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Telecom Operators Moan as Diesel Cost Rises by 233% to N30 Billion Monthly

Telecom Operators Moan as Diesel Expenses Rise by 233% to N30 Billion Monthly

According to analysis and computation of data from Nigerian telecom operators, the cost of powering telecommunication services with Diesel has jumped by at least 233.33 percent in recent months to N30bn monthly.

The development brings the annual cost of powering telecoms services with Diesel to N360bn.

The Association of Licensed Telecoms Operators of Nigeria (ALTON) said the cost of Diesel, which is required to power network towers, base stations, and offices, rose from N225 in January 2022 to over N750 in March 2022.

They stated this in a letter written to the Nigerian Communications Communication (NCC), a copy of which was sighted by our correspondent.

The letter read in part, “The telecommunication industry has been heavily financially impacted following Nigeria’s economic recession in 2020 and the effect of the ongoing Ukraine/Russia crisis. It has increased energy costs (an appreciable 35 percent of ALTON’s members’ operating expenses).

“Consequently, the cost of diesel required to power operators’ towers, base stations, and offices rose by a staggering 233 per cent from N225 per litre in January 2022 to over N750 per litre in March 2022.”

According to industry data, mobile telecommunication operators use an average of 40 million liters of Diesel per month to power telecom sites. Going by the diesel consumption figure and the current price of Diesel, the cost of powering telecoms services will be about N30bn monthly and N360bn annually.

In its ‘2020 Subscriber/Network Data Report,’ the NCC said there were a total of 33,832 towers belonging to mobile and fixed operators and collocation and infrastructure companies as of 2020. It, however, added that operators had a total of 36,998 base stations at the end of the year.

According to ALTON, energy costs account for 35 percent of telecom operators’ operating expenses.

Click To Read: Telecom Operators May Review Tariff Upward

The telecom operators said the ongoing crisis in Ukraine/Russia had contributed largely to this increase, which was negatively impacting the telecom industry. This, among other things, is a major reason telecom operators are pushing for a 40 percent upward review in the cost of calls, SMS, and data.

ALTON said, “Given the state of the economy and the circa 40 percent increase in the cost of doing business, we wish to request for an interim administrative review of the Mobile (Voice) Termination Rate for Voice; Administrative Data floor price and cost of SMS as reflected in extant instruments.

As a result of the development, the umbrella body for telcos is pushing to increase the floor price of calls from N6.4 to N8.95 and the price cap of SMS from N4 to N5.61.

Recently, the ALTON Chairman, Mr. Gbenga Adebayo, disclosed that the telecom industry was one of the largest consumers of Diesel in the country. He said telcos base their network planning, operational expense, and projection plans on diesel prices. Also, there is a need for an intervention to save the sector, or operators might have no other choice but to start a price review process.

He said, “Diesel is now very expensive, from N250 to over N700. All network planning, operational expenses, and planned projections for the year are based on the diesel prices. This has increased. Today, you know the implication of that. This is one problem; cost has gone up.”

About Bukola Olanrewaju

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