Telecommunications

Tariff hike: Telcos fume as FG orders reversal

 

The decision of the Federal Government to order a reversal of the recent 10 per cent tarrif hike has left telecommunication companies fuming.

By implication, Telcos like MTN Nigeria and Airtel, who had previously raised the cost of their data bundles by roughly 10%, will now need to go back to their previous prices as a result of this judgment.

According to The PUNCH, this was revealed by the Nigerian Communications Commission on Wednesday.

According to the commission, the initial consideration of 10% approval for tariff adjustments for various voice and data packages was in accordance with the commission’s mandates as set forth by the Nigerian Communications Act, 2003, and other current Regulations and Guidelines, as this was done within the parameters of the industry’s established price floor and price cap.

However, it added that its decision to allow telcos such as MTN Nigeria and Airtel to review the pricing of some of their tariffs was made after a rigorous and realistic analysis of the country’s operational environment and present economic climate.

The NCC claimed that despite its management’s interim approval of the tariff modification, the board has since revoked it.

A statement signed by the Director, Public Affairs, Reuben Muoka, said, “The Minister of Communications and Digital Economy, Prof. Isa Ali Ibrahim Pantami, has maintained that his priority is to protect the citizens and ensure justice to all stakeholders involved.

“As such, anything that will bring more hardship at this critical time will not be accepted. This was also why he obtained the approval of President Muhammadu Buhari for the suspension of the proposed 5 per cent excise duty, in order to maintain a conducive enabling environment for the telecom operators.

“Much as there is an increase in the cost of production, the provision of telecom services is still very profitable and it is necessary that the subscribers are not subjected to a hike in charges. In view of the above, the Commission, through a letter sent on the 12th of October 2022, has already directed the affected Mobile Network Operators to reverse the upward tariff adjustment.

“The Commission will carry our further consultations with all industry stakeholders on the best approaches that will protect and uphold the interest of both the consumers and the service providers.”

Due to rising production costs, telcos have been pushing for a price rise review of their services since the beginning of the year. The Association of Licensed Telecoms Operators of Nigeria recently informed the NCC that the cost of operating telecoms has grown by 40% since the commencement of the Russia-Ukraine war.

Findings indicate that telecoms implemented the most recent directive but were upset about the change.

Telcos have protected their rates, according to sources in the telecoms sector, but the government’s action is telling and will affect investor confidence.

As reported by The PUNCH, a telcos source said, “To be honest with you, we had to reverse the prices about a week ago. We did it quietly. There are so many layers to this. If we were in a serious country, how can a regulator give approval then deny it did so after a while.

“They don’t know the gravity of this decision. The prices of everything have gone up, even bread is now more expensive. We use scarce foreign exchange in the industry. The only reason why we are still surviving is because of volume. The cost of production has seriously gone up, eating into margins. Investors that should come to the country will not come. We cannot talk because we are still trying to protect our business, but we will continue to bear this.”

Another telcos source blamed the recent move on politics. The source refused to speak but said, “I am a businessman, I don’t want to heat up the business climate.”

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