Telcos to earn more as NCC raises international calls termination to $0.10

The Nigerian Communications Commission (NCC) says it has increased the international termination rate (ITR) to $0.10 from the current $0.045 for voice services.

ITR is the rate paid to local operators by international operators to terminate calls in Nigeria.

The rate is different from the mobile termination rate (MTR), which is the rate local operators pay to another local operator to terminate calls within the country.

Last year, NCC changed the rate from local currency to dollar to accommodate concerns from industry players over forex discrepancies.

In a statement on Tuesday, Umar Danbatta, executive vice-chairman, NCC, said the new rate would take effect from September 1, 2022.

“We resolved that the commission should further engage with the IDAs and the MNOs to further understand their respective concerns as a basis towards a fair and amicable resolution of the challenges,” the statement quoted Danbatta as saying.

“We had several meetings with IDAs and MNOs, specifically on April 6 and June 21, 2022.

“While the determination had set a floor price of $0.045 and gave the MNOs room to negotiate on commercial terms with carriers, there were related indications that MNOs took advantage of this latitude to engage partners to the detriment of the Nigerian transit/IDA operators.

“To check the incidence of such anti-competitive disposition, it was agreed by all parties at the meetings that a fixed rate should be adopted by the Commission, in place of the floor rate, which had provided a platform for negotiations with various carriers at a rate above the floor. It was further agreed that the present determination should be amended to include this new fixed rate. 

“The position was further underscored by the fact that the floor price of $0.045, while being the lowest rate in Africa, does not support predictability and monitoring, with a little positive impact on a healthy national balance of payment position,” 

The statement added that the committee considered the impact created by the present tax regime on the relative price offerings between the MNOs, other international carriers and the IDAs.

It revealed that while invoices issued to IDAs include a value-added tax (VAT) rate of 7.5 percent, other international carriers will enjoy a relative price advantage over the IDAs.

“It was the consensus of all that taxes and other costs borne exclusively by the IDAs be taken into consideration in arriving at the rate of terminating international in-bound traffic by them,” the statement added. 

“The pricing asymmetry on the ITR will allow local IDA players to accommodate taxes and other related costs in a way that guarantees their competitiveness within the international carrier market and aligns with the subsisting principle and policy on local content.”

NCC further said it would adopt the same method as contained in the subsisting MTR Determination of 2018.

It added that big operators would terminate at N4.70 in the networks of small operators, while small operators should terminate at N3.90 in the networks of big operators, thereby allowing a 21 percent discount to be enjoyed by the IDA operators on all inbound international traffic terminations.