Telcos cut investment over economic challenges, says ALTON chair

The Chairman of the Association of Licensed Telecom Operators of Nigeria, Gbenga Adebayo, has stated that telecommunications companies in Nigeria are becoming reluctant to invest more in infrastructure as they continue to contend with a tough economic environment.

He said while appearing on Channels Television’s The Morning Brief breakfast show on Saturday.

He attributed the decline in telecom investment to economic challenges facing the country.

The chairman of ALTON pointed to lack of investment as the main cause for the deteriorating state of telecom infrastructure in the country.

According to him, the decrease in investment has led to outdated systems, poor quality of service, and inadequate pricing.

He highlighted the urgent need for investment in the sector to address the crisis and ensure improved services for consumers.

Two weeks ago, telecommunications companies issued a statement that they were considering raising their service prices, including voice calls and data, to offset operational costs and address economic challenges.

Operators had also called on the Federal Government to facilitate a constructive dialogue with industry stakeholders to address pricing challenges and establish a framework that balances consumers’ affordability with operators’ financial viability.

Adebayo stated, “If you don’t invest in a sector, you can’t talk about quality of service; you can’t talk about right pricing. The government must help, and the time is now.”

He drew a comparison to the energy sector, where a lack of investment in infrastructure had led to decrepit substations and outdated transformers, some of which are 25-30 years old.

“When the people in the energy sector came, they licensed the DisCos; they sold them those companies and all of that, and everybody thought that would solve the problem. The answer is ‘no’ because when the DisCos came, they didn’t invest in infrastructure.

“We don’t want to come to a time where the telecom sector becomes like that. We need to continue to put the right policies and regulations in place to attract investment. It is only when we attract investment that we can demand a minimum level of performance,” he emphasised.

He stressed that leaving operators to solve their problems alone was unacceptable and urged the government to take immediate action to address the crisis.

Investments in the sector decreased by 70.5 per cent to $134m in 2023 from $456.8m in the corresponding year, according to the National Bureau of Statistics.

According to the Nigerian Communications Commission, the industry spent N2.09tn on operational costs in 2022, highlighting the significant investment required to maintain and operate the nation’s telecom infrastructure.

As of the end of 2022, the NCC reported that there were 34,862 towers and 127,294 base stations in the country, underscoring the magnitude of the challenge facing telecom operators.

Last week, the President of Telecommunications Companies of Nigeria, Tony Izuagbe, warned that telcos were running at a loss and may not survive this year if tariffs remained unchanged.

He cautioned that if urgent action was not taken, many telecom operators may be forced to shut down operations, leaving millions of Nigerians without access to vital communication services.

Izuagbe emphasised that the current tariff regime is insufficient to cover the costs of providing services and urged regulatory bodies to address the industry’s challenges and support operators in maintaining the quality of service.