Telcos Breathe a Sigh of Relief as FG Approves First Tariff Hike in 12 Years

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January 14, 2025/CSL Research

Telecommunication companies are set to breathe a sigh of relief as the Minister of Communications and Digital Economy, Dr. Bosun Tijani, announces an impending tariff hike for telecom services. While operators have advocated for a 100% increase, the minister has assured that the adjustment will fall short of that figure, emphasizing the importance of balancing consumer protection with the need for sustained investments in the sector.

Though the exact percentage has yet to be finalized, reports suggest the increase will likely range between 40% and 50%. Telecom providers have cited severe economic pressures threatening their financial viability, compounded by regulatory restrictions that have prevented price adjustments for over a decade.

Nigeria’s telecommunications industry is grappling with significant challenges, driven by rising operational costs linked to the devaluation of the Naira and escalating inflation. These economic pressures have taken a toll on the profitability of major players such as MTN Nigeria and Airtel. MTN Nigeria reported a staggering loss after tax of ₦514.93 billion for the nine months ending September 2024, driven by foreign exchange (FX) losses amounting to ₦904.93 billion. Similarly, Airtel Africa’s H1 2025 financial results revealed a profit after tax of US$79 million, largely overshadowed by US$260 million in foreign exchange and derivative losses. These figures underscore the profound economic challenges faced by Nigeria’s telecom operators, highlighting the urgent need for strategies to address the sector’s financial sustainability.

Telecommunications operators in Nigeria have faced significant challenges in adjusting prices despite rising inflation and other economic pressures, primarily due to regulatory restrictions imposed by the Nigerian Communications Commission (NCC). The NCC, responsible for overseeing pricing in the telecom sector, requires operators to obtain approval for any tariff changes. This regulatory framework ensures that pricing adjustments adhere to established standards and accurately reflect the operational costs of telecom companies. For operators, a tariff increase has become essential to safeguard the sector’s profitability and sustainability. The industry has long advocated for price adjustments, with the last major hike occurring 12 years ago.

Recent signals from the Minister of Communications and Digital Economy suggest that the government now acknowledges the need for a tariff increase to protect investments in the sector. This adjustment could be pivotal in fostering growth in 2025 and addressing some of the financial hurdles experienced in 2024. However, the anticipated tariff increase is likely to add to the financial burden on consumers, further straining the cost of living. Many Nigerians rely on affordable telecom services for communication, education, and business, and higher tariffs could make these essential services less accessible. This may exacerbate the digital divide and limit access to critical resources for a significant portion of the population, underscoring the need for a balanced approach that considers both industry sustainability and consumer welfare.

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