Telecom operators in Nigeria are advocating for a tariff increase in 2025 as a crucial step to maintain the sustainability of their services amidst growing economic challenges. The telecom sector, long regarded as a cornerstone of Nigeria’s economy, has been pivotal in driving GDP growth and fostering the nation’s digital economy, particularly during times of economic instability like the 2020 recession.
Despite its resilience, the sector faced significant turbulence in 2024, with operators grappling with economic pressures, record losses, and disruptions like subsea cable cuts that affected internet connectivity across Nigeria and West Africa. Experts predict that tariff adjustments, renewable energy initiatives, satellite partnerships, and fibre expansion projects will shape the sector’s trajectory in 2025.
Tariff Increases as a Lifeline
At a December 2024 stakeholder meeting, telecom operators warned of potential service disruptions in 2025 if tariffs are not reviewed upward. For over a decade, operators have pushed for tariff adjustments to reflect the economic realities of providing services.
Gbenga Adebayo, Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), emphasized the urgent need for intervention:
“If nothing is done, we may see grim consequences, such as service shedding. Operators might struggle to provide services in some areas, leaving millions disconnected,” he said.
Adebayo noted that resources required to maintain and modernize telecom networks have dwindled, threatening the industry’s sustainability. Echoing this concern, MTN Nigeria CEO Karl Toriola stated, “There should be no delusion; if tariffs don’t go up, we will shut down.”
Minister of Communications, Innovation, and Digital Economy, Bosun Tijani, acknowledged the necessity for price adjustments, though the government remains cautious about the impact on Nigerians already facing financial stress.
“We appreciate the hardships Nigerians face today. Any tariff hike must be measured and accompanied by sustainable partnerships with the government,” Adebayo added.
Reducing Costs Through Renewable Energy
Energy costs continue to be one of the largest burdens for the telecom sector, with diesel accounting for 35% of operating expenses. Airtel Nigeria, for instance, spent ₦28 billion on diesel by May 2024 alone.
To address this, operators are increasingly transitioning to renewable energy sources such as solar, lithium batteries, compressed natural gas (CNG), and liquefied petroleum gas (LPG). Renegotiated tower contracts with infrastructure providers like ATC and IHS are projected to save MTN Nigeria between ₦100 billion and ₦110 billion in 2025, significantly easing operational costs.
Expanding Access with Satellite Partnerships and Fibre Projects
Operators are partnering with satellite providers to extend high-speed internet to rural areas where traditional infrastructure is impractical. Collaborations include Airtel Nigeria’s partnership with Eutelsat OneWeb and MTN’s trials with Starlink, Omnispace, and AST SpaceMobile.
These initiatives align with the government’s plan to increase telecom access in rural areas to 80% by 2027. Additionally, efforts to expand the country’s fibre optic network are underway, with plans to increase coverage from 35,000 km to 125,000 km by 2027 through a $2 billion special-purpose vehicle (SPV).
Challenges: Record Losses and Subscriber Decline
The financial struggles of telecom operators persisted throughout 2024. MTN reported its first-ever loss of ₦137 billion in 2023, while Airtel Africa recorded an $89 million loss in 2024, driven primarily by operations in Nigeria.
Subscriber figures also plummeted after the government enforced the SIM-NIN linkage policy, which caused disruptions and led to the loss of 64.37 million active subscriptions between March and September 2024. Glo was notably found to have inflated its subscriber numbers by 40 million, according to an NCC audit.
Cable Cuts and Infrastructure Damage
Subsea cable cuts in March 2024 disrupted internet services across Nigeria and West Africa, resulting in $23 million in losses for the sector. Daily terrestrial fibre cuts further compounded these issues, with operators like Airtel reporting an average of 43 incidents daily.
To combat infrastructure damage, the Federal Government enacted the Designation and Protection of Critical National Information Infrastructure Order, 2024, imposing a 10-year jail term for those caught vandalizing telecom infrastructure.
Shifting Consumer Trends: Data Over Voice
The growing adoption of smartphones drove a 30% year-on-year increase in data usage in 2024, reaching 870,398.28 terabytes by October. Data revenue now surpasses voice revenue for major operators, with MTN earning ₦1.14 trillion from data compared to ₦949.43 billion from voice services in the first nine months of 2024. Airtel’s data revenue ($229 million) similarly outpaced voice earnings ($209 million).
Outlook for 2025
The telecom sector enters 2025 at a critical juncture. While a tariff hike appears inevitable, the government and industry players are carefully weighing its impact on the public. With renewable energy adoption, satellite partnerships, and fibre expansion projects in motion, the sector is poised for transformation.
A telecom executive summed up the outlook: “The challenges are significant, but we believe the necessary adjustments will be made to ensure the sector remains viable.”
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