FG faults proposed telecoms tariff hike

The Federal Government has faulted the proposal by telecommunications companies to raise their tariffs, emphasising that increasing data, voice and text message prices isn’t the “sole or optimal solution” to the sector’s challenges.

It also urged the companies to explore innovative solutions to counter inflationary pressures and high operating costs.

The Minister of Communications Innovations and Digital Economy, Bosun Tijani, gave this advice at the launch of the Nigeria Digital Economy Report on Thursday in Abuja.

The report launched by the GSM Association, an international organisation that represents the interests of mobile network operators worldwide, analyses the Nigerian economy and the government’s digital transformation strategy.

The report also examines the role of the Nigerian mobile industry in supporting economic development and recommends initiatives to help the government achieve its national development objectives.

It also features the latest statistics as it concerns connectivity and forecasts on digitisations role in driving economic growth.

Recently, telecommunication companies in Nigeria renewed their push for an increase in the prices of calls, data, and other services after multiple failed attempts in the last 11 years.

In a communiqué signed by the Association of Licensed Telecom Operators of Nigeria and the Association of Telecommunication Companies of Nigeria, the telcos argued that the current prices are insufficient to maintain their business operations.

The operators stated that its general service pricing framework had not been reviewed upward in the last 11 years because of regulatory constraints.

Restating this position, the Chairman of the Association of Licensed Telecommunications Operators of Nigeria, Gbenga Adebayo, said investments in the sector had begun to dwindle due to varying challenges of currency devaluation, high cost of business, fossil fuel, multiple taxation, amongst others.

He insisted that a hike in telecom tariff was inevitable given the realities/outlooks of the present economy, maintaining that only a continuous flow of investments could sustain its viability

He said, “The first point is the sustainability of the industry, the industry can only be sustained if we have a continuous flow of investments. As we speak people are cautious about investing because of the very many challenges that we have had from currency devaluation to the high cost of business, fossil fuel and the rest. The second point is the multiple regulations and taxation. Some states will say they have removed the cost of the right of way taxes but other associated charges when you add them together defeat the objective of removing the right of way taxes. We have seen about 45 of such charges different from the right of way tax being charged by various tiers of government.

“Another issue is the price review that we are talking about, it is a simple regulatory process that should have been allowed to happen, so even when the regulator granted that we could move within the approved price band, the policymaker insisted that we couldn’t do it and all of these have gained public debate and making the industry look like we are trying to extract money from the public or we are not sensitive to the people’s concern. While the government is trying to provide incentives for the public on account of what has happened to our macro economy, our sector should not be used as a palliative to solve people’s problems, we must price right to sustain the industry and to have the right investments.”

But responding, the minister told Mobile Network Operators that increasing telecom tariffs is not a viable option and should not be the singular solution to the challenges confronting the telecom industry.

According to him, the government is cognisant of the challenges and is committed to addressing them incrementally.

While making the first public comment on the issue, the minister appealed to the operators to consider suffering masses affected by the economic downturn.

He said, “We have to deepen and address so many of these things. The solutions to these things will not come from one single thing, which is raising the tariff, that’s never going to be the solution. There are tons of other things that can be done to ensure that the business environment is conducive for the investors in this phase and the government is articulating that including the tariff conversation.

“The government may intentionally put out the right messages, the right policies and the right intentions but if everything that is coming from the association on just one issue is extremely negative, investors will not come in. Investors will not help. And if we go back to my very clear point, I’ve not seen anything more in what you are demanding that is difficult.”

He added, “It’s the approach to addressing them that I think we are not ready to do. And I’m being open about this because we must, for once, and finally, agree to address these issues positively; because they are not just affecting the companies that you represent. They are affecting the economy and the security of the nation as well.

“So we have to be extremely careful how we approach it and make sure we focus on solving it. Some of the things proposed nine months ago, if we collectively came together to address those things nine months ago, your demands would have been met. But the solution that the association is saying is only one solution. And I don’t believe anyone wants that.”

He expressed government commitment to improving infrastructure for the telecom industry. This, he said, would address multiple taxation, Right of Way (RoW), security of infrastructure, improved quality of services, and close access gaps through increased broadband penetration.

The Chief Executive Officer, of MTN, Karl Toriola, in his address, also lamented diminishing investments noting that capital investments tend to avoid areas with negative returns.

He said, “The tariff increase is very emotive but it is a big issue that can fix investments in the country. We don’t have the cash to invest or returns of investment for people to invest. Capital will not flow to where there is a negative return. Many other things can be done to improve the quality of the industry, spectrum availability, taxation, and protection of infrastructure. The price is too high but we can’t move to alternative power solutions because there are no fresh investments.”

On her part, the Head of Sub-Saharan Africa, GSMA, Angela Wamola, highlighted that the high cost of doing business in Nigeria was due to the lack of digitalisation in processes.

She emphasised that simplifying the processes would enhance financial inclusion.

“In Nigeria, the ingredients are there for success despite the headwinds that are beyond our control. Last year, Africa moved around $970bn among ourselves and that is more than 70 per cent of our total exports of Africa, just by moving money. The cost of doing business in Nigeria is expensive because the processes are not digitised, if we make the process simpler, financial inclusion will improve.”