Consumers squeezed as telcos hike data costs

The cost of living for cash-strapped Nigerians who are already grappling with rising prices may intensify as a result of recent hike in internet prices, analysts say

Earlier in the month, MTN Nigeria Communications and Airtel Africa Plc, top telecommunications companies (telcos) increased the prices for their data bundles to about 10 percent.

The price hike is a result of the high cost of diesel (used to provide electricity for their operations) which has increased by over 100 percent since March 2022 and the high volatility in the foreign exchange rate market.

Even before the hike in internet prices, the cost of living was already high for consumers because everything is expensive, says Benedict Egwuchukwu, a telecommunication analyst at Afrinvest Limited.

“So, this is just going to increase it further for them, causing core inflation numbers to increase,” Egwuchukwu said.

A further analysis of the monthly data plan bundles across the telcos shows that for MTN, a 1.5 Gigabyte (GB) data now costs N1,100 from N1,000 and 20GB data is now N5,500 from N5,000.

For Airtel, it costs N1, 100 for 1.5GB monthly data from N1000, N2, 200 for 4.5GB from N2, 000 and N4, 400 for 11GB from N4, 000.

“Why did MTN hike their data prices? About 10 percent price increase on each plan,” a Twitter user @DamilareJibunoh tweeted via his handle.

Another twitter user, @ayinkesteph also tweeted that the price increase is not fair. “We’ve got no value for what we are paying so much for.”

Over the past six years, Nigeria’s social economic indicators such as inflation, unemployment, insecurity, amongst others have worsened.

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Data from the National Bureau of Statistics (NBS) shows that the country’s inflation rate is currently at 20.5 percent as at August 2022, one of the highest in Africa, while the unemployment rate stands at 33.3 percent in the fourth quarter of 2020. These economic hardships have affected peoples’ standard of living, making them poorer daily.

Experts warn that the increase in internet prices might affect Nigeria ranking in the data affordability index as telecom companies offer some of the cheapest mobile data subscription rates in Africa.

According to Cable, a UK-based price comparison, the country Nigeria ranks fourth in Africa, with an average price of $0.71 for one GB.

In an August report, the Alliance for Affordable Internet (A4AI), a global coalition working to drive down the cost of internet access, said the prices of smartphones remained unaffordable for many people, especially women and people living in rural areas.

Smartphones became even more unaffordable over the last year, despite dropping two percent points between 2021 and 2022.

“If more people around the world, and especially where it is less common, in LDCs, sub-Saharan Africa, and South Asia, had access to smartphones, these economies could see a boost in their economic growth,” researchers at A4AI said.

In August, broadband penetration in Nigeria increased by 1.1 million to about 85 million. While this represents a higher penetration rate of 44.7 percent compared with the 41 percent recorded in the previous year, the penetration rate is still below the 45.9 percent recorded in October 2020.

Operators such as MTN Nigeria with 42 percent internet subscribers in August accounted for the largest share. Globacom, Airtel, and 9Mobile were responsible for 28 percent, 27 percent, and three percent of internet subscribers respectively.

According to data from the International Telecommunication Union (ITU), the mobile broadband penetration rates for South Africa, Egypt, and Kenya are roughly 116 percent, 77 percent, and 54 percent respectively.