The Nigerian telecom sector is grappling with skyrocketing operating costs, threatening its sustainability and prompting calls for tariff increases. Over the past two to three years, costs for fuel, power, labor, equipment maintenance, and security have soared, while forex fluctuations and availability have added more pressure. These challenges have left mobile network operators (MNOs) and infrastructure companies (INFRACOs) struggling to maintain services and profitability.
At a recent stakeholders’ meeting in Abuja, the Federal Government acknowledged the telecom industry’s plight and approved a tariff increase for telecom services, including calls, SMS, and data. The Minister of Communications, Innovation & Digital Economy, Bosun Tijani, emphasized the inevitability of price adjustments, though he noted that the 100 percent hike requested by operators would not be fully granted. “Price increases are necessary to sustain the industry, but they must also be reasonable to protect consumers,” Tijani said. The new tariffs are expected to be announced soon by the Nigerian Communications Commission (NCC).
Rising Costs Hit Telecom Operators
The telecom industry’s challenges stem largely from the depreciation of the naira against the US dollar, which has worsened the cost of importing equipment and repaying international loans. Over the past three to four years, the exchange rate has risen from approximately N500 to over N1,600 to the dollar, making telecom operations significantly more expensive.
Energy costs remain a major burden, with diesel prices and alternative power solutions driving up expenses. Statistics show that operational costs for major network operators have surged by over 300 percent in the last two years, with energy accounting for the largest share.
According to Olatide Jeremiah, Chief Executive Officer of petroleumprice.ng, “Most of the critical components needed to run telecom networks are sourced internationally. This creates a huge mismatch as revenue is earned in naira, but costs are denominated in dollars.”
Operators Call for Tariff Hikes
Telecom operators have repeatedly sounded the alarm, warning that without tariff increases, the sector faces severe consequences. The CEOs of MTN Nigeria, Airtel Nigeria, and 9mobile highlighted the industry’s struggles, stressing the need for sustainable pricing.
“The telecom industry is not just facing profitability issues; we are struggling with fundamental sustainability. Tariff increases will allow us to invest in infrastructure and improve service quality,” said Karl Toriola, CEO of MTN Nigeria.
The Association of Licensed Telecom Operators of Nigeria (ALTON) and the Association of Telecommunication Companies of Nigeria (ATCON) echoed these sentiments, urging the government to approve tariff adjustments to prevent a collapse of the sector.
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Impact of Delayed Tariff Increases
Industry experts warn that failure to address the rising costs could have devastating consequences for both operators and consumers. Poor network maintenance, reduced coverage, and frequent service disruptions may become the norm. “If operators cannot manage costs, consumers will experience dropped calls, poor internet connectivity, and other frustrations,” said Dinesh Balsingh, Managing Director of Airtel Nigeria.
The ripple effects extend beyond service quality. The telecom sector is a major employer in Nigeria, and rising costs could force operators to downsize, resulting in widespread job losses. Additionally, a struggling telecom sector would reduce investments, economic activity, and tax revenues, slowing the country’s overall economic growth.
Government Intervention Needed
To safeguard the telecom sector, experts recommend urgent action from the Federal Government. Alongside approving tariff adjustments, the government should offer incentives to infrastructure companies to maintain operations and invest in network upgrades. “We need a balanced approach that addresses the needs of both MNOs and INFRACOs,” said Obafemi Banigbe, CEO of 9mobile.
The telecom sector plays a critical role in Nigeria’s economy and is essential for driving digital transformation. By approving tariff increases and supporting operators, the government can ensure the sector’s sustainability and foster economic growth.
As the NCC prepares to unveil new tariffs, stakeholders hope the adjustments will strike a balance between sustaining the telecom sector and protecting consumers. The future of Nigeria’s telecom industry—and its broader economy—depends on swift and decisive action.