By Chris Okpoko
Ahead of the February date set by the Nigerian Communications Commission (NCC) for the implementation of the recently approved 50 percent increase in telecommunications tariffs, the Nigeria Labour Congress (NLC), Trade Union Congress (TUC), Coalition of Northern Groups (CNG), and Human Rights Writers Association of Nigeria (HURIWA) have rejected the hike.
Telecommunication companies (Telcos) argue that tariff increases are essential for the long-term sustainability of the sector and for improving services to subscribers. However, media reports indicate that the Federal Government’s approval of this increase has generated widespread outrage. The NLC is rallying Nigerians to reject this “harsh burden” and has threatened to mobilize workers to boycott telecom services. The TUC has described the hike as outrageous, stating that it will worsen the already dire living conditions of workers and Nigerians. Similarly, the CNG has condemned the timing of the hike, asserting that it fails to consider the struggles of the Nigerian people. HURIWA has labeled the hike as an “illegal, unconstitutional, and oppressive policy” that undermines the fundamental rights and freedoms of Nigerians. They further accuse the Federal Government of impoverishing citizens through a policy that stifles freedom of expression and access to essential communication services.
In recent years, Nigeria’s telecommunications sector has experienced significant growth driven by an increase in mobile phone usage and internet penetration. However, the announcement of a 50 percent tariff increase has initiated a heated debate among stakeholders. This article examines whether the 50 percent increase in Telco’s tariffs is justified.
A review of the financial performance of MTN and Airtel in 2024 (as case studies) showed the following:MTN Nigeria Communications Plc. reported a deepened after-tax loss of N519.1 billion in the first half (H1) ending June 2024, compared to an after-tax loss of N85.6 billion during the same period in 2023. Despite this loss, the telecommunication firm recorded a surge in revenue to N1.54 trillion from N1.16 trillion during the reviewed period. Further analysis revealed that MTN Nigeria’s revenue stemmed from various sources, including voice, data, SMS, interconnect and roaming services, handsets and accessories, digital services, value-added services, rental income, and other revenues. During the same period, MTN Group was reported to have delivered strong commercial momentum, executed key strategic initiatives, and maintained a resilient balance sheet. In constant currency, revenue from data services increased by 21 percent in the six months leading up to June 30, 2024, while fintech service revenue climbed by 27 percent. According to media reports, MTN Group President and CEO Ralph Mupita stated, “MTN Nigeria delivered a strong underlying performance, despite the severe macroeconomic impacts on its financial results. Although the commercial momentum and strategy execution were solid in H1, macroeconomic headwinds impacted reported results. The sharp devaluation of the naira during this period had the most significant effect on reported results.
”For the half-year ending September 30, 2024 (H1 2025), Airtel Africa reported a profit after tax of $79 million, recovering from a net loss of $13 million in the corresponding period of the previous financial year. During this half-year, the group generated revenue of $2.37 billion, reflecting a 10 percent year-on-year decline from the $2.62 billion reported in the same period last year. The group also experienced a 20 percent decline in operating profit, falling to $706 million from $885 million in H1 2024. In H1 2024, Airtel Nigeria was the largest contributor to Airtel Africa’s revenue with $878 million. While Airtel Nigeria’s performance in 2024 was affected by currency devaluation, the company still managed to post a profit for the half-year ending September 30, 2024.
The financial statements of these companies indicate that revenue in constant currency increased during the period, while reported currency revenues decreased, reflecting a weakened naira. Additionally, significant increases in fuel prices across various markets, alongside Nigeria’s economic circumstances, lowered their group revenue contribution after the naira’s devaluation, leading to a decline in financial margins. It is noted that, if not for currency devaluations in Nigeria, these Telcos would have reported significant profits after tax for the full year 2024.
To begin with, one of the most pressing implications of the approved tariff increase is its impact on consumers. Nigeria has one of the fastest-growing telecommunications markets in Africa, with millions of Nigerians relying on mobile services for communication, business, and access to information. A 50 percent increase in tariffs will lead to higher service costs, disproportionately affecting low-income users who struggle to afford necessities. This hike could limit access to essential services such as mobile banking and health information, exacerbating existing inequalities in society. For many consumers, particularly those living in rural and underserved areas, even a modest increase in service costs can significantly impact their budgets, leading to decreased usage or loss of access altogether.
Moreover, the increased tariffs are likely to result in a reduction in the overall usage of telecommunication services. Economists agree that price hikes typically lead to reduced consumption, and this may hold for Nigeria’s telecom sector as well. When faced with higher prices, consumers often forgo services or downgrade to more affordable plans. This can create a downward spiral where telecommunications companies experience diminished revenues, limiting their ability to invest in network improvements and innovative services. Such outcomes would ultimately undermine the progress in expanding network coverage and providing affordable access to communication technologies.
Additionally, it is crucial to consider the broader economic ramifications of the tariff increase. The telecommunications sector plays a vital role in Nigeria’s economy, significantly contributing to the Gross Domestic Product (GDP) and facilitating growth in various other sectors, including agriculture, commerce, and education. Economic growth in Nigeria relies heavily on connectivity; businesses depend on an effective telecommunications infrastructure to facilitate commerce, attract investments, and create jobs. Increasing tariffs undermines these efforts, particularly as the nation strives to recover from the economic shocks due to the naira devaluation and the removal of the fuel subsidy in 2023. The approval of a 50 percent increase raises questions about the motivations behind the hike, particularly when the government should prioritize rekindling purchasing power, stimulating growth, and enhancing economic resilience.
The telecommunications regulatory authority has argued that the tariff hike is necessary to improve service quality and expand coverage in underserved areas. While the intention may be to enhance infrastructure, the burden placed on consumers and businesses due to such a steep increase contradicts the goal of fostering widespread access. Given the current inflation rate of about 34 percent, it is perplexing how the NCC arrived at a 50 percent increase. Engaging in dialogue with industry stakeholders could yield innovative solutions that maintain service quality while prioritizing consumer welfare.
Furthermore, the lack of transparency surrounding the decision-making process raises concerns about the justification for such a hike. Stakeholders within the telecommunications sector, including consumers, have expressed frustration over their exclusion from discussions regarding pricing policies. A collaborative approach involving all parties could lead to more equitable and effective solutions than the unilateral decisions imposed by regulatory authorities. Consumer voices must be incorporated into policy formulation, ensuring that regulations serve the needs of all Nigerians rather than the interests of a select few.
In conclusion, while telecommunications companies deserve a tariff increase to compensate for inflation, a 50 percent hike is excessive and unreasonable at this time in Nigeria. This sharp increase places undue burdens on consumers and could hinder the overall economic progress of the nation. The telecommunications sector must be supported to continue delivering essential services that drive growth and development. Instead of implementing punitive tariff increases, the government and regulatory bodies should pursue collaborative, transparent, and innovative approaches to improve service quality and expand access. Engaging multiple stakeholders in constructive dialogue would be a far more effective strategy to address the challenges facing Nigeria’s telecommunications sector, ensuring that growth is inclusive and sustainable for all citizens.