New SMS Tariff: Telecom Operators to Lose N222bn
The recent directive by the Nigerian Communications Commission (NCC) on new price cap for domestic off-net short message service (SMS) of N4 (Four Naira) per message from February 5, would translate to a huge loss of over N222billion to the global systems for mobile communications (GSM) and code division multiple access (CDMA) operators, BusinessWorld Intelligence can reveal.
The SMS platform is one of the areas that make the Nigerian market one of the most lucrative markets in the world.The platform is becoming a popular medium through which Nigerian subscribers send and receive messages because it is cheaper than voice calls.
The telecom operators, as gathered, have reduced their short message service to as low as N9 and N10 per SMS from as high as N25, to complement revenues derived from the over 40 billion minute calls of voice traffic on their network annually, together with other value-added services to the over 105 million subscribers in the country. The volume of minute calls which was over 42 billion per annum in 2009, was disclosed to have reduced as more subscribers now resort to the use of short message service which has been made cheaper than voice calls not on any proposition package.
Commenting on the new directive, Mr. Lanre Ajayi, president of the Association of Telecom Companies of Nigeria (Atcon) condemned the control of tariff or prices by the NCC, saying it is not right for the regulator to do that as it is against the principles of liberalisation and fair play. He stated that if NCC wants to reduce tariff, it should increase competition in the sector, licence more operators and create an enabling environment that would ensure that. “NCC should allow competition and market forces to drive tariff and other charges on telecom services and not acting against the principle of liberalisation and business operation,” he maintained.
On the loss that would be incurred by operators, he noted that the primary concern now should be on the principles guiding deregulation which have been negated.
In an interview, Mr. Akinwale Goodluck, corporate service executive, MTN Nigeria, stated that the operators are still looking at the losses and that since the regulator has issued the directive, compliance would not be an issue, as previous instructions have been adhered to.
However, stakeholders in the telecom industry have expressed worries that the new price cap may reduce the pace of network expansion and level of investment on infrastructure by the operators who have incurred much loss from the destruction on telecom base transceiver stations (BTS) in the north-east part of the country late last year and also on those recorded during the flood disaster in the same year.
Association of Licenced Telecom Operators of Nigeria (Alton) had stated that 250 telecom sites were destroyed in September and that the flood disaster damaged 300 base transceiver stations, resulting in a colossal loss of N18.8bn.