Inflation: Ayotunde Coker advocates ‘tiered pricing’ to sustain Nigerian telecom businesses

Chief Executive Officer of Open Access Data Centre (OADC), Dr. Ayotunde Coker, has advised Nigerian telecom operators to embrace a tiered pricing model, where affluent consumers could pay for premium services, allowing for more affordable options to be offered to the broader population.

Coker stated this on Saturday during the Nairametrics Industry Spotlight webinar themed “Beyond Connectivity: Telcos and the Future of Financial Inclusion in Nigeria.” 

He noted that despite inflationary pressures and the broader cost-of-living crisis, telecom operators in Nigeria have been unable to modify regulated pricing.

Coker emphasized the need to strike a balance between controlling inflation and ensuring that telecommunications services remain accessible to all segments of society.

Creative solution 

While noting that telecom operators must become creative in their pricing to achieve business sustainability amid the current inflationary challenge, he said:

“We must graduate products and services to fit different segments of society. More affluent consumers can afford certain services, which helps subsidize lower costs for others who rely on basic, essential telecom services.” 

“There are ways to innovate, such as offering services during specific times of the day for those who need them for essential purposes, like education or healthcare,” he added.

• He also noted that the ongoing cost-of-living crisis, which has been building over time, requires new ways of thinking about telecom pricing and service delivery.

• Coker argued that these challenges present opportunities for the industry to develop new, efficient ways of providing services, benefiting both the industry and consumers.

• The OADC boss pointed out that affordability remains a significant challenge in the Nigerian telecom sector.

• He noted that many Nigerians must work disproportionately long hours to afford basic data and voice services.

• He explained that although the cost of mobile and broadband services in Sub-Saharan Africa, including Nigeria, is not among the highest globally, there is still room for improvement.

Systemic challenges and infrastructure investment 

Coker also stressed the critical need for capital investment in telecom infrastructure, warning that without it, the quality of services such as broadband could deteriorate, further impacting economic growth and digital transformation.

He highlighted the role of broadband in powering industries and improving the quality of life for Nigerians.

“If we don’t invest in capital infrastructure, our broadband will keep failing, and all the benefits we talk about in terms of digital connectivity will disappear,” he said.

Coker pointed out that systemic issues related to the cost of infrastructure development, such as building telecom towers and data centers, need to be tackled through innovative solutions.

One such approach, he suggested, is for the industry to collaborate and share resources, optimizing costs and ensuring a sustainable rollout of infrastructure.

What you should know 

Amid high inflation and forex crisis that has rocked the Nigerian economy over the last 16 months, telecom operators under the aegis of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) have been clamouring for a review of the current tariff regime. However, the Nigerian Communications Commission, which regulates prices in the industry, has refused to grant the telcos’ requests.

• Based on this, ALTON, led by its Chairman, Gbenga Adebayo, had wanred that the operators may not be able to continue investing in capacity with the current tariff regime.

• According to the body, the telecom industry is the only industry that has not reviewed its prices despite the rising inflation in the country and other economic realities that warrant increment.

• According to him, the last time there was a telecom price review was in 2013, and the prices of every other service in Nigeria have gone up multiple-fold since then.

• Rewane said the current tariff regime is inhibiting the operators’ capacity to invest more in infrastructure, hence, the quality of their services has been deteriorating in recent times.
• He added that poor telecom services would affect the telecom subscribers and the economy at large.