Telecom Base Stations Fuel Cost Now N400bn – NBS
The cost of powering telecommunication services has hit N33.47bn per month following a 55.16 per cent year-on-year increase in the cost of diesel.
According to the National Bureau of Statistics, the cost of diesel rose to N836.81 per litre in March 2023 from N539.32 per litre in the corresponding period of 2022. This pushed the monthly cost of powering base stations to N33.47bn in March 2023 from N21.57bn as of March 2022.
At the current rate, the cost of operating base stations is expected to exceed N401.67bn by year’s end.
Industry statistics estimate that mobile telecommunication operators use at least 40 million litres of diesel per month to power telecom sites. As of the end of 2021, the Nigerian Communications Commission revealed that there were 38,288 base stations in the country. According to a source in one of the mobile network operators, each base station has two diesel-powered generators.
Commenting on the increase in the cost of power, the Head of Operations, Association of Licensed Telecoms Operators of Nigeria (ALTON)Gbolahan Awonuga, explained to Economic Confidential that the rising cost of diesel is affecting telecom service providers.
He also noted that the telecoms industry is the highest user of diesel in the country. He said, “We are the highest users of diesel and when the price went up from N250/litre to N800/litre last year, it impacted our operation.
“Power is key. It determines everything. Even though there is an increase in virtually the price of everything in the economy, telecom tariff remains the same. This means that there are a lot of difficulties. Revenue has reduced and prices of other inputs have changed, but tariffs are still the same.”
He stated that the estimated 40 million litres of diesel per month have since grown. Awonuga argued, “The report that we are consuming about 40 million litres of diesel per month is correct and should be more than that presently. The quantity has not decreased.”
He further noted that telcos’ attempts to shift to new sources of power have been met with its challenges.
“As regards alternative power sources, we are doing that. But solar is an emerging technology,” he added, “In some villages where we have shifted, we noticed that they are destroying the panels and using them for table tennis.”
Corroborating him, a top source in the industry affirmed to our correspondent that the quantity of diesel consumed by base stations is more.
According to the source, the increase in diesel prices and other macroeconomic indices is impacting telcos negatively.
The source said, “The industry is suffering, the only reason why it doesn’t appear that we are going through tough times is because of volume.”
In 2022, telcos under the aegis of ALTON proposed a 40 per cent hike in the cost of telecom services due to the hike in diesel prices.
According to them, diesel accounted for about 35 per cent of their operating costs. In a letter to the NCC, they said, “The telecommunication industry has been heavily financially impacted following Nigeria’s economic recession in 2020 and the effect of the ongoing Ukraine/Russia crisis.
“This has resulted in an increase in energy costs (which constitutes an appreciable 35 per cent of ALTON’s members’ operating expenses).”
