If we are to believe Mr. Olusola Teniola, President of the Association of Telecommunications Companies of Nigeria (ATCON), telecoms tariffs would increase sharply for all services if the CBN follow through on its plan to impose a levy of 0.005‰ on all electronic transactions in Nigeria.
This levy by the CBN is in accordance with a certain Cybercrime Prohibition and Prevention Act of 2015. Section 44 of the act states that it is the duty of the apex bank to compel all businesses affected by the levy to pay the levy or tax to a special account in the Central Bank.
To be clear, telecoms are not the only businesses affected by the levy. Banks and other financial institutions are also required to pay the tax.
Listening to Mr. Teniola of ATCON, you’d think the CBN is trying to impoverish Nigerians further with this new tax.
The act was promulgated by the Government of the Federation three years ago in conjunction with the National Assembly. As Nigeria News is well aware, before it became law, it must have passed through several readings, deliberations and public hearings in the National Assembly.
Where was ATCON when all this was ongoing to warn of the danger of imposing the levy? Why are they raising an alarm now when the CBN is about to implement the letter of the law?
Ostensibly, they are doing it to let well-meaning Nigerians put pressure on the CBN to desist from going ahead with it.
ATCON though are not letting Nigerians fight for them. The head of the association outlined how telecoms firms In Nigeria are battling to meet the costs of running a profitable business in Nigeria with several taxes adding to their running costs exponentially.
An additional levy or tax would, therefore, be the dearth of telecoms leading to loss of jobs and a further shrinking of the economy that is just coming out of a recession.
The only way to survive the implosion of telecoms is to pass on the levy to the about 150 million subscribers in Nigeria. A nice way of telling us to brace up for a rise in tariffs.
Let’s try and see how the 0.005% levy would translate into a spike in tariffs according to the ATCON president.
A little research shows that MTN Nigeria made net income profit of about N23 billion last year. This net income covers all their operations including profits from calls and data services.
Now 0.005 percent of that is N1.15 million per annum on a profit of N23 billion! Mr. Teniola expects us to wrap our heads around how less than 2 million naira in extra charges in a year would cripple MTN or lead to a serious hike in tariffs if they are to remain in business.
Let’s even say they pass on that cost to the consumers. 0.005 percent extra payment for subscribers means you would pay an extra 50 kobo for a N1000 monthly purchase of data. Or if you pay N15/minute on calls at the moment, by the time the networks transfer the 0.005% levy to subscribers, your cost per minute would now ‘spike’ to N15.075/minute.
You can easily extrapolate those figures to any amount you wish to have an idea of the huge price ‘hike’ the ATCON head is talking about.
What those figures show is that the levy is too small to make any difference to the cost of doing business for the telecoms or even cost of buying airtime or data in Nigeria.
So what is Mr. Teniola getting at? Is there something else he knows that we don’t? It is all well and good telling us to expect a price hike, but it is being clever by half when you attempt to pull wool over our eyes by crying wolf.
I think ATCON are trying to force a price hike down the throats of Nigerians by all means. Don’t for one minute think ATCON have our interest with that call to the CBN not to impose the levy.
Since last year, ATCON had tried a similar move to increase tariffs, especially for data. Somehow, they convinced the Minister of Communication and the NCC to agree to their demands.
But the massive outcry from the public, with the National Assembly joining pitching in on the side of subscribers, saw them make a fast retreat.
It was shameful that NCC and the Minister of Telecommunications colluded with ATCON then to try and increase tariffs.
ATCON came with similar excuses that if prices/tariffs remained at that level, the sector would collapse in due course.
But everybody knew it was a blatant lie. The tariff increase is mostly championed by ISPs whose services are restricted to just a few cities in the country.
These ISPs find it difficult to compete with the GSM companies whose data services are cheaper and are available all over the country. So they wanted the tariffs to be tweaked for their own services to become competitive relative to the GSM companies.
It is really a shame the government through the NCC allowed themselves to be manipulated by ATCON then.
For ATCON, this 0.005% levy represents an opportunity to get what they tried and failed to obtain last year. We should call the bluff of ATCON.
They are a bunch of self-serving businessmen who want to force Nigerians back to the days of the NITEL-like monopoly where competition in the industry was absent. Welcome price-fixing.
Let ATCON understand that Nigerians are ready to bear the cost that 0.005% levy. There is no correlation between the levy and a ‘steep spike in tariffs’!