*Experts and the National Association of Telecommunications Subscribers suggest funding alternatives to the Nigerian Mobile Network Operators’ move for 100 percent tariff increments, including exploring funding opportunities in the Capital market, to ensure digital inclusion and industry sustainability

Gbenga Kayode | 绿帽献妻

As the Mobile Network Operators’ (MNOs) agitations for 100 percent tariff increments for telecoms products and services have reached the crescendo, and continued to generate interests in public discourses lately, experts and the National Association of Telecommunications Subscribers (NATCOMS) have offered suggestions, including telecoms operators’ approaching the Capital market for funding to ensure industry sustainability.

绿帽献妻 reports the network operators, under the aegis of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) and the Association of Telecommunications Companies of Nigeria (ATCON) have continued to intensify efforts at convincing the Nigerian Communications Commission (NCC) to consider, and approve tariff adjustments for telecoms consumers over the years.

Telcos’ justification for proposal on tariff increases

The telecoms companies have hinged their request for tariff hikes on how skyrocketing diesel prices for powering base stations, rising costs of imported telecom equipment, inflation, and the depreciation of the Naira have all rendered the current pricing structure unsustainable in the telecoms space.

Likewise, Dr. Karl Toriola, Chief Executive Officer (CEO) of MTN Nigeria Communications Plc, while featuring on a private television programme recently, affirmed that network operators, indeed, had submitted a proposal for “approximately 100 percent telecoms tariff increases” in the ecosystem.

Toriola is said to have vocal about the financial strain on operators in recent times.

With MTN servicing 78 million subscribers, the CEO recently warned that the company might be forced to halt operations, if tariffs remain stagnant.

鈥淭here鈥檚 no way that the industry could continue to sustain itself and provide the required quality of service under the present structure,鈥� MTN Chief stated.

He also stated: “We鈥檙e not even talking about profitability; we鈥檙e talking about sustainability.

“The entire ecosystem, including suppliers and other stakeholders, is facing the same pressures.”

In the same vein, Engr. Gbenga Adebayo, Chairman of ALTON, has continued to stress the need for a pricing structure driven by market forces.

Adebayo said: “The current pricing regime is not sustainable given the inflationary pressures we face. Government intervention in pricing will only deter investors and lower service quality.”

NATCOMS: Why MNOs should approach Capital market for funds to sustain operations

Reacting to the development, Chief Adeolu Ogunbanjo, President of NATCOMS, reportedly considered the financial strain such proposed 100 percent telecoms tariff hikes would impose on consumers in the Nigerian economy.

The telecoms subscribers’ group also described the Capital market options, such as Initial Public Offerings (IPOs), as more sustainable solutions to address the reported rising operational costs, and other challenges in the West African country’s digital ecosystem.

An IPO, which involves a company offering of a company’s shares to the public for the first time through the stock exchange, allows firms, including Telcos, to raise capital by selling ownership stakes to interested investors.

Ogunbanjo as well contended that the option of MNOs’ approaching the stock market as against pushing a proposal for tariff increments would further prevent burdening subscribers, especially low-income consumers in the economy.

In a recent note, the President of NATCOMS reportedly also criticised the NCC for any consideration of the tariff hikes, describing the move as 鈥渋nsensitive鈥� and 鈥渘ot in the interest of telecom services consumers,” The Punch report said.

The Association observed that the rising costs of products and services have already made life difficult for Nigerian consumers.

He stressed that further increases in telecoms charges would add to the financial strain of such Nigerians.

Expressing its concern about the proposed tariff hikes, which would double the current costs of services, including voice calls, SMS, and data bundles, NATCOMS said that would worsen the difficulties faced by several consumers.

The consumer advocacy group further warned if the controversial Tax Reforms Bills currently in the National Assembly (NASS), in Abuja, FCT, are approved, telecoms services also could witness a 12.5 percent tax rate, which could lead to 鈥渢wo-thirds of telecoms services subscribers being priced out of the market.鈥�

The MTN Nigeria fundraising example, by Ogunbanjo

Underlining the significance of exploring funding opportunities available in the country’s Capital market, Ogunbanjo cited the relevant example of MTN Nigeria, that has successfully sought and got stock market listing as a model.

He, therefore, urging other network operators, including Globacom Limited, operators of Glo brand, and Airtel Networks Limited, operators of Airtel telecoms brand to follow suit and explore the Capital market funding opportunities.

鈥淭hey can go to the capital market to raise funds. Nigerians will buy their shares, and I am confident it will be oversubscribed.

“MTN has already done this successfully; other operators like Glo and Airtel should follow suit,” the President of NATCOMS said.

Ogunbanjo submitted that funds MNOs raise through the Capital market could help them to finance infrastructure upgrades, regulatory compliance, and technology investments without resorting to tariff increases to further compound consumers’ economic hardship in Nigeria.

Concerns of authorities, experts about tariff hikes, affordability, digital inclusion and sustainability

The Nigerian Government, through the telecoms sector regulatory Commission, seems to be at a crossroads over approving a 40 percent increase in telecommunications tariffs, just as the MNOs themselves have proposed a 100 percent price hikes to address rising operational costs, a report has said.

Experts have opined the thorny issues of sustainability, affordability, and national digital inclusion are all at stake in the Nigerian digital ecosystem.

Similarly, Dr. ‘Bosun Tijani, Honourable Minister for Communications, Innovation and Digital Economy, as well as the Management of the Nigerian Communications Commission,聽 led by Dr. Aminu Maida, Executive Vice-Chairman and CEO of NCC, have expressed reluctance to approve a 100 percent tariff increases, according to report.

It was gathered the Nigerian authorities are particularly concerned about such a 100 percent tariff increments, citing the possibility derailing the Federal Government鈥檚 much-talked-about agenda for extensive digital inclusion in the country’s economy.

Still, telecom operators have argued, warning industry stakeholders, that without considerable tariff adjustments, the significant sector of the Nigerian economy faces stagnation, and network degradation in the near future.

In terms of implications of the telecoms regulators’ “possible” refusal to approve their proposal for upward tariff adjustments, the network operators have expressed their concerns over likely shutdowns, threatening millions of telecoms consumers and the emerging聽 Nigeria Digital Economy.

Kindly Share This Story