Telcos insist on upward review of tariffs, claim sector in ‘ICU’

Telecommunications operators have insisted that it is high time the industry reviews the current tariff structure if it must remain afloat and contribute significantly well to the economy.

The operators, largely the mobile network operators (MNOs), claimed that the $76 billion sector, which has enabled other industries, is currently in the intensive care unit (ICU).

Speaking in Lagos, yesterday, at Financial Derivatives Company’s (FDC) forum, tagged: ‘Telecoms Industry 2.0: The Next Investment Frontier in Nigeria’, the Chief Executive Officer of MTN Nigeria, Karl Toriola, said no investments would come into a dying sector.
Toriola said tariff increase is critical to sustaining the sector, stressing that the last time a price increase was effected in the sector was 11 years ago.

“Investments will not come to the sector… It will dry up. The telecoms sector in Nigeria is now in an intensive care unit (ICU) gasping for breath. There’s an urgent need to rescue the sector from collapse. We are in deep crisis in the industry,” he stated.

The MTN CEO said two things were critical in resuscitating the sector, these include firstly, ensuring there are price increases and secondly ensuring that there are certain concessions for the operators from the government.

According to him, many players are declaring losses, “even the listed firms on the Nigerian Stock Exchange are declaring losses upon losses. We must act fast to save this critical sector.”

On his part, Airtel Nigeria CEO, Carl Cruz, who had expressed optimism that investment will continue to flow into the sector, said pricing increase has become imperative, adding that it is now an absolute necessity.

Cruz said the sector is challenged from both sides, stressing that apart from vandalism and fibre cuts, several taxes and levies by state actors have compounded the woes of players.

“Investments can only come to a sector that is protected and supported. Airtel alone suffers every month, from over 1000 fibre cuts, where do we place that? We need to act fast to save the sector,” he stated.

Providing insights, the Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo, said the current challenges are huge but can be surmounted if actions beyond the rhetoric are taken.

Adebayo, an engineer, said apart from the about 54 different taxes and levies the sector is confronted with, cases of vandalism, and theft among others have been on the rise.

He stressed that the industry is now seen more as a ‘cash cow’ not as enabler, especially by state actors.

The ALTON boss also insisted that the current price regime in the industry is no longer sustainable and needs to be reviewed for the sector to grow and prepare for the next phase of growth.
“Government needs to stimulate investments towards the sector. We must detach ourselves from every form of political interference that won’t augur well for the sector,” he stressed.

On how the sector can grow and contribute more to the economy in another 25 years, the CEO of Chapel Hill Denham, Bolaji Balogun, said regulators need to consider an altered perspective around tariffs to encourage investments

He said the ecosystem needs to increase localisation, minimize exposure to foreign exchange financing, utilize capital markets and develop a plan for talent development.
Balogun said though, there have been significant investments in the last 25 years of the telecoms revolution, “but we still have more grounds to cover for another 25 years”.

According to him, there is still a need for complete or near-universal coverage, service quality, increased smartphone penetration, improved broadband quality and penetration among others.