19 April 2019

Nigeria: Telcos Mull Tariff Review to Cushion Harsh Business Climate

Association of Licensed Telecommunication Operators of Nigeria (ALTON), the industry body for all telecommunications companies in Nigeria, said that it is proposing a cost-based tariff for voice calls in the country. Gbenga Adebayo, chairman, ALTON, said that the new model would reflect the cost of doing business in the country.

Adebayo who spoke against the backdrop of the reported move by the operators to hike tariff, said that the base price tariff that is currently operational does not consider the multiplicity of taxes and levies in the telecom industry.He said: "We are asking that tariff should be cost-based and for that to happen, we need to understand what the costs are that are being incurred due to multiple taxation and consequently, relate that to the tariff that will be charged in those areas. That is actually what the conversation is about.

"We are going to be approaching the NCC with all the cost information and we are going to be requesting through the established protocols for a cost-based tariff. We will not be right to say it is an increase in tariff but tariff that will reflect the cost of service provision."

"There is a base price, a minimum bottom price- that has been determined by the NCC and that is based on general cost of service provision and operating expenditure and recurring cost. It certainly doesn't consider issues of taxation and levies. "Telcos are struggling under the burden of a tortuous mix of levies, taxes and charges that significantly inhibit their ability to function effectively.

Recall that in October 2018, Mr. Olusola Teniola, president, Association of Telecommunications Companies of Nigeria (ATCON), estimated that mobile telephony operators pay on the aggregate some 23 different taxes to various government agencies at the federal, state and local government levels.

State governments have been particularly active in insisting on the payment of allegedly non-statutory levies and charges by the telcos, and have resorted to shutting down base transceiver stations and denying them Right of Way for their infrastructure.Even where the taxes are legal, they are often poorly assessed and the amounts demanded are sometimes well in excess of what is prescribed.To worsen matters, these charges and taxes are often collected using blatantly extra-legal methods.

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