Regulator launches overhaul of phone service costs for the first time in nearly a decade

The Nigerian Communications Commission has embarked on a thorough review of telecom interconnection pricing in collaboration with consultancy firm KPMG, marking the first major reassessment of the sector's tariff framework in nearly a decade, with the exercise commencing in Lagos at a mobile termination rate stakeholder forum on Tuesday.

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This comprehensive review aims to reassess wholesale pricing rules that govern payments between networks for completing voice calls, with Mobile Termination Rates being regulated fees paid by one operator to another to complete calls across networks, influencing competition, investment, and retail pricing.

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The current framework, last set in 2018 and adjusted in 2022, has been overtaken by structural changes in the market, including the rollout of 5G, the expansion of data-led services, and the entry of mobile virtual network operators, as well as macroeconomic pressure, such as currency depreciation and inflation, which have significantly altered operators' cost bases.

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According to the Head of the Competition and Tariff Unit at the NCC, Omotayo Mohammed, the exercise goes beyond a routine tariff review and reflects the need to align regulation with a rapidly evolving industry, where the telecom market has changed materially since the last determination, both in technology deployment and market structure.

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Mohammed stated that new service categories and business models now require regulatory attention, and noted that the review is being conducted under Section 108 of the Nigerian Communications Act 2003 to ensure tariffs remain cost-reflective and non-discriminatory, with the goal of keeping regulation effective in a fast-moving market.

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KPMG will combine data analysis, stakeholder consultation, and international benchmarking to inform a revised pricing framework, with Partner and Head of Tax, Wole Obayomi, explaining that the exercise is designed to identify gaps in the existing regime and test whether a structured review cycle is required, depending on industry input.

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Obayomi emphasized the importance of getting input from the industry in terms of potential solutions and recommendations to address the shortfalls, with the process relying on contributions from operators and other stakeholders to inform the review.

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The NCC and KPMG will examine pricing practices across wholesale and retail segments, assessing whether emerging services are adequately captured under existing regulatory definitions, and evaluating the sustainability of prevailing tariff structures, with attention to investment capacity, service quality, and consumer affordability.

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As part of the review, operators will be required to submit detailed financial and operational data covering revenue, costs, profitability, market share, capital expenditure, service quality, and usage trends over multiple years, providing a clearer view of industry trends and the cumulative impact of existing pricing rules.

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The engagement will include bilateral technical sessions with mobile network operators, mobile virtual network operators, international carriers, clearing houses, and interconnect exchange providers, with industry participants expected to involve finance, technical, and commercial teams in the discussions.

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The NCC and KPMG will also benchmark Nigeria's framework against peer markets, including South Africa and Kenya, alongside emerging economies such as Indonesia and Malaysia, with the selection reflecting similarities in macroeconomic conditions and regulatory responses to sector development.

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Findings from the benchmarking exercise are expected to inform recommendations for a revised pricing regime aligned with both domestic conditions and international practice, supporting a pricing framework that is transparent, competitive, and capable of sustaining investment in network infrastructure and service quality.

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NCC Director of Public Affairs Nnenna Ukoha explained that the review cuts across the entire telecom value chain, from operators to consumers and investors, with termination rates remaining central to pricing dynamics, competition, and service outcomes.

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Ukoha emphasized the importance of integrating stakeholder feedback under the commission's co-creation regulatory approach, urging operators to comply with timelines for data submission, as the process would only be effective with timely and accurate input.