Are higher voice-calling rates around the corner?

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by Stanley Mujere

Last week, news broke in the media that the Association of Licensed Telecommunication Operators of Nigeria (ALTON) was to present a cost-based proposal to NCC. The outcome of the research in question, if adopted by the authorities will change the way millions of Nigerians communicate.

Apparently unsatisfied with the base price tariff structure which currently guides the pricing of voice-calls in Nigeria, ALTON which is made up largely of the big Mobile operators, has commissioned a research/data gathering exercise that will help it fight for a new pricing template, a cost-based tariff structure for voice calls.

However, in an effort not to arouse public protest, ALTON immediately stated “the new model would reflect the cost of doing business”, without necessarily increasing the price of voice-calls in the industry.

But the spirit and structure of the article points in the other direction. For instance, ALTON points to “multiple taxation and levies” on telecoms equipment as factors that necessitated its push for the research and call for a cost-based tariff model for voice-calls.

What makes this even more peculiar is that ALTON went ahead to point to the experience of the biggest telecoms player in Nigeria in the article. A paragraph states that “in January this year, MTN expressed concerns regarding the shutdown of its facilities in Kogi State over allegations that it had not met its tax obligations to the state government.”

Pushing the envelope even further, Gbenga Adebayo, Chairman of ALTON who was quoted extensively in the article noted that telcos are required to pay 36 levies in Kogi state alone! While this is deplorable, there are measures which telcos can adopt, to raise profitability and save Nigeria the stress that will follow a drastic or subtle price increase for voice-call in the country.

Indeed, it is worth noting that while multinationals in the telecoms industry are tactically hinting that there should be an upward review in voice-call rates, they are doing the exact opposite in the data and wholesale ends of the market, where indigenous ISPs and operators are being squeezed out of business. So, while these operators price data increasingly aggressively despite extremely congested networks and poor quality of service, they want to price voice services higher since they face no competition in the voice space with the number of lines that they have.

Surely, multinational telcos making almost 50 percent profit margins have no basis for justifying cost-based increases on poor Nigerians who are recovering from a recession that has rendered millions helpless and hapless. Financial data released by MTN by year-end 2018 indicates that the company recorded Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) amounting to N453.1 billion, that amounted to 30.8% growth compared to 2017! Likewise Airtel reported in Feb 2019 for the quarter ended in Dec 2018, 25% revenue growth from $243m in 2017 to $303m in 2018.

If these multinationals are looking at improving profitability, one of the options before them is further cutting through infrastructure sharing and investing in providing more of the value chains e.g. software development, hardware integration and even outsourced support service within Nigeria. Unlike their counterparts in more developed climes where a high proportion of their inputs are developed in-country, not enough is being done by operators in this direction at the moment.

Indeed, for the Nigerian economy to grow and the unemployed youth to get jobs, the telecoms industry which is almost 12% of the nation’s GDP needs holistic solutions for the economy and not retail price relief for multinationals who are already at the top of the pyramid.

The danger in a voice-call price increase is the contractionary impact it would have on the poorer segments of our economy. These are the citizens who are least likely to own smart phones that allow them use free call services and also lack access to 3G and 4G services because these operators have only deployed 2G in their less affluent communities. Globally, there is a push for increased consumption of telecoms services because of the positive impact they have on economic growth and the wellbeing of ordinary citizens. So, while as a national policy we should be looking at how to make voice and more advanced services available to more Nigerians, we are instead considering imposing higher charges on the most vulnerable in our population.

The multiplier effect and consequences of price adventurism by our mobile operators should be carefully weighed against strategic national interests and growth goals.

A lawyer, Mujere wrote from Lagos

 

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