Telcos plan 40% price rise on the high cost of doing business
By Jeph Ajobaju, Chief Copy Editor
MTN, Airtel, Glo and other mobile telecom operators have sought approval from the Nigerian Communications Commission (NCC) to raise by 40 per cent the prices of voice, data, and text message services because of the rising cost of doing business.
The price floor of call should rise from N6.4 to N8.95 and that of small message service (SMS or text) from N4 to N5.61, according to a letter the Association of Licensed Telecommunication Operators of Nigeria (ALTON) wrote to the NCC.
The letter, titled “Impact of the Economic and Security Issues on the Telecommunications Sector”, said there is a 40 per cent increase in the cost of doing business, triggered by the recession in 2020 and the ongoing war in Ukraine.
ALTON also cited high energy costs, a 35 per cent rise in operating expenses, as well as multiple taxes and levies.
“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,” the letter pleaded.
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Upward review of prices
“Details are hereunder,” the letter added, as reported by The PUNCH.
“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.”
ALTON said in order to help the telecom sector, the NCC should, among others,
- Explore and provide other means of penalising operators rather than punitive monetary sanctions
- Extend the payment timeline of regulatory levies and fees
- Prevail on the government to issue an Executive Order declaring telecom infrastructure as a critical national infrastructure to mitigate the cost of replacing damaged and stolen infrastructure, among other things.
- Raise mobile termination rate (MTR) by 40 per cent.
ALTON recommended that
“For large operators, new interim MTR of N5.46 from N3.90 reflecting 40 per cent increase in the cost of business.
“For small operators, new interim MTR of N6.58 from N4.70 reflecting 40 per cent increase in the cost of business.”
