CEM REPORT, INDUSTRY| Nigeria’s telecommunications landscape is at a crossroads. After over a decade of stable prices, the Association of Licensed Telecom Operators of Nigeria (ALTON) and The Association of Telecommunication Companies of Nigeria (ATCON) are jointly advocating for a price increase. This move, if approved, would mark the first significant adjustment in service pricing since 2013.
A Cause for Price Increase
The current pricing structure, according to industry stakeholders, no longer reflects the economic realities of operating a telecom business in Nigeria. “The last price adjustment for telecom services in Nigeria happened in 2013,” says Gbenga Adebayo, Chairman of ALTON. “Since then, the cost of doing business has significantly increased due to factors like inflation, currency devaluation, and rising energy costs.”
However, operators face a hurdle in the form of regulatory constraints. “The Nigerian Communications Commission (NCC) has the authority to approve any price changes,” explains Mojisola Akinbajo, President of ATCON. “This process, unfortunately, hasn’t been conducive to timely adjustments that reflect the changing economic environment.”
Beyond Pricing: A Multitude of Industry Challenges
While price hikes are a major concern, Nigerian telcos are grappling with a wider range of challenges that threaten the sector’s sustainability. “Multiple taxation, burdensome regulations, and exorbitant Right of Way (RoW) charges are significantly impacting our bottom line,” says Adebayo. “These factors, coupled with the high cost of maintaining and expanding infrastructure, make it difficult to invest in cutting-edge technologies and improve service quality.”
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The health of the telecommunications sector has a direct impact on Nigeria’s national security and socioeconomic development. “Telecom infrastructure is critical for national security operations, emergency response, and economic activity,” emphasizes Akinbajo. “However, the rise in attacks on cell towers and fiber optic cables disrupts services and poses a serious threat to public safety.”
Attracting Investment
ALTON and ATCON emphasize the importance of a neutral and independent regulatory environment. “A regulatory body free from undue influence is essential for fostering trust in the industry and attracting investments,” says Adebayo. “Without this neutrality, investors may be hesitant to enter the Nigerian market, hindering the sector’s growth.”
Charting a Path Forward
To navigate these challenges, stakeholders are calling for a collaborative approach. “We urge the government to engage in open dialogue with industry representatives to find a pricing framework that ensures both affordability for consumers and financial sustainability for operators,” says Akinbajo. “Additionally, designating telecom infrastructure as Critical National Infrastructure (CNI) and prioritizing security measures would be a significant step forward.”
If You Ask Me:
The push for a price increase by Nigerian telcos highlights the need for a comprehensive approach to address the challenges plaguing the industry. Regulatory reforms, enhanced security measures, and collaborative solutions are crucial for ensuring a thriving digital economy in Nigeria. Through a united effort, stakeholders can unlock the true potential of the telecommunications sector and propel Nigeria towards a brighter digital future.
Although the federal government has proposed measures to address some if the concerns and challenges highlighted, it remains to be seen the fruition of these proposals.
