenges, including the protracted $160 billion USSD debt, which is fast receiving attention and expected to be cleared by mid-2025.
  
Indeed, the debt shortfall affected telcos’ cash flow and operational budgets and added pressure on them to find alternative revenue streams to stay profitable. This is coupled with mounting inflationary costs, telecom companies argued that a tariff adjustment is necessary to offset financial gaps and maintain quality service.
  
Despite these financial disputes, Nigerian telecom companies have remained profitable. However, ‘profitability’ is relative, when considering economic conditions like the naira devaluation. While telco prices have remained unchanged for over a decade, the costs of goods and services have continued to rise. A report claimed that delays in implementing tariff adjustments led to significant revenue losses, with forecasts indicating a potential $11.3 billion shortfall between 2022 and 2026. Amid all this, mounting operational costs have put increasing pressure on telco profit margins.
 
Comparing Nigeria’s telecoms tariffs to other African markets provides interesting insights. Data released by the International Telecommunications Union (ITU) revealed that Nigeria ranked among the lowest in terms of data costs when compared to other countries like South Africa, Kenya, Zimbabwe, and Ghana. The ITU’s ICT Services Affordability Report 2023 showed the cost of data in Nigeria as $2.35, whereas it cost $2.66 in Ghana. On another hand, a 2GB data package costs $2.92 in Kenya, while in South Africa, the same package is $7.98. Despite facing similar inflationary pressures, Nigeria has maintained lower data costs than its counterparts. One is left to wonder if this tariff increase is, in fact, a long overdue adjustment.
  
Still, consumers have vowed to switch to other networks. Yet, the tariff increase isn’t limited to Nigerian telecoms providers as foreign operators in the country have also adjusted their pricing. The case in question is Starlink.

Falling ARPU
INDEED, the impacts of the challenges are obvious. The average revenue per user (ARPU) has gone south, declining by 38.79 per cent year-on-year to $1.89 at the end of 2024 from $3.08 in 2023. This drop is largely attributed to the continuous naira’s depreciation against the dollar.
  

GSMA, the global body for telecom operators, said revenue in naira has stopped growing as the number of subscribers has increased. It pointed out that falls in ARPUs indicated pressure on prices and reductions in average usage. A few years back, Nigeria was the largest revenue contributor for multinational telecom operators like MTN Group and Airtel Africa. However, steep foreign exchange losses due to the naira’s volatility have eroded investor dividends and pushed Nigeria down the earnings rankings.
  
MTN Nigeria, which once led as MTN Group’s highest revenue-generating subsidiary, has slipped behind MTN South Africa. Despite recording its highest-ever revenue of N3.36 trillion, its ARPU fell to $2.17 in the last quarter of 2024, a 35.42 per cent drop from $3.36 in Q4 2023.
  
Airtel Nigeria has also struggled, with its ARPU falling to $1.6 in December 2024, a 75 per cent decline from $2.8 in the same period in 2023. This figure now falls below Airtel Africa’s regional average of $2.6, highlighting Nigeria’s weakened profitability within the group. Revenue for Airtel Nigeria fell 40.34 per cent year-on-year to $738 million for the nine months ended December 2024.
  
According to GSMA, this decline has impacted operators as the “financial performance of the mobile industry in Nigeria has slowed down in recent years after a long period of sustained growth. Operators couldn’t match rising expenses, most in dollars. This led to a reduction in network investments and deteriorating service quality in 2024.”

Apprehensive 9mobile customers
TO further confirm the challenge within the sector, 9mobile customers have become apprehensive following weeks of service disruption from the network.
  
Though the management of 9mobile has come out to deny claims of shutting down in Nigeria, customers have faced persistent loss of network. Subscribers, who explore the social media space to vent their anger, also complained of their inability to port out of the network. More worrisome is also the fact that customer services have equally been at the lowest ebb.
  
Going into about five weeks now, subscribers have called on the telecoms regulator to intervene and rescue the firm and subscribers themselves. Some are even asked for compensation for time wasted on the network.
  
But the management said: “We understand that some customers have recently faced challenges, particularly with Mobile Number Portability (MNP), a service that enables seamless network switching. We want to clarify that 9mobile has never restricted customers from porting to other networks. We remain fully compliant with industry regulations and are committed to delivering fair, transparent, and customer-focused services. While there have been temporary technical challenges affecting MNP, these issues have now been largely resolved. Some minor delays may still occur due to ongoing system optimisations, but we are actively working to ensure a smoother experience for all users.
  
The firm said he acknowledged the temporary service disruptions some customers may have experienced in different locations, “however, we assure you that these disruptions are part of a broader transformation effort aimed at modernising our infrastructure and improving the overall service quality. Our ongoing investments in network upgrades and service expansion will soon yield significant improvements, ensuring reliable connectivity for individuals, businesses, and communities.”

Is NCC lukewarm?  
IN all, the telecoms sector remains very critical to the economy and cannot be allowed to fail. Reason, the NCC has been urged not to remain lukewarm in helping to find a lasting solution to the myriads of challenges confronting the sector.
  
According to stakeholders, Nigeria’s telecoms sector has the potential to be a powerful engine for economic growth and social development but addressing the current challenges and fostering a conducive environment for investment and innovation are crucial to ensuring its continued success. They submitted that failure to do so will leave Nigeria lagging in the global digital economy.