Nigeria Telecommunication Services Under Threat Over Cost Of Maintenance

The price of calls, data, and other telecommunication services are under threat as the cost of powering communication networks may rise to N38bn in August following the increase of diesel to N950/litre.

According to oil marketers recently, the cost of Automotive Gas Oil (diesel), will rise to between N900 and N950 because of the current foreign exchange crisis and the recent implementation of a 7.5 per cent Value Added Tax on the commodity.

Prior to the implantation of VAT on diesel, it retailed for N650/litre, the Natural Oil and Gas Suppliers Association of Nigeria said.

The President, NOGASA, Benneth Korie, said, “Diesel price is now approaching N900 to N950/litre depending on where you are buying it from. Before the introduction of VAT on diesel by the FIRS, diesel was around N650/litre.

“This increase in price is also due to the scarcity of the dollars. The government has to intervene in this dollar situation. All banks’ CEOs, Central Bank of Nigeria and others must meet to address this dollar issue. The way it is going, it will destroy a lot of things for us, if it is not controlled.”

The telecom industry is one of the largest users of diesel in the country because of the number of base stations that it needs to power up to keep communication running.

According to experts, telcos use about 40 million litres of diesel per month to power telecom sites.

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As of the end of 2022, the Nigerian Communications Commission revealed that there were 127,294 base stations in the country.

Each base station has two diesel-powered generators, according to experts in the industry.

The increase to N900 – N950 per litre of diesel implies that operators’ operational costs will jump to between N36bn – N38bn per month.

This is may impact the costs of telecom services as operators have at different times bemoaned the effects of the high cost of diesel on their services.

In the recently released ‘State of the Industry’ report, the Nigerian Communications Commission revealed that the operating costs of operators of the telecoms sector jumped by 21.64 per cent in 2022 to N2.09tn from N1.72tn as of the end of 2021.

In 2022, the Association of Licensed Telecommunications Operators of Nigeria wrote to the NCC requesting a tariff hike following a 40 per cent increase in the cost of doing business in the country.

It stated that the increase in energy costs contributed 35 per cent to the increase in its operating costs.