Telecom Tariff Hike in Nigeria: Balancing Business Sustainability and Consumer Welfare
The recent announcement of a 50% increase in telecom tariffs in Nigeria, raising call costs from ₦11 to ₦16.5 per minute, has sparked widespread concern nationwide. For over 16 years, operators maintained a steady rate despite rising operational costs and economic challenges. While they justify the increment as necessary for sustainability, the impact on low-income earners and Small and Medium Enterprises (SMEs) is far-reaching, raising critical questions about affordability, economic implications, and regulatory oversight.
On January 22, 2025, this writer joined the Morning Television programme “Quest Today” as a guest to dissect the subject, The Economic Impact of the Telecom Tariff Hike on Households and the Fate of Nigerians. During the discussion, the ripple effects of the increase on various segments of the population were analyzed, shedding light on the underlying causes and potential solutions to mitigate the burden.
Telecom operators argue that the hike is long overdue, citing increased operational costs driven by inflation, fluctuating foreign exchange rates, and the high energy cost. With over 90% of telecom infrastructure powered by diesel generators in a country with unreliable grid power supply, operators face significant financial strain. The sector’s dependence on imported equipment, compounded by naira depreciation, has further escalated costs. Despite these challenges, telecom companies have maintained low tariffs to remain competitive, a model they now deem unsustainable.
For low-income earners, the increase represents another blow to their already strained finances. Nigeria’s poverty rate, estimated at over 40%, means millions of citizens rely on affordable telecom services for communication, access to information, and financial inclusion through mobile banking. The additional cost could force many to limit call durations, leading to reduced connectivity and potentially exacerbating social inequalities.
The Main Telecom Operators in Nigeria
SMEs, which form the backbone of Nigeria’s economy, are also at risk. Small businesses depend heavily on affordable telecom services to reach customers, negotiate deals, and manage operations. The increased tariff could lead to higher operating expenses, reduced profit margins, and, in some cases, business closures. This comes at a time when many SMEs are still recovering from the economic disruptions caused by the COVID-19 pandemic and subsequent economic policies.
Regulatory bodies like the Nigerian Communications Commission (NCC) have a critical role in safeguarding consumer interests. While the increase may be justified from a business perspective, the NCC must ensure transparency in how the rates were determined and implement measures to prevent excessive profiteering. This includes monitoring service quality to ensure that the higher costs correspond to improved consumer experiences. The Consumer Protection Commission (CPC), on its part, should ensure that telecom operators adhere to fair practices, addressing complaints promptly and enforcing penalties for violations.
The government has promised to explore measures to cushion the effects of the increase on Nigerians, including promoting competition in the telecom sector to drive down costs and enhance service quality. Subsidies for critical telecom infrastructure, particularly energy solutions like solar power, could also reduce operators’ dependence on expensive diesel. These interventions must be swift and targeted to prevent further erosion of consumer purchasing power.
From a business perspective, the tariff increment is seen as a necessary step to sustain operations, but operators must tread carefully to retain customer loyalty. Offering alternative packages tailored to low-income users, such as discounted night calls or data bundles, could help mitigate the impact. Loyalty programs, transparent communication, and visible reinvestment into infrastructure and service quality could also reassure consumers that the increase is justified.
The hike also raises questions about Nigeria’s broader economic policies. High inflation, a weakening currency, and inconsistent energy supply have made business operations more expensive across all sectors. Addressing these systemic issues is key to reducing the financial burden on telecom operators and, by extension, consumers. The government must prioritize economic stability, as a healthy business environment benefits everyone.
Consumer behavior in response to the increase will largely depend on perceived value. If the higher tariffs result in better network coverage, faster internet speeds, and reduced call drop rates, consumers may be more willing to adapt. Conversely, if service quality remains unchanged, the backlash could include reduced patronage and increased migration to alternative communication platforms like internet-based calling apps.
In conclusion, the telecom tariff increase underscores the delicate balance between business sustainability and consumer welfare. While the operators’ reasons for the hike are understandable, its social and economic implications cannot be ignored. A collaborative approach involving operators, regulators, and the government is essential to minimize the negative impact on consumers. For operators, retaining customer trust through transparency and value-driven initiatives is vital. For the government and regulators, proactive policies and oversight will ensure that Nigeria’s telecom sector remains inclusive, competitive, and consumer-friendly.
Emmanuel Enebeli, Anipr, CEO, Entrepreneur, Public Relations and Media Strategist, Environmental Advocate. Email: enebelli@hotmail.com, Phone: +234 (806) 331 9057
