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.

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.