The Truth About The Recent Airtime and Data Price Hikes

Since the mid-2010s, when Muhammadu Buhari ascended the presidency of Nigeria, putting an end to 16 years of PDP leadership, the Nigerian experience has been colored by the scourge of inflation. These days, under the Tinubu administration, life in the country has been all but reduced to a game of guessing how quickly prices can rise. Take a scroll through X or TikTok and witness this situation play out in real time. Nigerians have changed tack from clamoring for better living conditions to simply pleading for a reprieve from the constant onslaught of inflation. That was the thesis of Raye’s TikTok polemic which stirred a torrent of public furor weeks ago. “It’s just like every single week prices go up. I want to know what the government is doing about this. Is there a particular time when prices will stop going up?” She asks before breaking down in tears. 

If her polemic litigated the possibility of a pause in inflation, the events of the past few weeks have shown that whatever reprieve her video sought is nowhere in sight. Prices have continued to rise, and airtime and data tariffs across the telecommunications networks in the country have increased significantly. In line with a January 20 approval from the NCC that capped potential tariff increases at 50 percent, network providers across the country have hiked airtime and data costs in the past few weeks, putting an end to nearly a decade of relatively stable airtime and data costs. 

Expectedly, these increases have put a strain on the already beleaguered citizenry, prompting fulminations about the level of hardship these increases will bring about. Nigeria, like many other countries in this age, is heavily dependent on connectivity. Correspondence via email, phone calls, or other channels is not just required for fostering human connection but for coordinating economic activities across the country. The Nigerian economy is also singular in its dependence on mobile transfers, a situation that is at once a blessing and a curse, given the general problem of poor internet connectivity in the country and, now, the ubiquitous tariff increases. 

Nigerians have not just griped about this situation but openly mulled over the possible causes of the steep tariff hikes. The average citizen is well aware of the inflationary pressure that weighs down the economy; what they often fail to realize is that businesses, just like citizens, are also feeling the effects of our fraught economic climate. Telecommunication companies, in particular, have felt the brunt of the economic disaster Tinubu’s administration has heralded. Take Airtel Africa, which lost $500 million in the 2024 fiscal year. Interestingly, the company recorded revenue growth in several other African countries. MTN Nigeria Communications PLC similarly reported a 400 billion Naira loss (after taxes) in the 2024 fiscal year. Their precarious financial positions are largely owed to the devastating devaluation of the Naira under Tinubu’s administration. 

For context, before Tinubu’s ascendancy in May of 2023, the official exchange rate averaged approximately ₦460.70 per US Dollar. By December last year, a dollar would cost around ₦1800. Today, at an exchange rate of ₦1536 per US Dollar, the situation is a smidge less grim. However, it’s not hard to see how Nigeria’s steep currency devaluation has left telecommunications firms in a lurch. Telecommunications companies rely heavily on foreign equipment, labor, and infrastructure (such as fiber optic cables that traverse countries). As a result, the depreciation of the Naira has translated into higher operating costs and capital expenditure. Combined with the inflationary pressure within the country, these companies are faced with few options but to raise prices to remain profitable. 

While network providers are justified in their unanimous decision to increase tariffs, the price hikes have visited untold hardship on a wide swath of Nigerians, especially the youth, many of whom work jobs that demand internet access. On Wednesday last week, the Senate condemned the hike in tariffs and urged the Federal Ministry of Telecommunications and Digital Economy to “deploy a policy framework to ensure sustainable and fair pricing for internet services across the country. While the senators in that plenary session rightly diagnosed the problem, their proposed solution rings hollow. Those in power, especially the President, need to understand the severity of the situation. The rise in tariffs will only feed the beast of inflation and increase the discontent of the nation. Tinubu is already widely unpopular; the surge in online criticism of the president in the past few weeks substantiates this. If the country’s inflation woes continue to worsen, the President risks not just ineluctably obliterating what remains of his and his party’s reputations but thrusting the country into a crisis. 

When situations are this dire, it’s not unheard of for governments to step in with reprieves—such as tax breaks and bailouts—for struggling companies. It’s worth noting that the companies that tend to receive these benefits are usually of strategic importance for the country in question. Consider the 2008 financial crisis, which saw the US government prop up its banking industry through a mix of quantitative easing, capital injections, and liquidity provision to lessen the impacts on the broader economy. During the COVID-19 pandemic, governments across the world similarly took measures to steady struggling businesses. 

Nigerian telecommunications companies are now facing a similar existential threat. They are too big to fail (they employ a vast swath of the population), and they also can trigger ripple effects in the economy with price hikes. As such, it’s in the best interest of the government to provide them with aid. One easy way to do this would be to provide tax breaks, tax cuts, or tax credits. Nigerian telecommunications companies pay between 50 and 60 percent of their earnings as taxes and levies (this accounts for Companies’ Income Tax, VAT, Withholding Tax, and sector‑specific charges, such as the Annual Operating Levy, National Information Technology Development Fund Levy, and various state-level fees, including right‑of‑way charges). It’s the government’s prerogative to tax companies as they deem fit; however, in extenuating circumstances such as the one facing network providers today, it’s to the government’s advantage to adjust these figures according to agreed-upon terms that will guarantee direct benefits to the public. Put in plain terms, it’s in everyone’s interest for the federal government to reduce taxes for these companies on the condition that they restore tariffs to previous levels.