January 13, (THEWILL) – An inevitable fallout from the recently approved telecommunications (telecom) tariff hike is price increase and additional tax burden it would impose on the people. The federal government last week approved a tariff hike in the telecom sector, signalling an imminent increase in the cost of calls, data bundles, and SMS services for consumers which would have its ripple effects.
This decision follows the government’s commissioning of a study to evaluate the telecom sector’s financial needs and the potential impact of tariff adjustments on consumers.
Although the exact tariff increase was not officially disclosed, there are reports that the new rate would slam at least a 40 percent hike on the existing price of services being offered by the telecom companies.
At a stakeholder forum in Abuja, the Minister of Communications, Innovation, and Digital Economy, Bosun Tijani announced the government’s decision to approve the tariff adjustment, emphasising that the hike would not reach the 100 percent increase requested by service providers.
“Tariff will go up. That’s the verdict,” Tijani stated. “But it won’t be by 100 percent. We need regulations that ensure the sector’s growth, job creation, and support for other key sectors while safeguarding Nigerians from excessive financial burdens.”
This development would consequently lead to increased costs and deepen the financial strain on consumers already grappling with soaring inflation currently at 39.93 percent.
The tariff hike underscores the government’s broader goal of fostering a sustainable and innovative telecom sector capable of supporting Nigeria’s digital economy.
However, it raises questions about affordability for consumers, particularly in a nation where connectivity remains a critical driver of economic and social inclusion.
Already telecom services – calls, data, SMS, attract a 7.5 percent Value Added Tax (VAT), this will reflect in the upward tariff adjustment with consumers paying more. Also, the planned increase in VAT contained in the proposed Tax Reform Bills presently being reviewed by the National Assembly will eventually be passed to the consumers.
In effect, enterprises that rely majorly on telecom services such as those into e-businesses – publishing, healthcare, education, and others, will operate cost-reflective tariffs which would entail price increases that would eat into the pockets of already impoverished citizens.
According to reports, the new tariffs being considered for approval by the NCC include calls from ₦11 to ₦15.40 per minute (a 40% increase), SMS (₦4 to ₦5.60; a 40% increase), and data (1GB bundle will rise from ₦1,000 to at least ₦1,400).
Telecom operators argue that these increases are necessary to cover rising operational costs. However, for millions of Nigerians, these hikes may further strain already tight household budgets.
“This tariff adjustment will affect businesses even at the SME level. Private educational institutions, healthcare services, POS and business centre operators will have to increase their charges to remain afloat. This will mean paying more by the consumers resulting in dwindling patronage,” said Mike Akamiokor, a Lagos-based engineering services proprietor.
On the flipside, the development would entail imposing more levies on bank customers as the financial services institutions screw them through the Electronic Money Transfer Levy which accrues from the use of e-banking services with the telecom companies as the enablers.
Recent analysis of the monthly FAAC reports in the past one year (January – November 2024) showed that total allocation to the three tiers of government (federal, state and local government) rose by N1.37 trillion from N14.60 trillion in November 2023 to N19.94 trillion in November 2024, constituting a 36.5 percent increase.
The increase derived from the upward trajectory during which the three tiers of government benefited from the high figures recorded by the various revenue agencies.
For instance, revenue from the Value Added Tax (VAT) rose by N2.8 billion from N2.5 billion to N5.4 billion in November 2023 and 2024 respectively. This represents an increase of 109.2 percent during the review period.
Furthermore, revenue from the Electronic Money Transfer Levy (EMTL) introduced in the Finance Act of 2022, dropped to N171.3 billion in 2024 from N314.4 billion in the previous year due to the accumulated January – August 2022 figures captured in 2023.
Following the trend, the states and the local governments witnessed huge revenue increase of 42.5 percent and 38.2 percent, from N3.2 trillion to N4.6 trillion; and N2.3 trillion and N3.2 trillion respectively.
Further analysis of the reports revealed that the highest allocation in 2024 was recorded in February when the three tiers of government shared N2.33 trillion, while the least amount of N1.20 trillion was shared in
July
In the case of 2023, the highest amount was recorded in June when the FAAC allocation for the three tiers of government was N1.89 trillion, while the least — N860.04 billion, was shared in February of that year.
THEWILL reports that the strong regulation by the Nigerian Communications Commission (NCC) over the telecoms industry has created the environment for expanded revenue opportunities by government, banks and operators.
The various windows of taxes, levies and service charges became imperative as the increasing reliance on mobile phones, internet services and other connectivity makes it imperative to ensure that the industry operates within regulatory frameworks that promote efficiency, competition and environmental sustainability.
Earlier findings by THEWILL revealed that the Federation Accounts Allocation Committee (FAAC) rose by N4 trillion to N15.7 trillion or 34 percent in 2022 over the N11.7 trillion cumulatively shared by the three tiers of government in the previous year – 2021.
Components of the figure include the Value Added Tax (VAT) which rose to N3.3 trillion in 2022 against N2.4 trillion recorded in 2021 part of which was realised from the telecoms sector.
The Electronic Money Transfer Levy (EMTL) introduced by the Finance Act of 2022, boosted the revenue of the government significantly from mere N11.4 billion in 2021, to N394.7 billion in 2022, representing a 3,353 percent jump.
This service relies largely on the functional output of the telecoms operators who provide the enabling platform for the transactions to thrive.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
