Business & Strategy

MTN, Glo, Others Seek NCC Approval for Tariff Adjustment

Written by Jerry Alomatu on April 26, 2024

News Views: 85

Telecommunications operators in Nigeria, including MTN Nigeria and Globacom, are seeking approval from the Nigerian Communications Commission (NCC) to adjust their tariffs. This move follows foreign exchange losses and increased energy costs, which led some operators to report losses last year. The request for tariff adjustment comes shortly after MultiChoice, a South African pay television company, raised its tariffs, and other companies, including Discos and brewing companies, also increased their prices recently.

The telecommunications industry, represented by the Association of Licensed Telecom Companies of Nigeria and the Association of Telecom Companies of Nigeria, jointly issued a statement urging the government to expedite approval for the tariff adjustment. They emphasized that despite economic challenges, the industry has not reviewed its service pricing framework upwards in the past 11 years due to regulatory constraints. They called for a constructive dialogue with the government to establish a pricing framework that balances consumer affordability with operators’ financial sustainability.

The telecom industry’s inability to adjust prices amidst rising inflation and economic challenges is attributed to regulatory constraints. Telcos argue that these constraints prevent them from pricing their services appropriately.

Efforts to reach the NCC’s Director of Public Affairs for comment were unsuccessful as of press time on Thursday. Telecom operators are required to obtain approval from the NCC before implementing any price changes, and the regulator is currently conducting a cost-based study to determine whether to approve tariff adjustments.

The Chairman of the Association of Licensed Telecoms Operators of Nigeria emphasized that a tariff reflective of costs is essential for the industry’s sustainability. He warned that without sustainable business models, operators may cease investments, leading to infrastructure deterioration.

The telecom industry has faced significant cost increases due to forex market fluctuations, network expansion, and upgrades, resulting in dwindling investments. According to the National Bureau of Statistics, telecom sector investment declined by approximately 70.5% from $456.8 million in the previous year to $134 million in 2023.

MTN Nigeria Plc reported a substantial loss of N740.4 billion for fiscal year 2023, primarily due to forex market liberalization. Airtel Africa also recorded a significant decline in post-tax profit.

Telecom operators warn that without tariff adjustments, they may not survive the year. They cite high diesel prices and increasing operational costs as major challenges. Subscribers and economists support the need for tariff adjustments to offset rising operational costs and ensure service quality. They emphasize the importance of government intervention to address economic challenges facing the telecom sector and prevent further market deterioration.