…Increasing tariffs on services after making billions is extortion – Consumers
..Nigeria’s data, call rates not the highest in Africa – Operators
In this report, BENJAMIN SAMSON examines the plans by a telecom group, MTN, to increase call and data rates amid billions of profits declared by the company yearly.
Telecom group, MTN, has declared that it was planning to increase prices in selected markets due to the elevated inflation in the operating environment. This was disclosed in its first quarter report filed on the Johannesburg Stock Exchange.
In its outlook for the rest of 2023, the MTN group stated that, “We anticipate that trading conditions across markets will remain challenging for the remainder of 2023 and we will continue to execute on our proactive measures to manage the near-term challenges and risks.
“Within this environment of elevated inflation, implementing selective price increases across the portfolio remains a critical priority to ensure that operations generate sufficient cash flows to fund future capital expenditure needed for building world-class networks. We will continue to have the necessary engagements with the regulatory authorities on such needed increases.”
The telecom company, which operates across 19 countries including South Africa, Nigeria, and Ghana, said the blended inflation across its footprint remained elevated and averaged 18.5 per cent in Q1 2023, compared to 11.5 per cent in Q1 2022. Interest rates increased during the period as central banks acted to curb inflation. It claimed that higher inflation and interest rates weighed on consumers’ spending power and impacted business activity.
MTN’s chief executive officer, Ralph Mupita, in the statement, said, “MTN’s resilient business model and operational execution enabled us to continue to successfully navigate difficult macro-economic, geopolitical and regulatory conditions in Q1 2023.
“Local currencies generally weakened against the dollar, and foreign exchange availability was limited in several of our key markets affecting the pace of capital expenditure and our ability to upstream dividends and management fees.
“Over and above reduced economic activity in South Africa, MTN South Africa’s network availability remained under pressure due to ongoing power outages across the country: there were approximately 90 days of load shedding in Q1, 2023 compared to 14 days in Q1, 2022.”
On the Nigerian market, it stated that, “MTN Nigeria drove strong commercial momentum in a challenging operating environment to deliver a strong financial performance in the period.
“In addition to higher inflation and interest rates as well as challenges with the availability of hard currency liquidity, the Nigerian economy was also impacted by the Central Bank of Nigeria’s redesign and introduction of new naira notes from December 15, 2022. The limited availability of new notes resulted in cash shortages which impacted customers’ ability to recharge through physical channels and transact within the MoMo agent network.”
Citizens’ angst/lamentations
However, subscribers to telecommunications services who spoke with Blueprint Weekend bemoaned their fate as the cost of using the services as currently being provided by the telecoms operators have become exorbitant, adding that it was becoming more difficult to keep pace with high costs of telecoms services.
Of particular concern to many users of MTN’s services is the issue of broadband services, also known as data. Most respondents on the topic stated that it is rather too expensive to subscribe to data service nowadays, stating that it was not like this before with many wondering why it would be so, especially given the high cost of living in the country.
A subscriber, Usman Dauda, said: “At a time telecom companies are still making billions in profits despite the recession, increasing tariffs on services is simply about extorting more from the people for calls and data after paying more for other services.”
Likewise, Uche Ezeanya said, “Can you people kindly look into the proposed hike in calls and data charges. Market force bringing prices down, but MTN wants it up. Please the federal government, don’t let them hike it. Nigerians are already feeling the heat. It’s not cost effective for me because now I spend about N5, 000 for more data and it still doesn’t last for a long time. I don’t use TikTok as much as I want to anymore and I have to cut down on my data usage. This iPhone limit app has also helped me control how I use data nowadays.”
Another subscriber, Mr. Adewale Iyiola, told Blueprint Weekend that he used to spend just N2, 500 on data per month, but that suddenly he discovered that the N2, 500 subscription was not enough anymore and that he had to increase it to N3, 500. Iyiola further stated that again, he realised that the N3, 500 was not enough for a month’s subscription and, therefore, increased it to N4, 000 from the initial N2, 500 he used to expend monthly even as he disclosed that he doesn’t visit sites that consume data like twitter, You Tube, Instagram.
The same storyline runs through other respondents who complained bitterly about the high cost of calls and data services across the country.
In his take,, Mr. Fidelis Okoro told this reporter that he could not explain his dismay concerning the rate at which the cost of calls and data is going on the high side. Okoro said it’s not only that data evaporates easily, sometimes data just disappears from one’s handset without any explanation from the operators.
Okoro said he thought it was his operator that was the only culprit until he tried almost all other operators only to discover that they are the same. He wondered why it has become so difficult for Nigerians to enjoy such services without breaking the banks. He called on the federal government and the Nigerian Communications Commission (NCC) to come to the rescue of Nigerians over this issue.
Urging the federal government to intervene in the matter, another subscriber, Mrs. Mudasiru Omobolanle said it shouldn’t be this inflation era that services like internet subscription and phone calls should be out of reach of the people.
According to her, once the N3, 000 she subscribes to finishes, she would not bother to re-subscribe again for the remaining part of the month. Like Okoro, she also thought it was peculiar to her operator but discovered painfully that it cuts across all the operators.
