Telecom tariff hike, rebound of 9mobile, infrastructure expansion and boost in 5G adoption are expected to shape the industry this year, Lucas Ajanaku reports.
In the second quarter of last year, the Information and Communications Technology (ICT) sector contributed 19.78per cent to Nigeria’s real Gross Domestic Product (GDP). However, in Q3, the ICT sector’s contribution to GDP dipped to 16.35 per cent as the economy responded to the various macro-economic therapies.
According to reports, the Nigeria ICT market size is expected to reach $32.83 billion this year and grow at a compound aggregate growth rate (CAGR) of 18.32per cent to reach $76.14 billion by 2030.
Of the $32.83billion, the Federal Government has projected to generate up to $18.3billion by next year. And efforts to hit the target must start this year.
And part of the pathways to achieving the goals transforming the economy through ICT is rooted in the Ministry of Communications and Digital Economy’s National Digital Economy and e-Government Bill which it said would create an enabling environment for fair competition to promote innovation, growth and competitiveness in the economy.
The bill, which aims to provide a legal framework for the development and regulation of the digital economy, was read for the first time on the floor of the House of Representatives last year.
Speaking at the first National Digital Economy with e-Governance stakeholders’ engagement in Abuja, Dr Bosun Tijani said: “I hope this will be the first bill that travels across the entire country.”
Tijani said for those who followed the growth and trajectory of Nigeria’s economy, “You probably know that the ICT sector contributes huge to our GDP. We can compare it to agriculture, transportation or to whatever you think, but this sector is the backbone of any country today.”
The ICT sector, and particularly the telecom sector, has become the chicken that lays the golden eggs for the economy.
Association of Licensed Telecom Operators of Nigeria (ALTON) Chairman, Gbenga Adebayo, said the sector has become an enabler to other sectors, including government, national security architecture, e-government, financial services and many more, warning of the inherent dangers of killing the proverbial chicken that lays the golden eggs for all.
The sector is beset with a myriad of challenges ranging from dearth of infrastructure policy reforms, which will galvanise the youthful populace to take advantage of the digital ecosystem to thrive as opportunities to get paid employment in conventional space shrink.
Nearly two-thirds of Nigeria’s population is under 25 according to the United Nations Population Fund, making the country one of the youngest countries in the globe.
Tariff hike debate
One of the issues that have occupied public conversations in the telecom sector is the need to allow a regime of end user tariffs which the CEO of 9mobile, Obafemi Banigbe, said is cost-reflective.
Adebayo outlined the true picture of the telecoms business during his remarks at the organisation’s end-of-year dinner.
Adebayo cautioned: “If nothing is done, we might begin to see grim outcomes, such as service shedding. Operators may not be able to provide services in certain areas or during some times of the day, leaving millions of Nigerians disconnected.
“The economic fallout will be significant, with businesses suffering from a lack of connectivity, stalling growth and innovation. Key sectors like security, commerce, healthcare, and education, which rely heavily on telecom infrastructure, will face serious disruptions.
“This is not a time for further deliberation or delayed decisions. The survival of the telecom sector demands immediate and bold reform for its sustainability.
“Our tariffs must be reviewed to reflect the economic realities of delivering telecom services at a minimum for industry sustainability. Without this, operators cannot continue to guarantee service availability.
“We are in the last days for the survival of this sector, and if immediate and decisive action is not taken, the hope for a better 2025 will remain just that—a hope.”
Last year, MTN Nigeria CEO Karl Toriola, said the telecom sector was on the intensive care unit (ICU), gasping for breath, warning that if nothing was done to salvage it, it will die the way NITEL died.
And about a week ago, he appeared on a television station to address the sector’s challenges, also calling for an urgent review of tariffs. He demanded a 100 per cent hike.
Adebayo also said the challenges confronting the sector business are not new, but have become more serious in the last year.
Rising operational costs, increasing energy prices, inflationary pressures, and changing exchange rates have all created an unsustainable pressure on businesses, he had argued.
