The Nigerian Communications Commission (NCC) has finally approved a 50% tariff hike for telecom services, including calls, SMS, and internet bundles, after 11 years of negotiations with industry stakeholders. While the decision is seen as a step forward in addressing the sector's financial strains, operators say it falls short of their demand for a 100% increase, citing underfunded infrastructure and rising operational costs.

Under the new policy, operators can adjust prices within the established tariff bands of ₦6.40 to ₦50, as outlined in the NCC's 2013 Cost Study. The hike is expected to be rolled out in a week, and subscribers who recharge before the new tariffs are implemented or have ongoing data plans will not experience immediate price hikes unless they make new purchases.

Industry stakeholders, including the Association of Telecommunications Operators of Nigeria (ATCON) and the Association of Licensed Telecommunications Operators of Nigeria (ALTON), have expressed mixed reactions to the tariff hike. While they acknowledge that the adjustment will help bridge the gap between operational costs and revenues, they argue that it does not fully address the broader issues plaguing the sector.

"Tariff adjustment is a step towards bridging the gap between operational costs and revenues, but it does not fully address our need for a 100% increase. However, we understand this is a move in the right direction," said Tony Izuagbe Emoekpere, President of ATCON. "This adjustment will help operators invest in infrastructure, expand coverage, and improve service quality."

According to Gbenga Adebayo, President of ALTON, the tariff increase is just one part of a broader agenda to ensure the sector's sustainability. "Increasing tariffs was only part of the solution. We are grateful for the progress made, but we are taking it one step at a time," he said.

Industry stakeholders believe that addressing problems like multiple taxation, the protection of telecom infrastructure, and uniformity in the right of way for infrastructure are critical to improving service quality. "The focus should not only be on tariffs," said Adebayo. "We need a holistic approach to improve the ecosystem—starting with the protection of telecom infrastructure through proper enforcement of the Critical National Infrastructure gazette."

The tariff hike will help major operators like MTN and Airtel manage their expenses and service debts, as operational costs have surged by 120%. The additional revenue will also be directed toward capital investments to enhance service quality. NCC Executive Vice Chairman Aminu Maida has given operators a three-month window to recover losses, after which the regulator will focus on service quality improvements.

Nigeria's broader economic challenges, including multiple currency devaluations, inflation, and the removal of fuel subsidies, have exacerbated the telecom industry's financial pressures. In the last two decades, Nigeria has experienced four currency devaluations and two economic recessions, all of which have significantly impacted telecom operators' operational costs.

Many operators believe that the long-term solution lies in fully deregulating the telecom sector, allowing prices to be determined by market forces rather than a centralized tariff system. Under the current regulatory framework, the Nigerian Communications Act of 2003 gives the NCC the authority to set price floors and ceilings for telecom services.

Some have proposed an alternative solution: implementing a fixed approval timeline for any tariff hike. For example, operators would have 90 days to submit price changes, and if the NCC does not respond within that period, the proposed price changes would be considered approved.

As the telecom sector navigates this new tariff regime, industry stakeholders will be watching closely to see how it impacts service quality and the overall health of the sector. One thing is clear: the 50% tariff hike is just the beginning of a long journey to address the sector's deep-seated challenges.