Looming telecom tariff hike: A tough pill
The Association of Licensed Telecommunications Operators of Nigeria (ALTON) has raised the alarm about an impending increase in telecom tariffs, suggesting a staggering 100% hike. This proposal, which could lead to an increase in the cost of voice calls, text messages, and data bundles, has sparked widespread concern among Nigeria’s more than 300 million phone subscribers, especially the 163 million active internet users.
In the face of an already beleaguered economy, with inflation, naira devaluation, and rising energy costs taking a toll on Nigerians’ everyday lives, this tariff hike seems like an added burden. Telecom services have become integral to national life, supporting critical sectors such as security, commerce, healthcare, and education. Any disruption to this vital service could have profound consequences, stalling economic activities and affecting millions of businesses and individuals.
ALTON insists that the tariff increase is necessary to sustain telecom operations in a challenging environment. They argue that escalating operating costs demand urgent action, as operators can no longer bear the financial strain without a price adjustment. However, while it is undeniable that the telecom sector faces significant challenges, increasing tariffs at this juncture raises uncomfortable questions about the fairness of such a move.
The proposal to hike tariffs by 40%—which would see the cost of a minute of voice call rising from N11.00 to N15.40, a text message climbing from N4.00 to N5.60, and a 1GB data bundle surging from N1,000 to N1,400—could prove to be a tipping point. Such hikes could make telecom services unaffordable for many Nigerians already reeling from high food prices, transportation costs, and rent increases.
As Senator David Mark once warned, might we soon reach a point where telecom services are out of reach for the poor? The timing of this tariff hike is nothing short of disastrous. As Nigerians grapple with escalating economic pressures, imposing higher costs for essential services like telecoms risks exacerbating the hardships. Beyond the immediate impact on consumers, the proposed hike threatens to deepen the digital divide, leaving many Nigerians isolated from the digital economy, which has become a lifeline in today’s world.
While the telecom operators’ position is understandable—given the surging costs they face—this should not be a one-sided affair. Tariffs must reflect the economic realities of providing telecom services, but they must also take into account the precarious financial situation of Nigerian households. Striking a balance between industry sustainability and affordability for consumers is critical.
The government also has a vital role to play in this equation. It must intervene to provide the necessary infrastructure that can help reduce operational costs for telecom operators, ensuring that prices do not spiral out of control.
Understandably, many of Nigeria’s over 300 million telephone subscribers, including the 163 million active internet users, are worried about an impending tariff hike. The Association of Licensed Telecommunications Operators of Nigeria (ALTON) had warned of a looming service disruption unless the tariff was raised.
ALTON, which is seeking a 100% increase, insisted that the tariff hike was necessary to reflect economic realities, stressing that the telecom sector’s survival demands immediate and bold reform. Operators noted that energy costs, inflation, and naira devaluation have contributed to an astronomical rise in operating costs. The network operators claimed that a tariff hike was the only viable solution to their ever-increasing operating costs and necessary to address the challenge of sustainability.
Like most Nigerians, this newspaper believes that the planned hike, which could easily pass as a sour New Year gift to Nigerians who are already bearing the brunt of the harsh economic reality that defined 2024, is coming at the wrong time.
The latest moves to hike tariffs, which some industry watchers claim would be by 40%, will see an increase in voice calls from N11.00 to N15.40 per minute, short message services jump from N4.00 to N5.60, and the One GB data bundle move from N1,000 to N1,400. Aren’t we gradually approaching a stage where
There is no contesting the fact that the Nigerian economy is in a messy state. High inflation, foreign exchange volatility, and other extraneous factors fueled largely by the government’s economic policies have contributed to making the operating environment very harsh for businesses. It is true that, like businesses, Nigerians are also bearing the brunt of the harsh economic environment, including the skyrocketing rise in food prices, transportation costs, and rent, among other essentials, which have been on an upward trajectory.
Under this very unfavourable environment, tariff hikes, whether for power (due to the incurable energy deficit) or telecom services, will compound the woes of most Nigerians. Telecom service has become an integral part of our national life, and key sectors like security, commerce, healthcare, and education rely heavily on telecom infrastructure.
Efforts must be made to ensure there are no disruptions so businesses won’t suffer from a lack of connectivity that will stall economic activities. In the face of the current insecurity, Nigeria cannot afford telecom service disruption. The government must do all it takes to forestall a situation where millions of citizens will be disconnected, as that will have significant economic fallout.
The telecom operators need to be told in unmistakable terms that a hike at a time like this, when citizens are in dire straits due to the current harsh economic situation, would be a double whammy. Assuming, without conceding, that Nigerians won’t be further weighed down by a tariff hike at a time like this, there are procedures for such a review, including a cost study, consultation, enlightenment, and engagement of stakeholders. Have these requirements been met?
As a newspaper, we believe that tariffs must reflect the economic realities of delivering telecom services at a minimum for industry sustainability. Nothing can change this fact. But that should not be done at the expense of the hapless subscribers.
Operators must strive to strike a balance between protecting margins, recovering investment, and possibly making a profit while retaining subscribers. If the tariffs are high and beyond the reach of most subscribers, they will naturally drop their connections, at which point Senator David Mark would be vindicated.
Amidst the planned hike, the government needs to intervene by providing critical infrastructure to help the operators cut costs. On their part, the telecom service providers must explore other avenues to generate funds to meet their rising operational costs without overburdening the already burdened subscribers.
We urge all stakeholders to work together to find solutions that both sustain the industry and protect Nigerians from further financial strain.
