Telcos Mull 40% Tariff Hike
Telcos in the country have proposed a 40 per cent upward review of tariffs on voice calls, short message services (SMS) and data, worsening the plight of Nigerians yet to recover from the effects of the Covid pandemic.
The operators under the aegis, of the Association of Licensed Telecom Operators of Nigeria (ALTON), cited the rising cost of running a business as a reason for the proposed 40 per cent hike.
This development comes weeks after MultiChoice Nigeria, owners of DStv and GOtv, announced an increase in prices of its DStv and GOtv packages, citing the rate of inflation in Nigeria. As of March, the inflation rate stood at 15.92 per cent.
In a letter addressed to the Nigerian Communications Commission (NCC), ALTON said the price of calls will increase from N6.4 to N8.95, while the price cap of SMS will increase from N4 to N5.61.
Cost of energy has increased their operating expenses by 35 per cent while 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,” it said.
“Given 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.
“Concerning 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, 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 given the current economic situation.”
According to ALTON, other demands to the commission such as exploring other penalties for operators other than punitive monetary sanctions, extending 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.
The letter 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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