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FG Set to Reintroduce 5% Excise Duty Tax on Telco Services



Telecommunications - Investors King

The Federal Government of Nigeria is set to reintroduce a 5% excise duty tax on Telco services after it was exempted last month.

The imposition of a 5% excise duty tax on telco services is part of the government’s 2023 Fiscal Policy measures and tariff amendments which have been approved by President Muhammdu Buhari.

In a circular shared on LinkedIn by the Fiscal Policy Partner and Africa Tax Leader, PWC, Taiwo Oyedele, part of the 2023 Fiscal Policy Measures and Tariff Amendments reads,

“This is to confirm that His Excellency, Mr. TelPresident has approved the implementation of the 2023 Fiscal Policy Measures made up of Supplementary Protection Measures (SPM) for the implementation of the ECOWAS Common External Tariff (CET) 2022-2026 and a revised excise duty rates on alcoholic beverages, cigarettes & Tobacco products, as well as introduction on excise duty on Single-Use Plastic (SUPs).

“Telecommunication Tax- the 2023 FPM confirms the excise duty on telecommunication services earlier introduced via the Finance Act 2020 and prescribed in the Official Gazette No. 88, Vol. 109 of 11 May 2022 approved by the President. The tax is applicable on mobile telephone services (GSM), fixed telephone and internet services, both postpaid and prepaid at the rate of 5%.”

Investors King understands that concerning the proposed implementation of excise duty tax on Telecom services, telecommunication consumers under the aegis of the National Association of Telecoms Subscribers are currently in court to counter the government’s move.

Speaking on the issue, the President of the Association of Telecommunications Companies of Nigeria, Mr. Tony Emoekpere, said,

“If the excise duty tax on telecom services is reintroduced, the advantages of its removal will be eroded. This sets us back, we have always been complaining about multiple taxations, and the removal of excise duty was a relief from the Federal Government on the challenges we were facing.

“Do not forget that some of these multiple taxations we are facing are in areas where the Federal government does not have a direct impact like in the states, the FG didn’t have control over that. The removal helped the industry, but putting it back just sets us back to the challenges we have been facing all this while.”

Federal Government implementation of a 5% excise duty tax on Telco services is coming after it was dropped in March 2023, after six months of intense deliberations with the telecommunications industry stakeholders.

Recall that Nigeria’s Minister of Communications and Digital Economy, Isa Pantami during the suspension of the 5% tax had expressed concerns that the industry is already overburdened by excessive and multiple taxations, which will likely adversely affect the sector if the government fails to take any precautions.

With the reintroduction of a 5% excise duty on telco services, it could discourage Nigerians from using telecommunication services which have become a necessity for many. It could also negatively impact the telco sector and further contribute to more hardship for Nigerians.


Vodafone Plans to Sell M-Pesa For $1 as The Company Simplifies Its Management



Leading technology communications company in Europe and Africa, Vodafone plans to sell M-Pesa to Safaricom for $1 as it plans to simplify its management.

After Vodafone announced its first quarter (Q1) results for the year ended in March, the company entered into an agreement in April with Safaricom to sell MPHCL. MPHCL holds M-Pesa customer funds on trust for the benefit of M-Pesa customers in Kenya. Any profit generated by MPHCL, after defraying direct costs, is donated for use for public charitable purposes only.

Notably, Vodafone stated that no material gain or loss is expected to arise on disposal, as completion of the transaction is subject to various approvals, which are expected to be obtained before or during July 2023.

Vodafone wrote,

“Balances included in the Group’s consolidated financial statements for MPHCL on 31 March 2023 include short-term investments of €1,247 million and €1,226 million, due to M-Pesa customers, recorded within other investments and other creditors, respectively.

“These sums are shown in the group’s consolidated financial statements in accordance with IFRS, but MPHCL acts as the independent trustee for M-Pesa customers, independently administering the trust and holding all funds from the M-Pesa customers on trust for the benefit of M-Pesa customers.

It is worth noting that Vodafone has a controlling stake of 65.1% in M-pesa and a 5% indirect equity in Safaricom, and the transfer of the assets to Safaricom came as the company looks set to simplify its management.

An amendment to the trust deed creating M-Pesa Holding, which was published by Safaricom, however, shows that Vodafone was unconstrained in the use of interest income derived from the mobile money cash pool

Investors King understands that the deal will see Safaricom have full control of the platform that started in Kenya. Reports reveal that the move will boost Safaricom’s cash flows in addition to providing interest income if Safaricom invests M-Pesa user deposits in short-term securities.

