The Nigerian Communications Commission (NCC) has initiated a fresh review of interconnection charges for voice calls and SMS among telecommunications operators, marking the first such assessment in eight years. This development could lead to a tariff hike on calls and text messages for Nigerian subscribers.
What Are Interconnection Rates?
Interconnection rates, also known as Mobile Termination Rates (MTR), are fees that telecom companies pay each other when a subscriber on one network makes a call that terminates on a different network. These charges are essential for enabling seamless communication between mobile users across various networks in Nigeria.
The current rates range between N3.90 and N4.70 per minute. Industry observers warn that any upward adjustment could eventually translate into higher call and text messaging costs for consumers.
Rising Costs Drive Need for Review
Speaking during a stakeholders' consultative forum on the determination of MTR in Lagos, KPMG partner Wole Adenekan explained that the review has become necessary due to major changes in the operating environment since the last rate determination in 2018.
According to Adenekan, factors such as the depreciation of the naira, persistent inflation, soaring energy prices, and higher costs of network equipment have significantly increased telecom operators' expenses. He noted that setting termination rates too low could discourage investment in network infrastructure because operators may struggle to recover the actual costs of providing services.
Adenekan argued that rates based on real operating costs encourage efficient investment, support industry growth, and contribute positively to the broader economy. He stated, "A wrongly calibrated MTR can create barriers for smaller operators and give larger players an unfair competitive advantage. Cost-reflective pricing helps maintain a balanced and competitive market."
However, he cautioned that excessively high termination rates could ultimately be passed on to consumers through increased retail tariffs.
5G, AI and OTT Platforms Reshaping Telecom Industry
Adenekan also pointed to rapid technological developments as another reason for the review. He said the expansion of 5G networks, growing adoption of artificial intelligence (AI), and the increasing use of Internet of Things (IoT) technologies have altered network usage patterns and cost structures, making older interconnection frameworks less suitable for current realities.
He further observed that Over-the-Top (OTT) platforms, which provide voice and messaging services over the internet, are steadily reducing dependence on traditional telecom services and weakening operators' wholesale revenue streams.
The KPMG executive noted that while the NCC amended international termination rates in 2022, local MTRs have remained unchanged since the 2018 determination.
Consumer Protection and Fair Competition
In her opening remarks at the forum, NCC's Head of Competition and Tariff Unit, Omotayo Mohammed, described the review as an important economic policy initiative aimed at ensuring the commission's regulatory framework keeps pace with the rapidly evolving telecommunications sector.
She added that the exercise would also assess existing retail pricing regulations and asymmetry arrangements to ensure consumer interests remain protected while promoting fair competition across the industry.
