NCC: Telcos’ Operating Expenses Rise by 50.92%.

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Nigeria’s telecommunications industry faced significant financial pressures in 2023, with operating costs surging by 50.92% to N3.16 trillion, up from N2.09 trillion in 2022. This increase reflects the challenges faced by telecom operators in maintaining network operations amid rising inflation and currency depreciation.

According to the Nigerian Communications Commission’s (NCC) 2023 Year-End Performance Report, the industry’s revenue grew by 37.54% to N5.30 trillion, driven by increasing demand for voice and data services. The report highlighted that GSM operators remained the primary contributors to the industry’s financial performance, accounting for N2.52 trillion in operating costs and N4.01 trillion in revenue.

Capital expenditure in the sector rose by 26.06%, with operators investing N990.55 billion in 2023, compared to N785.77 billion in 2022. This increase demonstrates the sector’s commitment to enhancing infrastructure, including deploying 5G networks and expanding broadband services.

Despite these achievements, broadband penetration slightly declined from 47.36% in 2022 to 43.71% in 2023, due to adjustments in population figures used for calculations. However, active broadband subscriptions increased to 94.76 million, aligning with the national broadband target of 70% penetration by 2025.

The sharp rise in operating costs was attributed to a combination of factors, including energy costs, inflation, and the depreciation of the naira. Operators also increased investments in service quality, bandwidth, and capacity to meet the surging demand for data.

The sector’s resilience was evident in its contribution to the economy, with the telecom industry accounting for 14% of Nigeria’s Gross Domestic Product in the fourth quarter of 2023. Active voice subscriptions increased marginally by 0.96% to 224.71 million, while internet subscriptions grew by 5.81% to 163.84 million.

In response to the increasing operational costs, the NCC recently approved a 50% tariff adjustment for telecommunications operators. The decision was made under the NCC’s regulatory powers as stipulated in Section 108 of the Nigerian Communications Act, 2003. The approved adjustment falls significantly below the over 100% increase initially requested by some network operators.

The NCC stated that the decision was carefully calibrated to balance the rising costs faced by operators with the need to protect consumers from excessive price hikes. The adjustment will adhere strictly to the tariff bands outlined in the NCC’s 2013 Cost Study and the newly issued Guidance on Tariff Simplification, 2024.

According to a statement by the NCC’s Director of Public Affairs, Reuben Muoka, the decision was made to ensure that the telecommunications industry remains sustainable and able to deliver world-class services to Nigerians. The NCC will continue to monitor the industry’s performance and make adjustments as necessary to ensure that the interests of both operators and consumers are protected.

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