Tariff hike: Telcos urged to embrace IPOs for financial relief

The National Association of Telecommunications Subscribers has called on telecom operators to explore capital market funding instead of implementing a proposed tariff hike of up to 100 per cent.

Citing the financial strain such increases would impose on consumers, NATCOMS President Adeolu Ogunbanjo described capital market options, such as Initial Public Offerings, as more sustainable solutions for addressing rising operational costs.

He argued that these measures would prevent burdening subscribers, especially low-income users.

Ogunbanjo pointed to MTN Nigeria’s successful stock market listing as a model, urging other operators, including Glo and Airtel, to consider similar approaches.

He said, “They can go to the capital market to raise funds. Nigerians will buy their shares, and I am confident it will be oversubscribed. MTN has already done this successfully; other operators like Glo and Airtel should follow suit.”

An IPO, which involves a company offering its shares to the public for the first time through the stock exchange, allows firms to raise capital by selling ownership stakes to investors.

Ogunbanjo noted that funds raised this way could help telecom companies finance infrastructure upgrades, regulatory compliance, and technology investments without resorting to tariff increases.

Earlier, NATCOMS issued a note shared with The PUNCH, where they criticised the Nigerian Communications Commission for its consideration of the tariff hike, calling it “insensitive” and “not in the interest of telecom services consumers.”

The association pointed out that the rising costs of goods and services have already made life difficult for Nigerians, adding that further increases in telecom charges would add to the financial strain.

The group expressed concern that the proposed tariff hike, which would double the cost of services such as voice calls, SMS, and data bundles, would exacerbate the difficulties faced by consumers.

NATCOMS also warned that if the controversial tax bills are approved, telecom services could face a 12.5 per cent tax rate, which could lead to “two-thirds of telecom services subscribers being priced out of the market.”

The telecom sector is dealing with unpredictable challenges stemming from currency devaluation, skyrocketing diesel prices, and the escalating cost of power generation.

“The valuation of the currency has drastically changed, with official exchange rates moving from about N450 to over N1,550 per dollar. This has significantly increased our cost structures,” the Chief Executive Officer of MTN Nigeria, Karl Toriola, said on Arise TV last week.

According to him, diesel prices have surged from N200-300 per litre before the COVID-19 pandemic to over N1,000 per litre, while other essential inputs, such as fibre cables, batteries, and base stations, have also experienced steep price hikes.

“We’re not even talking about profitability; we’re talking about sustainability. The entire ecosystem, including suppliers and other stakeholders, is facing the same pressures,” he added.

The Chairman of the Association of Telecommunications Companies of Nigeria, in an interview with The PUNCH, raised the alarm over the potential consequences of delaying a tariff review, warning that failure to implement timely changes could lead to widespread service disruptions and declining quality of service.

“There should be a timeline, and that means everything should happen in the first quarter of 2025,” said Emoekpere.