Telcos paid over N2tn tax in 2023 – Report

Telecommunication companies paid N2.4tn tax to the Nigerian government in 2023, despite struggling to attract investments, a digital economy report from the Groupe Special Mobile Association obtained by Sunday PUNCH has revealed.

According to the report, the sector generated about N33tn, representing 13.5 per cent of the country’s gross domestic product.

It highlighted the importance of the telecommunications sector to Nigeria’s economy, with the potential for even greater growth and development in the next 3–5 years.

“The mobile telecoms sector accounted for 13.5 per cent of total GDP in 2023, including the direct value added by wider ICT industries and the impact of the sector in enhancing the productivity of other sectors.

“Overall, the mobile sector’s total contribution to GDP is estimated at N33tn in 2023, with N2.4tn in tax revenue contributions,” GSMA noted.

In the first quarter of 2023, the National Bureau of Statistics stated that telcos paid N119.87bn tax, a 35.91 per cent increase from the N88.19bn paid in the corresponding period of 2022.

This tax revenue was made up of Company Income Tax and value-added tax.

Operators paid N35.75bn as CIT, while telecom consumers and consumers of other information and communications services paid N84.12bn as VAT.

The NBS report also revealed that the information and communications sector was one of the top contributors to CIT in the quarter under review.

The total tax revenue for Q1 2023 was N1.18tn, with the information and communications sector contributing 10.17 per cent to the total revenue, the bureau stated.

Currently, telcos are going through rough patches due to rising inflation, energy costs, and exchange rate volatility.

Last year, investment in the sector decreased by 70.5 per cent to $134m in 2023 from $456.8m in the corresponding year, the latest report on capital importation by the NBS showed.

The two biggest operators by subscriber base in their respective financial reports declared losses.

Airtel recorded a loss of $151m in the first quarter of 2024, while MTN Nigeria lost N137bn for the year ended in 2023.

The President of the Association of Telecommunications Companies of Nigeria, Tony Emoekpere, said operators may not survive year-end should the current economic hardship persist.

“Telcos have been running at a loss, even though they may be reluctant to disclose,” the ATCON boss told The PUNCH in April.

Last month, the telcos finally voiced out their woes, requesting that the Federal Government allow them to increase tariffs, a move that has not been made in the last 11 years.

The Chairman of the Association of Licensed Telecom Operators of Nigeria, Gbenga Adebayo, said the sector was no longer attracting investments.

“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 many challenges that we have had, from currency devaluation to the high cost of business,” the ALTON chair lamented.

A few weeks ago, the Chief Executive Officer of Financial Derivatives Company Limited, Bismarck Rewane, said the last time there was a tariff review for the telecom sector was in 2013.

The economist justified the call by the telcos, saying that inflation had increased multiple times in 11 years.