“Despite these mounting pressures, tariffs have remained stagnant, leaving operators trapped in a financial quagmire. The resources needed to maintain, expand, and modernise our networks are simply no longer available. Without intervention, the future of this sector is at grave risk,” Adebayo said.
CEO, 9mobile, Obafemi Banigbe as well as the CEO, Airtel Nigeria, Dinesh Balsingh, added the voices to the conversation.
Banigbe said: So I would not necessarily focus on what percentage is better, whether it’s 100per cent or whether it is 30 or 40 or 60 or 70 per cent. The most important thing is that we need to look at the pricing regime where we are in. We know that our market is regulated. So because our market is regulated, we need to start thinking around the whole concept of market-reflective tariff, which is reflecting the realities on the ground, which will balance the need for sustainability and with the concern for affordability that our customers out there are concerned about.
“So, affordability will then remain a concern in defining how we put up a price point that is market-reflective, that is also able to allow us to generate enough cash flow to cover our costs and to reinvest in the business. So, from the policymaker point of view as well, I’m sure they are also considering the concept, the whole idea of affordability. And I’m sure that’s one of the reasons why government has really dragged its foot in being able to address this whole conversation around tariff increase.”
Balsingh said the adjustments will directly enhance the quality of connectivity for Nigerians, saying the focus is to ensure that no one is left behind in the country’s digital transformation journey.
He said the tariff hike is in response to the economic realities of rising operational and capital costs, saying the proposed tariff adjustments aim to ensure the long-term sustainability of the sector while unlocking significant benefits for 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.
“By enabling us to expand coverage, strengthen network security, and introduce cutting-edge technologies, the adjustments will directly enhance the quality of connectivity for Nigerians. Our priority is to ensure that no one is left behind in the country’s digital transformation journey.
“The increasing demand for digital services across sectors such as education, banking, and healthcare requires us to continually upgrade our networks to deliver more capacity and improve service quality. These investments come at a cost, one that must be shared proportionally to guarantee long-term viability.”
The tariff adjustments will not only ensure the sector’s sustainability but also bring significant improvements to service delivery.
Balsingh emphasized that these adjustments will be implemented with affordability in mind, ensuring minimal impact on consumers. The company remains steadfast in its commitment to supporting Nigeria’s vision of becoming a digital economy leader in Africa, empowering businesses, driving innovation, and fostering inclusive growth.
“Our commitment to quality service remains unwavering. While significant tariff adjustments have become necessary, we understand the importance of gradual implementation to support our customers’ financial positions. This step will enable us to invest in capacity, expand coverage, and enhance service delivery, ensuring Nigeria remains competitive in the global digital landscape,” he said.
Tijani has cleared the coast for a hike in end user telecom tariffs. The ball is now in the court of the NCC which has the power to hike or reduce telecom industry tariffs. It is expected that the regulator will, in the coming weeks, unveil the percentage increase that will be approved since Minister Tijani has ruled out granting a 100 per cent hike.
He emphasised the importance of broader structural reforms, highlighting the government’s ongoing assessment of the sector’s sustainability, emphasising the need for targeted investments in digital infrastructure and innovation to enhance long-term competitiveness.
“The study will help us see results in the next one or two weeks on the sustainability of our telecommunication sectors.
“What are the things we need to do to ensure that we can support them to be a lot more sustainable? Beyond just the conversation that has been out there about increasing tariffs, which is what everybody is talking about. We think, yes, there may be a need for it, but there are so many other things that we need to do as a country to ensure that that sector is competitive and beyond just supporting them to be competitive, that governments must also invest in digital infrastructure as well,” Minister Tijani said.
9mobile resuscitation
Nigeria’s fourth carrier, 9mobile, will be a company to watch during the year as the new management led by Banigbe walked his talks about getting the telco back on sound footing. From about 22 million subscribers, the telco fortunes nose-dived after Etisalat exited the market.
“So at the time the new shareholders and the new management took over the business, the business was really grappling with multi-dimensional challenges and that we had to take on headlong. We have the issue of infrastructure. The overall infrastructure of the business has really not been upgraded. So we are dealing with a lot of obsolete infrastructure and then we are dealing with a whole lot of issues of declining revenue, declining subscriber base, costs that are skyrocketing in the business. So those were some of the, I mean a lot of the challenges that we are about to have to deal with.
