Telcos Propose Tax Review To Avert 40% Tariff Hike

Telecommunication companies, under the aegis of the Association of Licensed Telecoms Operators of Nigeria (ALTON) has said the removal of multiple taxes in the telecom industry will reduce some of the operational pressure on the companies.

According to ALTON, this along with regulatory intervention may ensure that the current pricing regime of calls, SMS, and data is sustained.

The Chairman, ALTON, Gbenga Adebayo, disclosed this to our correspondent on Tuesday. He stated that telcos were facing difficulties operating in the nation, which is affecting their bottom line and cost line.

Telcos had recently proposed a 40 per cent hike in the cost of calls, SMS, and data as a result of an unfavourable operating environment.

He said, “Multiple taxes affect the operating environment and there are nuisance taxes which are taxes that are not in the statute, and it is in an attempt to collect those taxes that public actors often disrupt telecom services.

“Those types of illegal taxes and levies should be eliminated. The cost and process of collecting them today are offensive and very destructive and that should stop. That is what we are saying. So, there are two things that we are saying.

“The taxes that are not supposed to be, they should be removed. Once those taxes are removed, the actions of public actors when collecting the taxes will end. We did say the classification of telecoms as critical national economic infrastructure is very important. This issue of critical national infrastructure comes to bear again, we need this classification to be able to minimise the destruction.”

According to Adebayo, there is a need to remove the barriers to smooth operations in the telecom industry.

He, however, added that even if the government removed these taxes, the current pricing regime might still not be sufficient to cover the operational cost for telecom companies.

He notes that a new pricing regime will be necessary if the regulator does not intervene to help telecom companies.

“Even if the government were to make the environment more enabling, the current pricing regime might not be enough.

“It is a combination of many things, there are many issues we face today including difficulty in operating environment. So it doesn’t substitute for a price review. Our basic bottom line is that there is a high cost of doing business today, and this affects our bottom line, it affects all our cost lines.

“We are saying that there is a need to enact, I mean to activate some regulatory intervention to be able to mitigate these effects on the operators,” he stated.

According to the president of ALTON, telcos are not asking for a bailout from the government but that the operating environment be fair and a possible regulatory intervention.

Adebayo added, “We are not asking for a bailout. We are only saying make the environment easier, help us to keep our cost minimal and we would be fine.

“We are saying that let the regulator provide some form of intervention. We have made those prayers to the regulator.”

Recently, he said telecom operators pay as much as 36 different taxes and levies to governments across the three tiers of governance.