Proposed tariff hike may raise telcos’ voice revenue to N1.55tn – NCC report

NCC

Telecommunications companies’ voice revenue could jump by at least N442.57bn to N1.55tn in a year if the price floor of calls is raised by the operators from N6.4 to N8.95.

Telcos had recently written a letter to the Nigerian Communications Communication Commission, seeking approval to increase their tariff due to the rising price diesel and the general increase in the cost of doing business in Nigeria. If the NCC approves the proposal, telcos will increase their tariff on voice, SMS, and data.

In its 2021 industry report, the Nigerian Communications Commission disclosed that the total national outgoing calls in 2021 were put at 173.56 billion minutes, and with the price floor of calls at N6.4, telecommunication firms would have made at least N1.11tn from calls.

If the price call increases to N8.95, revenue from calls will rise by N442.57bn to at least N1.55tn within one year.

In the telcos’ letter to the NCC, the Association of Licensed Telecommunications Operators of Nigeria said there had been a 40 per cent increase in the cost of doing business in the nation. It also stated that the increase in energy cost had increased the cost of doing business by 35 per cent.

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It said, “In view of the foregoing, ALTON considers it expedient for the telecommunications sector to undergo periodic cost adjustments through the commission’s intervention in order to minimise the impact of the challenging economic issues faced by our members. Details are hereunder:

“Upward review of the price determination for voice and data and SMS. Given the state of the economy and the circa 40 per cent increase in the cost of doing business, we wish to request for an interim administrative review of the mobile (voice) termination rate for voice; administrative data floor price, and cost of SMS as reflected in extant instruments.”

The association for telcos in the nation also suggested that the price floor of calls be increased from N6.4 to N8.95. In its industry report, the NCC disclosed that the operating cost of telcos increased from N1.4tn in 2020 to N1.66tn in 2021.

Recently, the Natural Oil and Gas Suppliers Association, told journalists that diesel price could hit N1000/N1500 soon.

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The President of ALTON, Mr Gbenga Adebayo, had said the telecom industry was one of the largest consumers of diesel in the country.

He said, “Diesel is now very expensive, from N250 to over N700. All network planning, operational expenses, and planned projection for the year is based on the fact diesel prices. This has increased. Today, you know the implication of that. This is one problem; cost has gone up.”

According to a source at ALTON, the NCC is yet to reply the association’s letter and that the tariff is still the same.

The source said, “We have communicated to them. We are yet to get feedback. I wouldn’t know about a price change; the regulator knows what is best for the industry.”

Commenting on a probable increase, the President of the National Association of Telecoms Subscribers, Adeolu Ogunbanjo, said, “Costs are actually increasing. Diesel is currently N830/litre and other cost variables have also risen.

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Ogunbanjo said, “If the NCC has now confirmed an increase in operational cost for the telcos due to their new report, the telcos now have a legitimate reason to consider increases.

“But as operational costs are increasing, the usage of these services are also increasing. By this time next year, people will make more calls and data and there might not be a need to increase. Obviously, the increase will offset costs and probably increase profits.”

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