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Telcos to Raise Airtime Price as Operating Costs Jump to N1.66 Trillion

Telecommunication companies in Nigeria are planning to increase airtime price as operating costs jumped 18.74% to N1.66 trillion in 2021.

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Telecommunication companies in Nigeria are planning to increase airtime price as operating costs jumped 18.74% to N1.66 trillion in 2021.

In a recent letter written to the Nigerian Communications Commission (NCC), the Association of Licenced Telecoms Operators of Nigeria (ALTON) requested an increase in tariff due to the rising price of diesel and the cost of doing business in Nigeria.

According to ALTON, the diesel its members bought at N225 a litre in January 2022 rose to N750 per litre in March, and expected to rise even higher in the second half of the year. Therefore, the operators are demanding a price floor between N6.4 to N8.95.

This, experts, are saying if approved by the NCC could impact telecommunications sector revenue given the nation’s declining earnings and consumer spending.

Rotimi Akapo, a partner at Advocaat Law Practice, said “Any increase will affect average revenue per user as the value of people’s income continues to decline and there are other obligations competing for the same stagnant income. The MNOs (mobile network operators) will have to become very creative in getting their share of subscribers’ pocket.”

Akapo, who doubts NCC would approve an increase, said if at all, it would be based on economic indices that directly affect mobile network operators.

“I don’t expect that an exponential increase in tariff will be approved, if at all an increase is approved,” said Akapo. “It will be based on economic indices that impact the operation of the MNOs. The NCC usually balances the interests of all stakeholders in matters like this including that of subscribers.”

“They will cut back on promos and other costs of sales. CSR might suffer. There will be a lot more belt-tightening to compensate for the increasing operational costs and it is the ‘nonessential’ areas that will suffer first,” Akapo added.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Telecommunications

NCC Announces Airtel as the Sole Bidder for the Second 5G Spectrum Auction

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Airtel Financial Results - Investors King

The Nigerian Communication Commission (NCC) has announced Airtel Network Limited as the sole bidder for the 5G spectrum scheduled for auction on December 19, 2022.

Airtel has since deposited $27.36 million ahead of the auction.

Investors King could recall that MTN and Mafab Communication won the first 5G spectrum auction which also had Airtel as a competitor. 

According to the NCC, only two telecom companies, Airtel Africa and Standard Network & Connections Limited expressed interest in the auction as of the stipulated deadline which was Monday, December 5, 2022. 

Therefore, the NCC noted that there would be no auction as Airtel would be assigned one of the available lots of 100 MHz TDD Spectrum in the 3.5 GHz band.

Investors King understands that the $27.36 million deposit is 10 percent of the reserve price for the spectrum fixed at $273.6 million. The same price was paid by MTN and Mafab Communications before the 5G spectrum was allocated to them individually. 

MTN on its part has since launched its 5G network in some cities which include Abuja, Lagos and Ibadan. The 5G network promised to enhance connectivity and stimulate broadband penetration in Nigeria. 

NCC further stated that an extension sought by Standard Network can not be granted owing to the auction timetable which had earlier been published. 

The statement by NCC partly read “Only Airtel paid the Intention to Bid Deposit as stipulated in the Information Memorandum (IM) whereas, Standard Network sent an email appeal for the deadline to be extended by 12 working days which was not acceptable in view of the auction timetable”. 

“Having met all the provisions in the IM, Airtel has, therefore, emerged as the sole bidder. Consequently, there shall be no further bidding and the Commission will proceed to the assignment stage in line with the published Information Memorandum guiding the licensing process,” the statement added. 

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Telecommunications

Airtel Africa Receives $194 Million Loan Facility From IFC

Airtel Africa partners with IFC, a member of the World Bank Group to connect even more Africa

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Airtel Financial Results - Investors King

Africa’s leading telecommunications and mobile money services, Airtel Africa has signed a new $194 million credit facility with the International Finance Corporation (IFC), a subsidiary of the World Bank.

According to the telecommunications giant, the new financing facility is in accordance with the company’s strategy to improve debt within its operating firms and support operations in key African markets.

The eight years tenor credit facility will help Airtel Africa support operations and investments in the Democratic Republic of Congo, Kenya, Madagascar, Niger, Republic of Congo and Zambia.

Also, it would help provide more diversified access to local funding, the company stated in a statement signed by Simon O’Hara, Group Company Secretary and obtained by Investors King.

In line with IFC requirements for a loan facility, Airtel Africa is expected to deepen its Social and Environmental Sustainability and has put in place a dedicated Environmental and Social Action plan.

This, Airtel said would deepen its commitment to changing the lives of people in the communities in which it operates and provides clarity on how the Group can help address inequality and support economic growth in these communities.

Commenting on the facility, Segun Ogunsanya, Chief Executive Officer, Airtel Africa said: “I am very excited to announce the signing of this new facility with IFC. Not only does it align with our focus on improving our balance sheet through localising debt within our OpCos, but as we make progress on our sustainability journey it also supports our commitments and ability to meet strong ESG criteria. I look forward to working closely with IFC in the coming years as we explore further opportunities to support the economies and communities where we operate.”

On the part of IFC, Sérgio Pimenta, IFC Vice President for Africa, has this to say: “The COVID-19 pandemic has made mobile connectivity even more urgent for both social and economic development. Helping more people connect to affordable and fast internet networks is a priority for IFC in Africa, especially in the continent’s lower-income countries. The partnership with Airtel Africa will help achieve this.”

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MTN to Bid For Second 5G Spectrum; Other Telcos Protest

MTN to bid for a second 5g spectrum on December 16, 2022

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MTN Nigeria - Investors King

Nigerian mobile telecommunications company, MTN has showcased a potential interest to bid for a second 5G spectrum in the forthcoming auction which is scheduled for December 19, 2022.

The potential bidding however has been opposed by other telecommunication companies which claimed the move is against the spirit of competition. 

Investors King could recall that MTN and Mafab Communications won the first 3.5GHz spectrum license for a 5G network which was auctioned in December 2021 by the Nigerian Communication Commission (NCC).

The highly competitive auction which took place at the Transcorp Hilton Hotel in Abuja also witnessed the participation of Airtel

Subsequently, in September 2022, MTN finally launched the 5G network to boost internet speed in Lagos, Abuja, Port Harcourt, Ibadan, Kano, Owerri, and Maiduguri.

However, to access the 5G network, users will need to have compatible devices which is a bit expensive for average Nigerians.

To this end, MTN thereafter partnered with a phone financing company, Intelligra to bridge the cost of 5G-enabled smartphones. 

According to MTN Chief Marketing Officer, Adia Sowho, the partnership with Intelligra is aimed to drive 5G adoption in Nigeria. 

Meanwhile, barely two months after MTN launched its 5G network, the leading telecommunication company in Nigeria has showcased a potential bid for the second spectrum which is scheduled to hold on Friday. 

At a stakeholders engagement meeting organised in Lagos, MTN’s General Manager, Regulatory Affairs, Ikenna Ikeme, said the company had entered the last auction in 2021 with the expectation that it was an open market and it would be allowed to participate in other auctions should the need arise.

This, however, did not go down well with other telecommunication companies which claimed that should MTN be allowed to participate in the second auction and eventually win, it will make them dormant players which could affect the overall growth of the industry. 

The Executive Vice Chairman of NCC, Umar Garba Danbatta who presided over the engagement session noted that all contending issues will be given due consideration before the auction on Friday. 

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