Call, SMS Tariffs May Increase Over Interconnection Rates Review

The Nigerian Communications Commission (NCC) has begun the review of interconnection rates for telecom operators’ call and SMS services in the country, eight years after it was last reviewed.

Daily Trust reports that interconnection rates or Mobile Termination Rate (MTR) is the wholesale charge one network pays to another when its customer places a call that is received on a different network.

It is the underlying pricing mechanism that connects every Nigerian mobile subscriber — regardless of their network — with every other.

The current rate is N3.90 per minute/N4.70 per minute.

If the rate is eventually reviewed upward, telecom users in the country will pay more for call and SMS services, Daily Trust can report.

Speaking at a stakeholders’ consultative forum on the determination of mobile termination rate (MTR) in Lagos on Tuesday, a partner at KPMG, Mr. Wole Adenekan, said rates that are too low would fail to signal the true cost of providing termination services and can deter infrastructure investment.

Adenekan added that cost-based rates reward efficient investment and improve the country’s GDP.

“A mis-set MTR can enable dominant operators to foreclose smaller competitors through high termination barriers. A cost-reflective rate supports a level competitive playing field,” he said.

He said inflated termination charges are ultimately borne by end-users through higher retail prices.

The KPMG official said significant naira devaluation, inflation, and rising energy and equipment costs since 2018 have materially altered operator cost structures, hence the review of the current rate regime.

He added 5G rollout and AI/IoT adoption are also reshaping network usage patterns, cost structures, and service delivery models, making legacy interconnection frameworks less representative of current realities.

He noted competition by Over-the-top players, who are capturing voice and messaging traffic, is reducing reliance on traditional interconnection and weakening legacy wholesale revenue streams.

According to him, the 2018 MTR determination has never been updated for local rates, adding that the 2022 amendment addressed International Termination Rate only.

In her welcome address, the head competition and tariff unit policy department at NCC, Omotayo Mohammed. said the review constitutes a significant economic intervention intended to align NCC’s frameworks with the rapid pace of change in the telecoms sector.
Mohammed said the review would examine existing retail price controls and asymmetry arrangements with a view to safeguarding consumer welfare.
She said: “Our existing national interconnection rate regime was set out in the Commission’s Interconnection Rate Determination of June 1, 2018, and was subsequently adjusted through an amendment to the Mobile International Termination Rate (ITR) in September 2022.

“The Commission has historically maintained a regular cycle of periodic reviews to keep its frameworks relevant.

“However, the years since our 2018 determination have been marked by unprecedented and rapid change. The Nigerian telecommunications market has undergone considerable transformation, reflected in swift expansion, shifting market dynamics, the commercial deployment of advanced technologies such as 5G, and the emergence of new ecosystem players including Mobile Virtual Network Operators (MVNOs).

“At the same time, both global and domestic macroeconomic conditions have shifted considerably. Changes in exchange rate regimes, and inflation rates have substantially altered the cost structures associated with providing communications services in Nigeria.

“For regulation to remain effective in a fast-moving market, our frameworks must evolve in step with it. Pursuant to Section 108 of the Nigerian Communications Act (NCA) 2003, the Commission is therefore acting on its mandate to ensure that telecommunications tariffs and charges remain reasonable, cost-reflective, and non-discriminatory”. (Daily trust)