Proceeds from tariff hike will go into infrastructure upgrades, service quality – Telcos

• Telecommunications operators said proceeds from tariff hike will go into infrastructure upgrades and improving service quality
• The operators say the proposed tariff hike is to ensure the sustainability of the sector
• Nigeria’s telecoms sector faces macroeconomic challenges that impact operational costs and profits

Telecommunications operators (telcos) in Nigeria say the proceeds from the proposed 100 per cent tariff increase will be channelled to upgrades of major network infrastructure and service quality.

The Chief Executive Officer of MTN Nigeria, Karl Toriola, disclosed this in a column published in BusinessDay on Monday, January 6, titled, ‘An Inflection Point for Nigeria’s Digital Economy: The Imperative for Sustainability.”

Toriola stated that investment in infrastructure upgrades and service quality are among the major conditions given to telcos as they await final approval for the tariff hike following discussions with the government and the Nigerian Communications Commission (NCC).

He noted that part of the agreement is that the NCC will oversee the implementation of these investments to ensure that telecom companies comply with the requirements.

Toriola noted that the tariff increase would be capped, adding that telcos will ensure the hike remains significantly lower than price hikes in other sectors, such as energy and oil.

He wrote, “The discussions between the industry and government have been deliberate and focused on finding the right balance while aligning with pricing in other markets.

“It is why the proposed tariff increases will surely be capped, and definitely much lower than the price increases that have been imposed in other sectors like power/energy and oil, and ensuring that prices remain below our contemporaries.

“So not only will increases be capped well below the levels the industry has requested, but they are linked to a requirement to invest in network upgrades and service improvements, which will be overseen by the NCC to ensure compliance.”

Tariff hike is to ensure sector’s sustainability – Airtel CEO

On his part, the Chief Executive Officer of Airtel Nigeria, Dinesh Balsingh, said the proposed tariff adjustments aim to ensure the sector’s sustainability while delivering significant benefits for Nigerian consumers.

He said, “For over a decade, tariffs have remained static despite the dramatic increase in operating expenses, which have surged by over 300 per cent in the last 18 to 24 months alone.

“To continue providing high-quality services and meeting the growing demand for digital connectivity, it has become essential to realign our pricing structure with economic realities.”

Telcos face rising operational costs, push for tariff hike

Telecommunications operators in Nigeria have been confronted by challenges ranging from currency devaluation, high energy costs, and inflationary pressures, which have impacted their operational costs and led to losses.

To mitigate the impact of these challenges, telco operators pushed for tariff hikes by up to 100 per cent, which was reported to take effect from January 2025.

Although the NCC earlier denied such plans, saying they were untrue, telcos continue to maintain their stance, warning of imminent shutdown if tariffs are not hiked as many now operate on their reserves, which is not sustainable over time.

The planned tariff hike hasn’t gone down well with subscribers, who say a hike in the cost of services such as voice calls, SMS, and data bundles will further exacerbate the current financial strain faced by Nigerians.

Subscribers have threatened legal action should the NCC approve the 100 per cent hike in tariff.

Explore capital market funding, not 100% tariff hike, subscribers urge telcos

Meanwhile, TheRadar earlier reported that telecommunications operators were urged to explore capital market funding as a sustainable option to address rising operational costs rather than implementing a proposed 100 per cent tariff hike.

President of the National Association of Telecommunications Subscribers (NATCOMS), Adeolu Ogunbanjo, said the proposed tariff hike would impose financial strain on consumers.