In a concerning development for the telecommunications sector in Nigeria, the number of taxes and levies imposed on telecom operators has surged from 41 to 52, according to Gbenga Adebayo, the president of the Association of Licensed Telecommunication Operators of Nigeria (ALTON). Speaking at a closed-door stakeholders’ meeting on Thursday, Adebayo highlighted the challenges posed by multiple taxation, a longstanding issue affecting the industry’s profitability.
One of the primary grievances expressed by telecom operators is the increasing burden of taxes imposed by federal, state, and local government agencies. Adebayo emphasized the detrimental impact of these levies on the industry’s financial health, urging the government to address the issue promptly.
Additionally, Adebayo disclosed that banks have yet to settle the USSD debt owed to telecom operators, which has escalated from N120 billion in June to a staggering N200 billion. The outstanding USSD debt adds further strain to telecom operators already grappling with a complex economic environment.
Tony Izuagbe, the president of the Association of Telecommunication Operators of Nigeria, echoed similar sentiments in a recent communication to the Senate Committee on Telecommunications. He emphasized the urgent need for the committee to address the challenges posed by multiple taxation, attributing them to the complexities arising from multiple regulations.
“The Nigerian telecom industry is often faced with multiple regulations that usually lead to multiple taxation. As of today, our members pay taxes to federal government agencies, state government agencies, and local government agencies. All these taxes impact our members negatively because money earmarked for network expansion must be redirected to pay illegal taxes,” Izuagbe stated.
Telecom operators, especially major players like MTN and Airtel, find themselves under immense pressure due to the harsh economic conditions in the country. In their half-year results, both companies reported losses, with Airtel citing a $13 million loss after tax for the period ending September 30, 2023. The company attributed the loss to a foreign exchange loss of $471 million and the devaluation of the Nigerian naira in June.
MTN Nigeria also experienced a decline in its nine-month net profit, primarily due to the steady depreciation of the naira. The telco reported a foreign exchange loss of N232.8 billion, a significant increase from N27.9 billion in the same period the previous year.
The economic challenges faced by telecom operators are further exacerbated by the depreciation of the naira, triggered by the administration’s decision to float the currency. The removal of the petrol subsidy has also contributed to a surge in headline inflation, reaching 27.5 percent in September, according to the National Bureau of Statistics.
As telecom operators grapple with mounting financial pressures, stakeholders and industry experts are closely monitoring developments and advocating for comprehensive measures to address the taxation issues, safeguard industry sustainability, and promote economic growth.