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Thursday, May 26, 2022

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Telecom firms plan tariff hike by 40% on inflation, cost of doing business

Telephone users in the country may pay more for making calls as telecommunication operators have submitted a proposal to the Nigerian Communications Commission (NCC) to hike their tariff by 40 per cent as the inflation rate surges in Africa’s biggest economy.

The plan is to raise the cost of making calls by subscribers to N8.95 from N6.4  while the price cap of SMS will increase to N5.61 from N4.

In a letter to the regulator, titled, ‘Impact of the Economic and Security Issues on the Telecommunications Sector,’ telecom firms said there had been a 40 per cent increase in the cost of doing business in the nation.

The letter written under the aegis of the Association of Licensed Telecommunication Operators of Nigeria (ALTON), noted that the telecommunication industry has been financially impacted following the nation’s economic recession in 2020 and the effect of the ongoing Ukraine/Russia crisis.

They said this had resulted in an increase in energy costs, increasing their operating expenses by 35 per cent.

They said the recent introduction of excise duty of five per cent on telecom services had further increased the burden of multiple taxes and levies on the industry.

READ ALSO: Why Nigerians, other Africans are resisting mobile SIM card registration

“As the commission may be aware, the power sector under the supervision of its Nigerian Electricity Regulatory Commission of the power sector in November 2020 undertook a review of electricity tariffs to cater for the economic headwinds reported above.

“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.

“With respect to voice an SMS cost, ALTON respectfully requests the commission to consider a mark-up approach to address the upward price adjustment desirable for the industry. We have enclosed herein and marked as ‘Annexure 1’our proposal in that regard.

“For data services, we wish to request that the commission implements the recommendations in the August 2020 KPMG report on the determination of cost-based pricing for wholesale and retail broadband service in Nigeria. Excerpts from the report, are attached and marked ‘Annexure 2’ to provide a further illustration.

“In implementing the said recommendations, however, we recommend that the 40 per cent increase in the cost of doing business be factored in to arrive at a cost price per GB in view of the current economic situation,” the telecom firms said.

The telecom companies also want the NCC to explore and provide other means of penalising operators rather than punitive monetary sanctions; extend the payment timeline of relevant regulatory levies and fees; prevail on the Federal Government to sign the executive order declaring telecoms infrastructure as a critical national infrastructure to mitigate cost spent replacing damaged and stolen infrastructures, among other things.

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