Telecom sector targets cost-based rates after N3.99 tariff survives eight-year inflation shock

Nigeria’s telecommunications operators are pushing for a fundamental overhaul of the country’s wholesale pricing framework after mobile termination rates remained unchanged for eight years despite inflation, currency depreciation and rising network costs that have transformed the economics of the industry.

The debate emerged on Tuesday as the Nigerian Communications Commission (NCC) formally launched a comprehensive review of Mobile Termination Rates (MTR), a key wholesale charge paid by one network operator to another when calls terminate across different networks.

The current MTR of N3.90 per minute for established operators and B4.70 for newer entrants has remained in place since 2018, surviving one of the most turbulent economic periods in Nigeria’s recent history. During that period, the naira lost significant value, inflation accelerated, energy costs surged, and operators spent trillions of naira expanding and modernising their networks.

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Industry executives argue that while the NCC’s recent approval of retail tariff adjustments provided temporary relief, a more durable solution is needed.

“The sector should now transition from periodic tariff interventions towards a more predictable, transparent and cost-oriented pricing regime,” Gbenga Adebayo, chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), said at the stakeholder consultation forum in Lagos.

The review comes at a critical time for an industry that has become one of Nigeria’s most important economic sectors. According to industry figures presented at the forum, telecommunications investment has grown from about $500 million when the sector was liberalised in 2001 to more than $75.6 billion today.

As of March 2026, Nigeria had 185.7 million mobile subscribers, 153.15 million internet users and data consumption exceeding 1.42 million terabytes. The sector contributed 8.12 percent to the country’s gross domestic product in the fourth quarter of 2025.

Despite this growth, operators say their cost structures have changed dramatically since the last MTR review. Telecom companies continue to grapple with interest rates above 33 percent, foreign exchange volatility, inflation, rising diesel costs, expensive imported equipment, fibre cuts caused by road construction, vandalism and multiple taxation across different states.

The industry invested approximately N2.13 trillion in capital expenditure in 2025 and plans another N1.86 trillion in spending this year. According to operators, those investments are being directed towards 5G expansion, rural connectivity, cybersecurity upgrades, energy infrastructure and network resilience.

The NCC acknowledged that the communications market of 2026 bears little resemblance to the one that informed the current pricing framework eight years ago.

Speaking at the forum, Nkechi Araka, assistant director, policy competition and economic analysis at the NCC, said the review was necessary because significant technological and economic changes had altered the underlying cost of service delivery.

“The communications market has changed significantly since the last determination in 2018,” she said.

The regulator cited the rollout of 5G networks, the growing influence of internet-based communication platforms such as WhatsApp and other over-the-top services, the emergence of Mobile Virtual Network Operators (MVNOs), and increasing consumer demand for high-quality connectivity as factors reshaping the industry.

Unlike retail tariffs that consumers directly see, MTR is a wholesale pricing mechanism that underpins interconnection among networks. While largely invisible to subscribers, it influences competition, investment decisions, retail pricing and market entry conditions.

The NCC said the review would assess whether existing rates still reflect the true cost of providing termination services and whether the current asymmetric pricing structure, which allows smaller operators to charge higher termination rates, remains appropriate.

The Association of Telecommunications Companies of Nigeria (ATCON) urged the Commission to retain the asymmetric regime for smaller operators with less than 10 percent market share, arguing that such protections remain necessary to sustain competition and encourage market participation.

Tony Izuagbe Emoekpere, president, ATCON, who was represented by Chidi Ibisi, chief marketing officer at BroadBased, also warned that escalating operational costs are placing increasing pressure on operators’ ability to maintain investment levels needed to support Nigeria’s digital economy ambitions.

The review extends beyond voice termination rates and could result in broader changes across the telecommunications landscape.

The study will examine international termination rates, USSD pricing, Application-to-Person (A2P) messaging services, retail voice price controls and wholesale frameworks for MVNOs. It will also assess whether existing interconnection arrangements remain suitable for a market increasingly driven by digital services rather than traditional voice revenues.

Consulting firm KPMG, which is supporting the study, noted that the rise of 5G, artificial intelligence applications, IoT services and digital financial platforms has fundamentally altered network economics. At the same time, internet-based messaging and calling services have continued to erode traditional voice revenues that historically supported interconnection models.

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For regulators, the challenge is balancing operator sustainability with consumer protection.

The NCC said any future determination would be evidence-based and designed to ensure fair competition, support investment and protect consumers from excessive pricing. The Commission plans to collect detailed cost and traffic data from operators before publishing interim findings for industry consultation.

The review could become one of the most consequential regulatory exercises in the sector since the introduction of the current framework in 2018.

Beyond determining whether the N3.90 benchmark should rise, fall or remain unchanged, the exercise will effectively decide how the economics of Nigeria’s telecom industry are shared among network operators, new entrants and consumers in an era increasingly shaped by 5G, digital services and mounting infrastructure costs.

For operators, tariff increases may have eased immediate pressure, but only a cost-reflective wholesale pricing framework can provide the long-term certainty needed to sustain billions of dollars in future network investment.