Telecom Agencies Cost Of Operation Increases By N265bn – NCC

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The operational expenditures of Nigerian telecommunications businesses increased by N265.25 billion from N1.4 trillion in 2020 to N1.66 trillion in 2021.

According to the Nigerian Communications Commission’s ‘2021 Subscriber/Network Data Annual Report,’ this is the case.

“Total operational costs for mobile network providers climbed from N1,395,000,000,000 in 2020 to N1,658,235,000,000 at the end of 2021,” according to the study.
This is an increase of 18.74% above the value recorded in 2020.”

In April of this year, telecommunications providers under the auspices of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) stated that the rising cost of diesel had negatively impacted their operational costs, while requesting special interventions from the Federal Government.

The President, ALTON, Mr Gbenga Adebayo, said that the industry was worried about how the rising cost of diesel would further drive the high cost of business.

He stated that there was a need for an intervention to save the sector, noting that operators might have no other choice but to begin a process of price review.

He said, “Diesel is now very expensive, from N250 to over N700. All network planning, operational expenses, and planned projection for the year are based on the fact diesel prices. This has increased. Today, you know the implication of that. This is one problem; cost has gone up.”

Adebayo added that telcos were also struggling with the availability of diesel and the logistics of delivering it to sites.

He added, “We will be approaching the government for some form of intervention. But we are mindful of the high cost of living, and the implication of this on the economy and citizens. And so, we are not going to talk about direct price increases.

“But we will be approaching the government for some kind of intervention to cushion the effect of these changes on us as an industry.”

The cost of powering telecommunications services might exceed N60 billion per month and N720 billion in a year if fuel prices reach N1500 per litre, as suggested by product marketers.

According to industry estimates, mobile telecommunications carriers consume 40 million gallons of fuel every month to power telecom installations.
This means that telecommunications companies might spend up to N720 billion in a year to power their services.

According to ALTON, the telecom industry is one of the nation’s top consumers of diesel, accounting for around 35% of operator expenditures.

In a recent letter to the Nigerian Communications Commission, ALTON had lamented the high cost of providing telecom services in the nation, hinting at the need for a price review of these services to reflect market prices. It said, “The telecommunication industry has been heavily financially impacted following Nigeria’s economic recession in 2020 and the effect of the ongoing Ukraine/Russia crisis.

“This has increased energy costs (which constitutes an appreciable 35 per cent of ALTON’s members’ operating expenses).

“Consequently, the cost of diesel required to power operators’ towers, base stations, and offices rose by a staggering 233 per cent from N225 per litre in January 2022 to over N750 per litre in March 2022.”

In the letter, ALTON suggested a 40 per cent upward review in the cost of calls, SMS, and data. This would have increased the floor price of calls from N6.4 to N8.95 and the price cap of SMS from N4 to N5.61.

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