Telcos warn of service disruptions amid rising costs, threaten ‘load-shedding’ system like power sector

Key Points:

• Telcos threaten partial service disruptions due to unsustainable operating costs.
• The Nigerian Communications Commission (NCC) resists telcos’ pressure for a tariff increase.
• Subscriber groups caution that service outages could have far-reaching impacts on other sectors.

Telecommunication operators in Nigeria have issued a stark warning that surging operational costs could force them to adopt a “load-shedding” approach—similar to that used in the power sector—resulting in selective service provision across the country.

This comes as the operators struggle to cope with escalating financial pressures, including multiple taxes, rising energy costs, and mounting debts.

However, the Nigerian Communications Commission (NCC) has pushed back against what it perceives as a veiled threat from the telcos to force a tariff hike. The regulator stressed that it would not be coerced into approving price increases, asserting that such tactics are not conducive to resolving the industry’s challenges.

Telcos Consider Load-Shedding Amid Mounting Pressures

Gbenga Adebayo, Chairman of the Association of Licensed Telecom Operators in Nigeria (ALTON), revealed that the telecom sector is at a breaking point, where operators may be unable to maintain services across all their facilities simultaneously.

“We might reach a situation where only parts of our network are operational at any given time,” Adebayo said at an industry event organised by the Financial Derivatives Company (FDC).

This approach, known as load-shedding in the energy sector, could lead to inconsistent telecom services across different regions.

Adebayo lamented that the telecom industry has become a victim of its own success, with government agencies imposing multiple taxes and levies that strain the operators’ finances.

He noted that when telcos entered the Nigerian market in 2001, the government had committed to providing 18 hours of power daily—a promise that remains unfulfilled. Consequently, energy costs now constitute a significant portion of the operators’ operating expenses.

Carl Toriola, CEO of MTN Nigeria, echoed these concerns, highlighting the sector’s dire situation.

“The industry is in an intensive care unit, and without a price adjustment, it risks total collapse,” Toriola warned. He pointed out that the industry has kept prices static for over a decade, despite facing escalating costs and currency devaluation.

NCC Dismisses Telcos’ Tactics as Subscribers Demand Action

In response to these warnings, a source within the NCC accused the telcos of using scare tactics to push for a tariff increase.

The source, according to Vanguard, noted that while the operating environment is challenging, it is not unique to the telecom sector.

“This latest load-shedding threat is simply another strategy to pressure the NCC into approving a tariff hike,” the source said, adding that the regulator would not be swayed by such tactics.

Subscribers, represented by the National Association of Telecom Subscribers (NATCOMS), have also voiced concerns over the potential consequences of service disruptions.

Chief Deolu Ogubanjo, President of NATCOMS, warned that a breakdown in telecom services would have a ripple effect on sectors like banking, education, and healthcare.

“If the telecom sector collapses, other critical sectors will follow,” Ogubanjo cautioned, placing responsibility on the NCC to prevent such an outcome.

Analysis: Balancing Industry Sustainability and Consumer Protection

The current standoff between the telcos and the NCC highlights a deeper issue within Nigeria’s regulatory framework. While the operators are justified in seeking adjustments to reflect the rising cost of doing business, the NCC’s resistance to a tariff hike is rooted in the need to protect consumers from price gouging in a struggling economy.

However, the government’s approach of relying on regulatory control rather than addressing the underlying issues—such as energy supply and infrastructure deficits—may only exacerbate the situation.

The telcos argue that without the flexibility to adjust prices in line with operational realities, their financial viability is at risk. Yet, this argument needs to be balanced against the potential impact on consumers, many of whom are already grappling with economic hardships.

As the telecom sector teeters on the edge of crisis, the government and regulators must find a middle ground that ensures the sustainability of the industry while safeguarding consumer interests. A failure to do so could result in significant disruptions, not just within the telecom sector, but across the broader economy.

Stakeholder Perspectives: Calls for Regulatory Reform

Industry stakeholders and analysts are increasingly siding with the telcos, advocating for a more flexible pricing model that aligns with the realities of the operating environment.

Dr Falade Adesola, a senior lecturer at Trinity University, said pricing autonomy is crucial for the industry’s long-term viability.

“Without a pricing framework that reflects operational costs, the industry risks stagnation and could undermine future advancements,” Adesola warned.

The call for regulatory reform extends beyond pricing. Telcos have long demanded that telecommunications infrastructure be designated as critical national infrastructure, which would protect it from vandalism and other security threats.

Moreover, they argue that the current regulatory model, which has remained static for over a decade, is no longer fit for purpose in a rapidly evolving industry.

As the telecom sector navigates these challenges, the decisions made by the NCC and the broader government will have far-reaching implications—not just for the industry, but for the entire Nigerian economy.

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