“In terms of taking these challenges headlong, we broke down our recovery plan into four phases. The phase number one is really the stabilization phase and this is where we are looking at how do you keep the business going? How do you stabilize the business from a quality point of view, from a network stability point of view, from a cost management point of view, from an employee morale point of view. So those are the things that we’ve been doing in the last six months and then we’re trying to revamp our whole internet process. We’re trying to look at quick things that we can do in order to ensure that we keep the business as a growing concern.
“The second phase of the agenda, which is also handled in parallel because we basically don’t have time in order to be able to sequence it as we would have loved to, is the modernization phase of the business. Now, in modernization, like I said earlier on, since Etisalat, the business has not really had any significant investment in infrastructure. Because of that, a lot of the infrastructure that is put there is really the ones we are still using. And then a lot of them, as you would understand, they are quite old and then they need to be quite refreshed.
“So we’re currently in the process of refreshing our radio network, our core network, our transmission infrastructure, our billing system, our charging system, even our ERP systems. It’s like rebuilding the entire network from scratch. This is exactly what we are poised to do. And as we understand, that costs a lot of money in order to be able to put all these things back in place. Putting a service delivery platform that is more modern, that is more digital, that enables us to reposition ourselves as an innovative brand. All of these will cost money. The good news is that we have secured the commitment of our shareholders and the new investors in the business to secure the required amount of money that we need in order to be able to implement your overall modernization agenda for the business.
“So aside from modernization, we also need to deal with your overall transformation phase as we call it. Because it’s one thing for you to have infrastructure that is modernized. It’s another thing for you to have your building of the organization in terms of processes, in terms of reviewing our product portfolio and trying to make sure that we at least can be back in the market as that innovative business that everybody knows it is allowed to be back in the days. Our brand has taken a major hit and we basically repositioned the brand. So, we’re going to be doing a lot of brand refresh activities, a lot of visibility out there in 2025 so that we can at least compete in the market like we used to.
“So, the fourth phase is the growth phase. Now, after you have stabilized, you have modernized and then you have transformed from the point of view of processes improvement, from a point of view of overall product proposition that we want to have there in the market, from the point of view of our brand, from the point of view of our channel engagement and from the point of view of our customer experience, from the point of view of our overall customer value proposition.
“We are definitely going to pursue growth objectives. And then for us, growth is really about the only way out of the current situation we find ourselves in. We need to recover our subscriber base, we need to recover our market position. And then we also need to grow our revenues, because we have not been able to participate fully in the growth that the industry has experienced the last six, seven years, because of the fact that there has not been a major investment in the business. But like I said, we are very committed shareholders and we’ve been able to secure the required investment in order for us to implement all these things in order to make sure that the business can come back as a competing force in the market,” Banigbe explained in an interview early this year.
5G technology
After about three years of the rollout of the fifth generation (5G) technology in the country, adoption has been an issue. MTN Nigeria and Mafab Communications were the first to advertise the roll out of the service in the country while Airtel Nigeria joined a year after. Ostensibly because of its expensive nature in terms of equipment deployment and end user accessories such as technology compliant devices such as mobile phones and routers, adoption has been very slow. For instance, a 5G router costs as much as N50,000 while the national minimum wage which used to N30,000 was increased to N70,000 which some states are yet to implement. It is not clear if the government can force private sector employers to pay the new wage without resulting in downsizing and the inevitability of swelling the army of the unemployed.
While not much has been seen or heard from Mafab, unconfirmed industry sources said the firm plans to relaunch 5G in the year.
Critical National Infrastructure
Last year, the industry breathed a huge sigh of relief when President Bola Tinubu, issued the Presidential Order for the Designation and Protection of Critical National Information Infrastructure (CNII).
