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Telecommunications stakeholders, especially mobile network operators (MNOs), have said the current pricing regime, including for calls, short message service (SMS) and data, is unsustainable under current cost scheme in the country.
Under the aegis of Association of Licensed Telecoms Operators of Nigeria (ALTON), the MNOs said the matter requires urgent review, given importance of the sector to the economy.
In an interview with The Guardian, ALTON chairman, Gbenga Adebayo, said: “Current pricing regime is not sustainable under the current cost scheme. What we are charging, today, is certainly not sustainable. It is actually only a matter of time; either it will impact on scale of service or the industry’s performance and service availability. But certainly, it is not sustainable…what we have currently. We are living on borrowed times.”
Adebayo, however, didn’t say yes or no to possible increase in tariffs for now, but noted: “We are looking at all the elements, and decisions would be made soon. But the fact remains that current rates in the sector are not sustainable in the current dispensation.”
The ALTON chairman re-echoed this challenge in Lagos, yesterday, at the ongoing Nigerian Telecommunications Indigenous Content Expo (NTICE 2023), organised by Nigerian Communications Commission (NCC), where he called for urgent look into challenges facing operators and the industry. He also blamed regulatory interventions for problems in the sector.
The industry is currently beset with rising costs of diesel. Checks showed that telecoms operators are one of the largest users of diesel, with about 40 million litres consumed monthly to power telecoms sites across the country.
Prior to implementation of Value Added Tax on diesel, the commodity retailed for N650/litre, as of last year. But currently, after implementation and removal of subsidy, a litre hovers between N900 and N950.
The telecoms body, last year, had written to NCC, seeking approval for a 40 per cent increase in cost of calls, SMS and data.
“The current pricing regime in the industry is not sustainable. We are basically selling below cost. It is not easy to go about that but market forces should be allowed to determine prices,” Adebayo said.
In 2022, telcos had proposed that the call price floor will rise from N6.4 to N8.95, while SMS price cap will jump from N4 to N5.61. They noted in the letter that the cost of doing business in the country had increased by 40 per cent.
They claimed telecommunications business had been harmed financially as a result of the country’s economic downturn in 2020 and the Ukraine/Russia war. They added that this resulted in a 35 per cent rise in operational expenses due to increase in energy costs.
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