Beyond profit: Telcos navigate economic storm with price adjustments

BY ENIOLA JOHNSON

In a year when inflation soared to a staggering 33.2%, making everyday life more expensive for millions of Nigerians, one sector stood out for its resilience – telecommunications. While the prices of food, fuel, and essential goods skyrocketed, telecom operators kept data and call tariffs largely unchanged throughout 2024, offering a rare financial reprieve for consumers. However, with mounting operational costs and economic instability, the industry is now at a crossroads, forced to make difficult price adjustments to remain sustainable.

For over a decade, Nigeria’s telecommunications sector has been a pillar of connectivity, bridging communities, driving digital transformation, and enabling businesses to thrive. But behind the scenes, telecom operators have struggled against a backdrop of currency devaluation, rising energy costs, and inflationary pressures that have threatened their financial viability.

Despite these challenges, the latest SBM Intelligence report, The Price of Everything 2025, found that telecom providers were among the few industries that did not raise prices in 2024. Data and call rates remained flat, with services such as MTN’s 1.5GB monthly plan (₦1,200), Airtel’s 1.2GB plan (₦1,000), and Glo’s 10GB plan (₦3,000) staying unchanged. Even SMS and voice call rates remained frozen, shielding consumers from further financial strain.

This price stability, however, came at a cost. Telcos have absorbed significant financial losses as a result of Nigeria’s economic downturn, with operators facing rising diesel costs for powering base stations, foreign exchange volatility affecting equipment procurement, and growing taxation burdens.

By the start of 2025, the telecom industry could no longer hold the line. On January 20, 2025, the Nigerian Communications Commission (NCC) approved a 50% tariff increase, marking the first major price adjustment in years. This decision, reached after extensive discussions between telecom operators, regulatory bodies, and consumer advocacy groups, was aimed at ensuring long-term sustainability and improved service quality.

The move, while expected, has sparked mixed reactions. For consumers already grappling with rising food and transport costs, a 50% hike in telecom tariffs is yet another economic burden. However, industry experts argue that the adjustment was long overdue.

“Telecom operators have operated at a loss for too long. The price freeze was no longer sustainable,” the SBM Intelligence report explained. “While consumers will feel the pinch, this adjustment is necessary to keep the industry alive and ensure continued investment in infrastructure.”

The price adjustments in the telecom sector reflect broader economic challenges in Nigeria. Inflation has driven up the cost of virtually everything, from food and housing to fuel and electricity. The removal of fuel subsidies in mid-2023 led to a 70% increase in petrol prices, causing transportation costs to double and sending ripple effects across multiple industries.

For telcos, one of the biggest hurdles remains foreign exchange fluctuations. Much of the telecom industry’s equipment, including network towers, fiber optics, and software, is imported and priced in dollars. The naira’s depreciation against the dollar has significantly increased procurement costs, leaving telecom operators with little choice but to adjust their pricing structure.

According to Ikemesit Effiong, Partner at SBM Intelligence, “As inflation increased steadily within the period under review, rising from 28.92% in 2023 to 34.8% in December 2024, prices experienced a corresponding increase. While it is commendable that telecom operators maintained their prices throughout this period, our findings indicate that they were severely impacted by economic headwinds, exacerbated by unique industry challenges. Although the report does not extend into the current year, the recent approval by the Nigerian Communications Commission (NCC) for a 50% price increase was not surprising, given the sector’s apparent sustainability challenges.”

For the average Nigerian, the cost of staying connected is set to rise. The NCC’s 50% tariff increase means higher bills for data subscriptions, call rates, and broadband services. Streaming services, already affected by inflation, may see an even steeper decline in affordability.

Eniola Johnson is a writer and analyst living in Lagos