Govt to generate N1.6tn from telecoms tariff hike – GSMA

The recent 50 per cent tariff increase approved by the Nigerian Communications Commission is expected to generate an additional N1.6tn in tax revenue while driving investment in telecommunications infrastructure.

The Global System for Mobile Communications Association in a statement on Wednesday, described the tariff adjustment—the first in 12 years—as a significant step toward bridging Nigeria’s digital divide.

The policy is projected to expand 4G coverage to 94 per cent of the population and provide mobile internet access to an additional nine million people, including two million in underserved areas.

The global advocate for sustainable policy reforms in the telecommunications sector said it welcomed this decision as a major step forward for consumers and the economy.

By enabling mobile operators to invest in expanding and upgrading their networks, the tariff increase will bridge the digital divide and drive innovation across key sectors, including healthcare, education, and agriculture.

Head of Sub-Saharan Africa at GSMA, Angela Wamola, commented on the development: “This decision by the NCC is an important milestone for Nigeria’s digital future. By enabling sustainable investment, we are improving the quality of service for consumers and fostering opportunities for innovation and economic growth.

“However, to fully unlock the potential of this reform, it is critical to implement additional measures such as simplifying Right of Way permits, implementing a critical national Infrastructure plan, and reducing the mobile sector’s tax burden.

These steps will be essential to accelerate digital adoption across sectors.

“It is estimated that increased digitalisation in agriculture, manufacturing, transport, trade, and the government will increase GDP by around two percentage points by 2028. This would also create nearly two million jobs and raise an additional N1.6tn in tax revenue.”

The body said the tariff increase is projected to unlock over $150m in additional investment, expanding 4G network coverage from the baseline 90 per cent  to 94 per cent l of the population.

This improvement, according to GSMA, will benefit around 9 million people, with nearly 2 million expected to gain access to mobile internet services based on current adoption levels in rural areas, according to GSMA Intelligence.

“This milestone reflects the successful partnership between the Nigerian government, industry stakeholders, and the GSMA, demonstrating how collaborative policy reforms can drive economic development and digital inclusion.

“By advocating for policies that balance affordability with the need for sustained investment in infrastructure, the GSMA has played a critical role in ensuring the benefits of mobile connectivity are accessible to all Nigerians.”

On January 20, the NCC announced its approval of a 50 per cent tariff increase for telecom operators, citing rising operational costs and the necessity to maintain industry sustainability.

In a statement signed by Reuben Muoka, NCC’s Director of Public Affairs, Reuben Muoka, the Commission emphasised that the decision aligns with its regulatory responsibilities under Section 108 of the Nigerian Communications Act, 2003.

However, the National Association of Telecommunications Subscribers has expressed its intention to challenge the approved tariff hike in court.

In a similar development, a document from MTN Nigeria obtained by The PUNCH has revealed that Nigeria’s telecom industry may experience a significant $870m drop in capital expenditures by 2026 as a result of 11 years of delays in tariff increases.

 This decline in investments, which would have been used to expand and upgrade telecom infrastructure such as network coverage, technology upgrades, and the deployment of new services, is largely attributed to tariff hike delays.

The document revealed that in 2022, Nigerian telcos invested $1.41bn in capital expenditure, but this figure dropped to $1.16bn in 2023.

This is expected to fall even further to $0.47bn in 2024. By 2026, the investment is forecasted to remain low at $0.50bn, marking a $0.87bn shortfall compared to the baseline figures from 2022, the document showed.

This 18 per cent decline in planned capital expenditures is primarily driven by the inability of telecom companies to raise tariffs, which are crucial for offsetting operational costs and financing network expansion.