The objectives of this Order are to; designate certain Information and Communications Technology systems (ICT), networks and infrastructure operating in Nigeria, as Critical National Information Infrastructure (CNII) develop cohesive measures and strategies for the security and of CNII, and ensure their continued operation; adopt proactive and holistic approach in the identification, security and protection of CNII; reduce to the barest minimum, incidences capable of damaging, disrupting, or interfering with the operation, functionality, or integrity of CNII; and ensure the effective functioning of ICT systems, networks, and infrastructure, which are critical to driving national imperatives, economic development, national security and defense, public health and and government operations.
Security agencies and relevant ministries, departments and agencies of government are at the operational phase of the Order. During this year, more concrete steps are expected to be taken to rein in and curb the excesses of state and non-state actors that result in self-help by wilfully shutting down base transceiver stations (BTS) over spurious taxes and levies. It is also expected to curb the wilful vandalism and theft of telecom infrastructure.
Deepening infrastructure for connectivity
Deepening infrastructure to lower cost of operation and bridge the digital divide will require partnerships with Big Techs such Meta, Microsoft and Google.
Last year, Nigeria’s cross country 90,000km fibre project received a massive boost from the World Bank.
Tijani did not specify whether the boost was in the form of cash commitment or other form of support. He had earlier indicated that he was talking to financiers, including the World Bank to raise the $2 billion needed for the project.
“An excellent few days in DC with the World Bank as we received a massive boost for our 90,000km Fibre Fund project. We’re ready to move! Let’s go,” Tijani had posted on his X handle.
He had disclosed that multiple organizations were finalizing arrangements for the project’s financing.
“The Federal Executive Council (FEC) has approved the SPV that will deliver on this project, and our development funding partners are currently finalizing the SPV structure to ensure the aggregation of funding required for the effective deployment of the fibre-optic network.
“Our target is for this deployment to start within the next 6 months,” the Minister stated in his update on the project last month.
Emphasizing the need for the project, Tijani noted that an improved quantity and quality of connectivity would create opportunities in the short and long term by stimulating a more vibrant digital ecosystem.
The project is aimed at increasing Nigeria’s backbone network from 35,000km to 125,000km by adding 90,000km of fibre-optic cable to the country’s national connectivity backbone.
It is expected to enhance connectivity and improve the quality of telecom service in the country.
“By connecting more communities across the country, we will ensure that many more of our citizens can connect to the benefits of the digital economy,” Tijani added.
Earlier in May last year, he announced the approval of the SPV by the FEC, noting that it would be modeled in governance and operations similarly to some of the best Public-Private Partnership setups in Nigeria, such as NIBSS and NLNG.
According to him, the government would be working with partners and stakeholders from the government and private sector to build the additional fibre optic coverage required to take Nigeria’s connectivity backbone to a minimum of 125,000km.
He added that the project would also help in increasing internet penetration in Nigeria to over 70per cent and reduce the cost of access to the internet by over 60per cent.
Through the project, Tijani said Nigeria would achieve the inclusion of at least 50per cent of the 33 million Nigerians currently excluded from access to the internet.
It is also expected to deliver up to 1.5per cent of GDP growth per capita raising GDP from $472.6 billion (2022) to $502 billion over the next 4 years.
Meanwhile, stakeholders in the ICT sector have warned that the project may fail unless the government first addresses the current issue of Right of Way challenge across the 36 states of the federation.
Human capital development remains a critical pillar. The 3 Million Tech Talent (3MTT) initiative, with its focus on upskilling and reskilling the workforce will play a pivotal role in positioning Nigeria as a global leader in the digital economy.
The government plans to transition from strategy to execution, showcasing practical applications of AI in sectors like agriculture, health, and education. Startups funded through government initiatives are expected to deliver groundbreaking solutions that address local challenges and contribute to the national GDP. Additionally, hosting events like the AI Safety Summit could further solidify Nigeria’s position as a global leader in this transformative field.”
“As competition intensifies in 2025, operators are expected to ramp up innovation and infrastructure investments to retain and expand their subscriber base. I predict that operators will increasingly focus on data-driven services, bundling offerings like video streaming, e-learning, and e-commerce platforms to differentiate themselves in the market,” IT specialist, Jide Awe, said.