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MTN Nigeria Gains Massively as Thousands of Subscribers Migrated Across Various Networks in Q1 2023




Telecommunications giant MTN Nigeria experienced substantial gains in Q1 2023 as thousands of subscribers switched networks, according to data published by the Nigerian Communications Commission (NCC).

MTN emerged as the sole beneficiary among the four mobile operators, as 6,855 subscribers ported across networks.

In this period, 4,765 customers migrated from Airtel, Glo, and 9mobile to MTN. Airtel gained 1,173 subscribers from other networks, while Glo attracted 620 customers through porting. However, 9mobile suffered the most significant loss, with 4,309 subscribers departing its network.

Subscribers cited various reasons for porting, such as more affordable call/data rates, improved service quality, enticing packages offered by other operators, and promotional offers.

MTN’s success in attracting a significant portion of the ported subscribers can be attributed to its 5G service, which provides high-speed internet. MTN became the first mobile network operator to introduce 5G in Nigeria in September, and it has since focused on expanding its home broadband strategy, resulting in a substantial increase in its subscriber base.

The deployment of 5G technology has enabled MTN to offer faster speeds, lower latency, and unlock new use cases for consumers and enterprises. The network’s efforts in this area have contributed to a 14.6 percent rise in its active user base to 38 million, as well as a 68.7 percent surge in fintech active subscribers to 11.2 million.

MTN remains committed to supporting communities, investing in the coverage and capacity of its 4G network, and expanding its 5G sites. The network emphasizes expense efficiencies and disciplined capital allocation.

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NCC Sensitizes The Public Over Rising Cases of Nigerians Defrauded Through Telecoms



Services Tax

The Nigerian Communications Commission (NCC) has carried out a sensitization program, over rising cases of Nigerians that are being defrauded through telecoms.

The commission disclosed that it has received complaints from over 20,000 Nigerians who have fallen victim to telecoms scams.

In a bid to sensitize the public, the commission held a consumers sensitization program in Ibadan, Nigeria, at a market, with the theme: “Shine Your Eyes, No Fall Mugu”, addressing the public on the need to stay vigilant and informed to avoid losing their hard-earned money to fraudsters.

While speaking at the sensitization program, the Head of Consumer Affairs of NCC Mr. Ayanbanji Ojo said that many financial frauds are going on through the telecom, hence the need to educate the people, most especially the traders.

In his words,

“The market people are our telecom consumers and without them, we cannot engage in this business. The market people deserve to know what is going on. Today, we are talking about ‘Shine Your Eyes- No Fall Mugu’, which means there are so many financial frauds going on through the telecom and we want to educate our people, particularly the traders.

“So many complaints came from people who lost money to these fraudsters claiming to be telecom operators. So we need to educate our consumers all the time. We are now in the sustainability of the telecom industry and if we don’t sustain the telecom consumers, there is nothing we can do.

“Over 20,000 Nigerians have complained about being defrauded, even as of this morning. There are people we call loan sharks. These people will tell you that someone has obtained a loan from somewhere. How did they get your number and how did they know you are a friend to the person? These are the kinds of things we are trying to prevent and to protect the people, we have to educate them. This initiative is consistent with the mandate of the commission to protect, inform and educate the Nigerian telecom consumers”.

Addressing the complaints about services from telecom companies, Mr. Ojo explained that most of the time, it may appear as though telecom companies are cheating their users, but instead, he stated that these customers are the ones that activate the services which they are billed for.

The sensitization program also had in attendance officials from the Economic and Financial Crimes Commission (EFCC) educating telecom consumers on how to spot fraudsters, and also enlightening them on some of the tricks used by these fraudsters.

Investors King understands that as the Telecom industry evolves, there are growing concerns over the rising trend of fraud perpetuated on Telecom platforms across key sectors of the Nigerian economy. The menace which follows the wide acceptance of new methods of mobile money and electronic banking and payment systems has been discovered to cost the country whopping sums of money.

Fraudsters are now targeting telecom networks with the intent of getting access to consumer information in the databank of service providers. One often used tactic is that these fraudsters conduct SIM swaps of targeted individuals, and then, conduct USSD-based transactions causing huge losses of funds from victims.

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