Kazzem Mossa Tijani, a student, said, “Enough of these extortions. Salary is not increased. Salary is not regular and everything is just going up. What a country. It seems NCC is not experiencing a recession. God save us from these heartless people.
“My university is online, so most of the work I do requires using data. I have been in an exam before and my data finished and I had bought 50GB just four days before that exam. I had to switch to Swift Mifi.
“Well, I now spend more on data and end up using money I want to use for other things, to buy data. As a student who lives off an allowance I try not to go on social media apps like Instagram and TikTok unless I need to.
“It has really affected me because funds are really tight, so I will have to manage the way I use my data to reduce the way I buy data. I always have to sacrifice some apps and even with that, I don’t still see much difference. I thought about switching to another network but I’m not sure if this will make any difference as a lot of people are making the same complaints.”
Operators’ response
However, in his reaction, the president of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), Gbenga Adebayo, said calls and the usage of data should be made to reflect the cost of doing business in Nigeria.
He said: “It is apparent that tariffs for phone calls and the usage of data to perform online operations and partake in online virtual meetings will require innovative pricing that reflects the costs of doing business in Nigeria.
“Latest statistics demonstrate an opportunity for data pricing to be affordable to those struggling to make ends meet, however, it is also important to note that Nigeria’s data prices is one of the cheapest on the continent and with the recent recommendations made in the Nigerian National Broadband (NBC) Plan 2020-25, a target of N390 per 1GB per month can be achieved by 2025.
“The obstacles to reduction of unbundled data pricing are multi-faceted and require a multi-stakeholder engagement to put heads together to resolve the recurring issues of multiple and double taxation, high costs of doing business which impacts on our costs of rendering data services. With the introduction of full adoption of CNI and harmonisation of RoWs across the country, there is likelihood that reduced costs will be reflected in data prices going forward.”
Multiple taxations
Speaking on the negative impacts of multiple taxations, the Chief Executive Officer of PanAfrican Towers, Azeez Amida, said Nigeria’s telecommunications operators face multiple taxes and fees at local, state and federal levels.
According to him, service disruptions related to tax claims cost the sector millions of dollars annually.
“Operators have been seeking a one-stop shop to ease administration of taxes. We suffer arbitrary enforcement actions and service disruptions by parties working on behalf of tax-raising bodies.
“The cost of disruption to our industry runs into millions of dollars annually. The telecommunication sector is already bleeding from multiple taxes and duties across all levels of government.
“We are already overburdened with a plethora of taxes totaling about 41 categories. Some of these are multiple taxations because other tiers or levels of government were imposing the same levies that mobile network operators (MNOs) had already paid to the federal government. Multiple taxation and fees pose a huge threat to the growth of the Nigerian telecoms market.
“There should be a uniform tax system, and the same should apply to fees. Taxes are essential to providing funding for infrastructure; it is important for the growth of any society. But taxing and levying businesses multiple times inhibits growth. This is where regulation is needed to streamline the tax system and other fees for tower companies,” he said.
Also, a telecom operator who does not want his name in print, said the rising cost of diesel has impacted negatively on their operational costs and that they are set to approach the federal government for special interventions.
He said network planning, operational expense, and projection plans for telecom operators are based on diesel prices. He added that the industry was worried about how the rising cost of diesel would further drive the high cost of business.
“There was a need for an intervention to save the sector, or operators might have no other choice but to begin a process of price review.
“Diesel is now very expensive, from N250 to over N700. All network planning, operational expenses and planned projection for the year is based on the fact diesel prices. This has increased. Today, you know the implication of that. This is one problem; cost has gone up.
“Telecom operators are also struggling with the availability of diesel and the logistics of delivering it to sites. 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.”
However, the operator said if network providers were unable to get any form of intervention from the government, they would approach the regulator to push for realistic pricing, which would reflect the dynamics and realities of the business climate.
An expert’s opinion
However, in a chat with this reporter, a telecom expert, Daramola Folorunsho, said in the last two decades, the Nigerian Communications Commission (NCC), the industry’s regulator, has shown itself as a consumer-oriented regulator by deploying various regulatory frameworks and initiatives to ensure a consistent reduction in the cost of telecommunications services in the country.
He said: “The commission has put in place measures aimed at protecting the consumers of Nigerian telecom consumers over time. These include: the issuance of direction on data rollover. The commission did this strictly in the interest of the consumers as research shows that this practice is not obtainable in other regulatory jurisdictions.
“Furthermore, the commission also issued a direction on forced migration and auto-renewal, which mandates service providers to offer options to the subscriber to choose to continue to enjoy an existing service or not.
“With regard to data depletion, consumers are encouraged to report such experience first to the affected service provider, and it is the expectation of the commission that, consistent with the industry consumer code of practice, the operator will deal with such complaints appropriately.
“NCC dedicated a whole year as the ‘Year of Telecoms Consumer,’ with a campaign programme designed to give concrete expression to the centrality of the consumer in the telecoms ecosystem to explain why tariffs should not be increased indiscriminately.
“The Dambatta-led NCC has maintained solidarity with the consumer on matters of tariffs and issues like Quality of Service (QoS) and other complaints. The commission has also waded into matters regarding Right of Way, state governments shutting down base transmitter stations, multiple taxations, and protection of critical telecoms infrastructure, which has produced results.”
