ON THE PLANNED RATE HIKE IN THE NIGERIAN TELECOMMUNICATIONS SECTOR

An Adjunct Professor of the North Dakota University, USA, Engr. (Dr.) Wisdom Patrick Enang says that the telecommunications sub-sector of Information and Communications Technology (ICT) has contributed significantly to the Nigerian economy, hence must not be allowed to collapse.

Dr. Enang made the plea on Friday May 24, in an interview with newsmen in Uyo, the Akwa Ibom State capital.

 

The globally renowned energy expert revealed that as at the fourth quarter of 2023, the ICT sub-sector contributed 14% to the growth of Nigeria’s real Gross Domestic Product (GDP).

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“In effect, Nigeria has experienced economic expansion because of the telecoms sector. Perhaps this is why the telecom operators in Nigeria, represented by the Association of Licensed Telecommunication Operators of Nigeria (ALTON), and the Association of Telecommunication Companies of Nigeria (ATCON), have pushed for cost-reflective tariffs.”

 

Dr. Enang somehow agreed with ATCON and ALTON members, that in a fully liberalized and deregulated sector like telecommunications in Nigeria, the current price-fixing policy was not backed by economic realities, thus eroding investors’ confidence.

He explained that the cost of operating any business in Nigeria, especially in the telecommunications sector have increased, as general inflation has led to higher prices for equipment and services.

 

“For instance, the cost of diesel has risen significantly, the expenses for running generators have also increased, and even higher VAT rates on tower leases have added to the financial burden of telcos.”

These factors, he said, has collectively increased the operating costs of telcos, making it difficult for them to maintain their services at affordable rates.

 

Explaining further, the Akwa Ibom born, British trained Chartered Engineer who is fully registered with, and accredited by the British Engineering Council informed that recent data paints a stark picture, indicating that Nigerian telcos alleged spending on diesel alone in May 2024 has skyrocketed, increasing by a staggering 50% compared to the same period in 2023.

 

Dr. Wisdom Enang averred that as at March 2024, Nigeria’s annual inflation rate stood at 33.20%, maintaining that these were not just numbers on a page but actual costs impacting the industry.

He further stated that ALTON was making a simple case, that telcos’ charges must reflect the cost of providing their services, stressing that if tariffs do not reflect economic reality, operators may be forced to cut back on services, which would be detrimental to the Nigerian economy and its citizens.

 

“Let’s talk about the cost increases for a minute: l am referencing the ALTON request to the Nigerian Communication Commission (NCC) for regulatory approval to raise tariffs by 40% in 2022. If that request was approved in 2022, the floor cap on national voice calls would rise from N6.4 to N8.95 per minute. Keep in mind that in 2022, the exchange rate of one USD was $1/N448 (now $1/N1500), and inflation was 18.85% (now 33%). Asking the telcos to keep prices fixed while every government agency has increased their fees and duties is simply asking the private telcos to subsidize the Nigerian economy, l would reason.”

 

Dr. Enang also raised issues on the multiplicity and diversity of taxes telcos are asked to pay by multiple Federal, State and Local Government agencies.

According to the renowned erudite scholar, a tariff review would enable telcos to further contribute to Nigeria’s economic growth, saying that this was a shared interest that we all should consider. Speaking further, Dr Enang cited that the same issue of fixing retail prices below the fair and cost-reflective market price was the same reason why investors avoided the Nigerian downstream sector for decades.

 

The Ethical and Attitudinal Reorientation Czar explained that Nigeria was a large market for the telcos, but added that markets must pay for themselves.

Known for his massive and sustained advocacy for the adoption of the right democratic imperatives and a value-driven approach to leadership and governance, Dr. Wisdom Enang opined that the telcos were, to his mind, not asking for a handout, but for a pricing basis that reflects economic reality. Dr. Enang further informed that the last time there was a telecom price review was in 2013.

 

“Cost-reflective tariffs are not about profits but about maintaining a sustainable business model that benefits all stakeholders, especially consumers.”

“The current tariff regime is inhibiting the operators’ capacity to invest more in infrastructure; hence, the quality of their services has been deteriorating in recent times. Poor telecom services would not only affect the telecom subscribers but the economy at large.”

 

He further argued that if a bag of rice at the time telcos last had a price review was below N12,000, which has now changed to N77,000 and the price per liter of diesel was N196, which has now changed to N1,700, then there was need for a considerate and non-exploitative price review.

 

Dr. Wisdom Enang who is a Fellow of both the Nigerian Society of Engineers (FNSE) and the Nigerian Institution of Safety Engineers (FNISafetyE) also warned that if Nigeria underinvests in the sector and do not manage it efficiently, the Nation will risk getting low returns and inefficient outcomes.

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