Telcos demand 40% hike in price of calls, data, blame rising cost of operation

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The cost of calls, data, and SMS may soon see an increase.

This comes as the Association of Licensed Telecommunications Operators of Nigeria (ALTON) in letter to the Nigerian Communications Commission (NCC), asked for upward reviews in voice calls, short message services (SMS) and data costs.

ALTON further explained that rising energy costs, has increased their operating expenses by 35 per cent.

The request if granted, will lead to about a 40% increase in the cost of calls, data, and SMS.

According to them, the telecommunication industry has been financially impacted following the nation’s economic recession in 2020 and the effect of the ongoing Ukraine/Russia crisis.

They said this had resulted in an increase in energy costs, increasing their operating expenses by 35 per cent.

They added that the introduction of the recent excise duty of five per cent on telecom services had further increased the burden of multiple taxes and levies on the industry.

“As the commission may be aware, the power sector under the supervision of its Nigerian Electricity Regulatory Commission of the power sector in November 2020 undertook a review of electricity tariffs to cater for the economic headwinds reported above,” the letter reads.

“In view of the foregoing, ALTON considers it expedient for the telecommunications sector to undergo periodic cost adjustments through the commission’s intervention to minimise the impact of the challenging economic issues faced by our members. Details are hereunder:

“Upward review of the price determination for voice and data and SMS. Given the state of the economy and the circa 40 per cent increase in the cost of doing business, we wish to request an interim administrative review of the mobile (voice) termination rate for voice; administrative data floor price, and cost of SMS as reflected in extant instruments.

“With respect to voice and SMS cost, ALTON respectfully requests the commission to consider a mark-up approach to address the upward price adjustment desirable for the industry. We have enclosed herein and marked ‘Annexure 1’our proposal in that regard.

“For data services, we wish to request that the commission implements the recommendations in the August 2020 KPMG report on the determination of cost-based pricing for wholesale and retail broadband service in Nigeria. Excerpts from the report are attached and marked ‘Annexure 2’ to provide a further illustration.

“In implementing the said recommendations, however, we recommend that the 40 per cent increase in the cost of doing business be factored in to arrive at a cost price per GB in view of the current economic situation.”

The group also highlighted other demands to the commission such as to explore other penalties for operators other than punitive monetary sanctions, extend the payment timeline of relevant regulatory levies and fees, prevail on the federal government to sign the executive order declaring telecoms infrastructure as a critical national infrastructure to mitigate cost spent replacing damaged and stolen infrastructures, among others.

It added that the Mobile (Voice) Termination Rate (MTR) for voice, administrative data floor price and cost of SMS as reflected in extant instruments should also be increased.

“For large operators, a new interim MTR of N5.46 from N3.90 reflecting 40 per cent increase in the cost of business,” ALTON said.

“For small operators, the new interim MTR of N6.58 from N4.70 reflects a 40 per cent increase in the cost of business.”




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