Telecom operators, subscribers at odds over proposed tariff hike

While the price of internet data has remained relatively stable in the past decade, calls for an upward review by telecom operators may change the status quo.

Stakeholders in the telecommunication sector are at loggerheads over the proposed hike in internet data tariff, voice calls, and short message services (SMS).

The Association of Telecommunication Companies of Nigeria, ATCON, and the Association of Licensed Telecoms Operators of Nigeria, ALTON, insist that the telecom sector may not survive if the Nigerian Communications Commission (NCC), the sector’s regulatory body, fails to approve a new tariff regime.

They argued that rising operational costs, weakening Naira, and increasing the price of energy and infrastructure maintenance have severely affected telecom companies.

However, subscriber associations like the Association of Telephones, Cable TV and Internet Subscribers of Nigeria, ATCIS, insist that telecom operators do not have any justification to propose a tariff hike, owing to the current economic realities.

Tariff hike

In its first half (H1, 2024) financial report, MTN Nigeria reported an after-tax loss of N519. 1 billion, driven by forex volatility and inflationary pressures. Airtel Africa, Nigeria’s second-largest telecom operator by market share, also reported after-tax losses to the tune of $89 million for its full year ended March 2024.

To make matters worse, incessant vandalism, fibre cuts and theft of equipment already cost telecom operators billions of Naira to replace, in addition to the service disruption the concerns trigger.

While the price of internet data has remained relatively stable in the past decade, calls for an upward review by telecom operators may change the status quo.

President of the Association of Telecommunication Companies of Nigeria, ATCON, Tony Emoekpere argued that the current tariff structure is no longer tenable and a price increase has become imperative to guarantee quality service delivery.

“These tariffs have been frozen for such a long time and to keep them stagnant is totally unrealistic,” Mr Emoekpere told PREMIUM TIMES.

“We understand the fact that any price increase will have an effect but what the tariff hike will provide is better quality of service to subscribers.”

Mr Emoekpere said in its talks with the NCC, the regulatory body urged telecom operators and companies to focus on improving the quality of their services and explore other measures rather than a tariff hike. He however expressed confidence that an approval is imminent.

“I don’t think there will be a rejection; I think the worst-case scenario is that the NCC may approve a lesser percentage of what is being requested,” he added.

Subscribers’ counter-argument

An increase in the price of voice calls, short message services (SMS) and data could undermine Nigeria’s efforts to bridge the digital divide and achieve a broader broadband penetration, according to some subscribers.

NCC data shows that the country’s broadband penetration currently stands at 41.56% as of September, falling short of the ambitious 70% target set for 2025.

The National Bureau of Statistics, in partnership with the United Nations Development Programme, reported in a 2021 survey that only 22% of informal businesses in Nigeria use the Internet for their daily operations. Considering Nigeria’s economic downturn, this number may suffer a decline if the proposed tariff hike is implemented.

The proposed tariff hike has made subscribers and business owners like Taiwo Matthew very concerned, as his business centre and browsing cafe outlet depend heavily on good internet connectivity for smooth operations.

Mr Matthew has managed to keep his business afloat for twenty years despite Nigeria’s harsh economic conditions. However, a tariff hike threatens to deliver the ultimate blow, he said.

To guarantee sustainability, the businessman noted that his customers will bear the burden of increased costs as price adjustments will be made.

“It doesn’t make sense at all, because the country is hard. So if they increase their tariff that means it will affect customers because there will be an increase in prices,” he said.

The President of the Association of Telephones, Cable TV and Internet Subscribers of Nigeria, ATCIS, Sina Bilesanmi, condemned the proposed tariff hike, especially in the face of Nigeria’s current economic decline.

Mr Bilesanmi stated that not only do telecom operators not have a ground to hike the price of internet services, but consumers must be consulted before any decision can be made.

He said telecom operators should call for a proper stakeholder meeting, where details of the proposed tariff hike can be discussed with consumers.

“They cannot do it alone, all stakeholders must come to an agreement,” he said.

The ATCIS president also raised concern over NCC’s effectiveness in regulating the telecoms sector, under the new administration.

“Before we used to see how active the NCC was but since this new administration resumed, NCC has been going down. We don’t know if the regulatory body has been compromised but we are ready to investigate the matter, expose and also sue them,” he said.

Poor internet service, data depletion persist

Amid the clamour for tariff hikes, subscribers continue to experience poor internet services.

Simisola Adigun works for a broadcast station in Lagos where television news production forms the core of her responsibility. According to Ms Adigun, the poor internet connectivity has greatly impacted the newsroom’s productivity. She says the situation has gotten so bad that conducting interviews via Skype or Zoom is almost impossible.

She said calls to the internet provider offer little or no solution. The situation has given her organisation a bad reputation as interviews take longer than necessary due to poor internet connection.

“The poor network service is a big problem for people like me who work in the media, as it affects our productivity,” she said.

“We have earned a bad reputation as that media house with an unstable network and such a tag is really bad for the brand.

“Making countless calls to the network provider yields little or no result at the end of the day,” she added.

Ms Adigun questioned the effectiveness of the NCC in enforcing the delivery of excellent internet connectivity by telecom companies and operators.

She added that telecom operators should first improve the quality of their services before proposing a tariff hike.

“We are not getting value for the money we are paying, so there is no justification for the increase. People are struggling to make a living and you now expect these same people that you are offering bad services to meet up with the new tariff. It makes absolutely no sense,” she said.

Aside from poor internet connectivity, data depletion is another challenge subscribers grapple with.

Every month, Mr Matthew purchases the unlimited subscription package at the cost of N28,000 to run his business. However, the subscription, which ought to be unlimited as advertised, gets exhausted within two to three weeks despite temperate usage.

He said the situation makes him incur extra operational costs.

“Every month, I subscribe for the Airtel unlimited package which costs 28,000 per month. However, it does not last for the full month, it finishes by the third week,” he said.

Operators, NCC keep mum over specific percentage increase

Not much is known about the specific percentage increase telecom operators are proposing. When asked, Mr Emoekpere declined to give a number.

“The proposed increase is still under discussion with relevant agencies so I won’t be able to specify what exactly the percentage increase is, but I know that discussions are still ongoing as regards to tariffs,” he said.

Adeolu Ogunbanjo, the president of the National Association of Telecommunications Subscribers (NATCOMS), told PREMIUM TIMES that his organisation proposed an increase of 10 per cent as a better alternative to loading shedding.

Load shedding happens when telecom operators shut down some cell sites and rotate connectivity.

He said the tariff hike would boost the telco’s profitability and, in turn, help improve the quality of service to end users.

“Rather than allowing the telecom industry to be killed, it is better we allow an increase of no more than 10% so that they can survive,” he said.

PREMIUM TIMES reached out to Reuben Muoka, the NCC Director of Public Affairs, to seek clarity about the commission’s stance on the proposed tariff hike, if the downturn in internet connectivity is linked to the demand for a tariff hike, among other issues.

Mr Muoka, however, declined to comment on the matter, saying “it is not a subject of media discussion.”

In October, NCC said it had commenced “pre-enforcement measures” against Elon Musk’s Starlink for increasing its subscription prices without approval.

The internet company had announced it was increasing its monthly subscription fee from N38,000 to N75,000. It also increased the price of its hardware from a previous price of N440,000 to N590,000.

The announcement sparked outrage from consumer protection associations like ATCIS and local telecommunications providers.

Checks by PREMIUM TIMES show that the price adjustment had been reversed and the old price remained on Starlink’s website.