Communications Tax: 25% of Licensed Operators to Shut Down

operatorsMinister of Communications, Mr. Adebayo Shittu

Industry players have projected that Nigeria would lose another 25 per cent of licensed operators if the Communication Service Tax bill is passed into law.

Already, the country has lost 57 per cent of licensed operators to multiple taxations.

The National Chairman of  Association of Licensed Telecommunications Operators of Nigeria, Mr. Gbenga Adebayo, said on Thursday that despite the growth already recorded in the industry, telecoms operators continued to face challenges emanating from recurring taxations and the regulatory environment.

He said, “When I became the chairman of ALTON three years ago, there were 35 licensed telecoms companies comprising some small players, those in the fixed line, Code Division Multiple Access and Global System for Mobile communications players that were doing well, though not without challenges.

“However, today, that figure has come down drastically, as we now have just about 15 licensees still operating and this tells you that something is not going well.”

A top  employee in one of the four major telecoms firms said that findings from a study conducted by the regulatory department of his company showed that no fewer than 25 per cent of the existing licensed operators would cease operating in the country one year after the CST bill is passed.

Speaking on condition of anonymity, he added, “Should this happen, then the Federal Government should be prepared for the worse, as so many Nigerians will be rendered jobless. It will be too bad for the telecoms sector that is currently seen as one of the highest employers of labour.”

The ALTON chairman said that the loss of about 20 operators, representing about 57 per cent, within a space of three years “has been traced partly to the problem of regulatory environment, where there are multiple regulations and imposition of all kinds of taxes on the operators from the federal, state and local levels.”

He said, “The fact that, as operators, we are still confronted with wilful and non-wilful damage, arising from insecurity in the past years, multiple taxation, especially the Right of Way charges and attendant problem of indiscriminate shutdown of telecoms infrastructure, among others, suggests that regulations in the industry remain unfriendly with varying degrees at different levels of government.”

He said that the RoW in most states remained exorbitant as government agencies, especially at the state and local levels, continued to perceive telecoms as ‘cash-cow.’

“It is only in Lagos now that we have been able to achieve better understanding from the government. For instance, Lagos State Government, having realised the great impact pervasive deployment of telecoms infrastructure and unhindered access could have on the state’s Gross Domestic Product, three years ago, crashed RoW tax to N500 per metre.”

“Conversely, in states such as Osun and other states, operators are charged N8, 000 per metre covered while laying their fibre optic cables in addition to other laughable charges on the operators. These are some of the things that we face as operators and it is telling on our sustainability as a business with the smaller operators being the most susceptible, thereby leading to their collapse,” he said.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years' experience as a foreign exchange research analyst and trader. A graduate of University of East London, U.K. and a vivid financial markets analyst.

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