Nigerian mobile operators have agreed to channel the revenue from the proposed 100 per cent tariff increase into major network infrastructure upgrades and service quality.

This is a major condition for the telcos as they await final approval for the tariff hike, following discussions with the government and the Nigerian Communications Commission.

As part of the agreement, the country’s telecom regulator will oversee the implementation of these investments to ensure that telecom companies comply with the requirements.

MTN Nigeria’s Chief Executive Officer, Dr. Karl Toriola, made these revelations in a column published in BusinessDay on Monday.

Mobile operators have been facing a tough operating environment recently, a situation largely driven by macroeconomic conditions such as naira-to-dollar volatility and inflation, which is currently pegged at 34 per cent.

Running costs, according to the operators, have surged by over 300 per cent in the last 18 to 24 months, making tariff adjustments necessary for the long-term sustainability of the telecom sector.

These have led to operators becoming reluctant to invest more in infrastructure as they continue to contend with a tough economic environment.

As a result, telcos are seeking a 100 per cent tariff increase, a proposal that has enraged subscribers, who have threatened legal action should the NCC approve it.

The telecom executive, overseeing almost 70 million subscribers, agreed that the tariff increase would be capped, ensuring it remains significantly lower than price hikes in other sectors, such as energy and oil.

“The discussions between the industry and government have been deliberate and focused on finding the right balance while aligning with pricing in other markets.

“It is why the proposed tariff increases will surely be capped, and definitely much lower than the price increases that have been imposed in other sectors like power/energy and oil, and ensuring that prices remain below our contemporaries.

“So not only will increases be capped well below the levels the industry has requested, but they are linked to a requirement to invest in network upgrades and service improvements, which will be overseen by the NCC to ensure compliance,” Toriola wrote in the column.

Foreign investments in the sector fell sharply to $14.4m in the third quarter of 2024, marking an 87 per cent decline from the $113.42m recorded in the second quarter.

The decline signalled a significant downtrend for the sector, which has been grappling with infrastructure deficits and high operating costs despite its growth potential.

Further, Toriola emphasised that the balance between tariff increases and investment commitments will not only provide the telecom industry with the confidence to invest but also create a clear pathway to sustainability.

The telecom chief noted that higher prices would lead to better networks, more relevant services, and an improved customer experience, all of which will foster growth.

Toriola highlighted the potential of Nigeria’s digital economy, stating that while it has made significant progress over the past decade, it is still in the early stages of development.

He commended the government’s decision to establish a sustainable tariff regime, calling it both brave and necessary to ensure continued growth in the digital economy.

“We have demonstrated our long-term commitment to Nigeria many times,” Toriola said. “We believed when no one else did. We continue to believe, and we are committed to partnering with Nigeria and Nigerians to continue investing based on that belief.”

The Chief Executive Officer of Airtel Nigeria, Dinesh Balsingh said the proposed tariff adjustments aim to ensure the sector’s sustainability while delivering significant benefits for Nigerian consumers.

“For over a decade, tariffs have remained static despite the dramatic increase in operating expenses, which have surged by over 300 per cent in the last 18 to 24 months alone.

“To continue providing high-quality services and meeting the growing demand for digital connectivity, it has become essential to realign our pricing structure with economic realities,” Balsingh said in a note shared with The PUNCH.