Revenue Increase, Eased Operational Costs, Telecoms Embrace a New Era

Telecom companies are about to embrace a new era of tariffs as the government has agreed to a proposal for a 50% increase.

Despite the protest by the Socio-Economic Rights and Accountability Project (SERAP) which the Federal Government defended with logical arguments, operators seem ready for an increase. Operators are most likely feeling the pinch of the economy’s current state as operational costs have risen along with inflation. Energy costs, one of the biggest parts of operational costs appear to be weighing on them.

The Nigerian Communications Commission (NCC) agrees with operators that a raise was necessary. Contrary to the news, the government has not signed any approval, operators are waiting for signed approvals.

The President Bola Ahmed Tinubu Media Centre, in a statement made available to the press recently, said operators are free to maintain their current rates if they find them sustainable. It seems unlikely that any operators would miss the opportunity to counterbalance their accounts. The annual reports of operators show lowered profit margins for 2024.

The Outlook of Tariff Hike for Customers

Regardless of rising operational costs, tariffs have remained stable for over a decade. The growing dependence on telecommunications services in Nigeria is evident in operators’ reports. They could deter usage and lower dependency.

The current rate of calls and SMS costs for many is less than N10 including for MTN, Airtel, Globacom and 9Mobile users. For every call, customers of different services will experience a jump above N10 per minute with a 50% increase. The cost of sending one SMS will most likely remain under N10 but slightly above N5.

Internet data will follow the same pattern but will remain under N600/GB.

How hike is essential for telcoms

Nigeria’s economy is marred with rising inflation. With the volatile interchangeability and inflation that has grown above 30% since 2013, the timing could not be more critical.

Operators have had to deal with lower profitability stemming from the losses in foreign exchange, surging diesel prices and constant naira depreciating.

The tariff hike could mean a revenue boost with a positive impact on operations and cash flow. The contacting scores for operating performance and cash flow for MTN and Airtel have a huge chance of recovery.