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Data, call costs to go up as telcos propose 40% tariff hike

Data, call costs to go up as telcos propose 40% tariff hike
May 04
11:46 2022

Telecommunication companies under the Association of Licensed Telecom Operators of Nigeria (ALTON) have asked for upward reviews in voice calls, short message services (SMS) and data costs.

ALTON said this in a letter addressed to the Nigerian Communications Commission (NCC), citing the rising cost of running a business.

According to ALTON, the proposed upward review of the price of calls will increase from N6.4 to N8.95, while the price cap of SMS will increase from N4 to N5.61.

The group said this had increased energy costs, increasing their operating expenses by 35 per cent.

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

“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,” the letter reads.

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

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“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 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 and 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 ‘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.”

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The group also highlighted other demands to the commission such as to explore other penalties for operators other 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 others.

It added that the Mobile (Voice) Termination Rate (MTR) for voice, administrative data floor price and cost of SMS as reflected in extant instruments should also be increased.

“For large operators, a new interim MTR of N5.46 from N3.90 reflecting 40 per cent increase in the cost of business,” ALTON said.

“For small operators, the new interim MTR of N6.58 from N4.70 reflects a 40 per cent increase in the cost of business.”

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