Nigerian mobile operators have agreed to invest revenue from a proposed 100% tariff increase into major network infrastructure upgrades and service quality improvements. This commitment comes as telecom companies await final approval for the tariff hike following discussions with the government and the Nigerian Communications Commission (NCC).
Dr. Karl Toriola, CEO of MTN Nigeria, disclosed these developments in a column published in BusinessDay on Monday, emphasizing that the NCC will oversee the implementation of the investments to ensure compliance.
The telecom sector has been facing escalating operational costs driven by macroeconomic factors such as naira volatility and inflation, which currently stands at 34%. Operating expenses for mobile operators have surged by over 300% in the last 18 to 24 months, compelling telcos to propose tariff adjustments to sustain operations.
Despite these challenges, the proposal for a 100% tariff increase has sparked backlash from subscribers, with threats of legal action if the NCC approves the hike. In response, operators have assured stakeholders that the tariff increases will be capped and will remain significantly lower than price hikes in other sectors, such as energy and oil.
“The discussions between the industry and government have been deliberate and focused on finding the right balance while aligning with pricing in other markets,” Toriola wrote. He stressed that the increases are tied to a requirement to invest in network improvements, monitored by the NCC to ensure transparency and compliance.
Foreign investments in Nigeria’s telecom sector dropped sharply in 2024, with Q3 investments totaling $14.4 million, an 87% decline from the $113.42 million recorded in Q2. The decline reflects the sector’s struggle with infrastructure deficits and high operational costs despite its potential for growth.
Dinesh Balsingh, CEO of Airtel Nigeria, highlighted the unsustainable nature of the current pricing regime, noting that tariffs have remained static for over a decade despite dramatic increases in costs. He stated that the proposed tariff adjustments are critical for ensuring the industry’s sustainability while delivering value to consumers.
Toriola emphasized that the balance between tariff increases and investment commitments will encourage telcos to invest confidently in Nigeria’s telecom landscape. The additional revenue is expected to lead to better networks, enhanced services, and improved customer experiences, ultimately driving growth in the country’s digital economy.
While commending the government’s decision to establish a sustainable tariff regime, Toriola described it as a brave and necessary step toward long-term growth. “We have demonstrated our long-term commitment to Nigeria many times. We continue to believe and invest based on that belief,” he stated.
With the government and telcos working collaboratively, the proposed tariff adjustments are positioned to bolster Nigeria’s telecom sector, ensuring its sustainability while meeting the increasing demands of the digital economy.
