Telecom Tariffs: Stakeholder Lists Three Things FG Must Do To Prevent Further Increase

• While Nigerians are yet to come to terms with the recent 50% tariff increase, stakeholders say it could rise further
• This will be the case unless the federal government addresses three teething problems affecting the telecom sector
• These issues result in an immediate spike in the cost of operations for telecommunication companies

Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.

As Nigerians grapple with the reality of an increase in telecom tariffs, stakeholders in the industry have identified three key things the government must address to prevent further hikes.

The Nigerian Communications Commission recently approved a 50% hike in telecom tariffs, after more than a year of agitations from the Telecom operators. While this is less than the 100% the operators demanded, they have agreed to work with this increase.

Several Nigerian groups are still agitating to see this tariff hike rescinded, and have embarked on negotiations and threatened strikes.

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However, stakeholders describe the move as critical to the survival of the telecommunications sector, and Nigeria's digital economy.

In an interview, Mr. Opeyemi Tomori, President of the Private Telecommunications and Communications Senior Staff Association of Nigeria (PTECSSAN) explained three things the federal government must do.

Rising fuel prices affect telecom operations

Tomori explained that the removal of fuel subsidies has moved fuel prices from N190 to over N1,000 in less than two years.

This has significantly increased the cost of powering base stations and field operations, the PUNCH reports.

He explained;

“This is a major concern for telecom operators because these base stations allow the networks to function. Moreover, petrol prices, which fuel the cars of our field engineers who maintain base stations and fibre networks, have also risen from N198 to over N1,030 in the same period. As the cost of fuel continues to rise, so does the challenge of keeping up with maintenance schedules and repairs.”

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He added that even the 50% tariff hike approved can not cover the huge difference, and the government needs to step in and get fuel prices under control.

High electricity tariffs affect telecom expenses

Tomori noted too that with the increase in electricity tariffs for band A customers, telecom companies took a hit in their finances.

He explained that most of the Telecom branch offices are located in places where they fall under the band A feeders, and now have to spend 250% more on electricity costs.

This only serves to worsen the financial pressures already faced by telecom operators, and if further hikes must be avoided, the government must work out a sustainable energy solution for telecom operators.

FG needs to stabilise the naira

Tomori added that the naira depreciation has also affected Telecom operators' finances as the cost of buying and maintaining telecom equipment is paid in foreign currencies, meaning that they now need more naira to purchase the same services.

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He reiterated;

“For the sector to avoid further strain, the government must address these three key areas. These are the fundamental drivers of telecom operating costs. If these factors are not addressed, no tariff adjustments will be enough to stabilise the industry.”

GSMA says Telecom tariff increase will create jobs

In related news, GSM Association (GSMA) has said the 50% tariff increase could create up to 2 million direct and indirect jobs in the sector.

This could translate to increased tax revenue for the government, resulting in up to N1.6 trillion in annual revenue.

According to GSMA, the increase will unlock massive investment and revenue potentials in the sector, bringing up to $150 million in investments into the sector in the short term.

Source: Legit.ng