Afrigather Within the first half of 2024, MTN Nigeria, the nation’s largest cell community operator, paid ₦232 billion in taxes—an astonishing 586% enhance from the identical interval final yr. It paid 54 separate taxes in 2024 alone throughout numerous federal, state, and native authorities companies.
The tax burden on telcos like MTN Nigeria will rise additional by the top of 2024 because the variety of taxes continues to develop. In response to the Affiliation of Licensed Telecommunication Operators of Nigeria (ALTON), state governments gather the vast majority of these taxes.
These taxes embrace constructing permits, sewage charges, convulsion levies, storage licenses, and extra. Gbenga Adebayo, ALTON’s President, instructed TechCabal that these taxes elevated operational prices of telcos by 50% in 2024.
Some taxes are statutory, however others are imposed arbitrarily. As an example, the newly shaped Nationwide Affiliation of Telecom Landlords in Bayelsa has imposed levies not acknowledged by state regulation. Whereas federal taxes are principally legally grounded and quantity lower than 20, state and native taxes embrace a mixture of legally-backed and arbitrary levies.
“The a number of taxes are pushed primarily by income,” Adebayo stated. “There’s a notion that the telecoms trade is extremely worthwhile and so might be handled as a money cow.”
MTN Nigeria didn’t instantly reply to requests for feedback.
The present tax atmosphere threatens the enlargement of broadband infrastructure, which is essential for integrating thousands and thousands of Nigerians into the digital economic system. As of December 2023, 27.91 million folks in 97 communities nonetheless don’t have any dependable high-speed web, in keeping with knowledge from the Nigerian Communications Fee (NCC). In states like Niger, there is no such thing as a high-speed web.
One main concern is the inconsistency in right-of-way charges, which permit telcos to put fiber optic cables on state-owned land. Most federal authorities companies cost ₦145 for fiber laying on highways, whereas the Nigerian Inland Waterways Company (NIWA) prices ₦2,500 per linear sq. meter for laying fiber alongside waterways and bridges.
State prices fluctuate broadly, from Kwara’s ₦1 per kilometer to as a lot as ₦9,000 in Oyo State.
States like Osun, Lagos, Cross River, and Abuja have invested in fiber ducts that shield cables and lease these ducts to operators. Nonetheless, the requirement to cost separate charges for the lease and proper of approach make this association dearer. Operators like MTN, Airtel, and Globacom use these ducts however nonetheless face excessive prices.
“States have restricted income sources, in order that they frequently squeeze telcos,” Manish Kochhar, a former chief expertise officer at Globacom, instructed TechCabal. He added that even after paying lease or RoW prices, states incessantly fail to guard the cables from injury brought on by development tasks. This ends in degraded cable high quality and poor connection throughout Nigeria.
The Presidential Fiscal Coverage and Tax Reforms Committee, established in 2023, promised to evaluation and harmonize these taxes. Nonetheless, there was no replace on their progress relating to telecom taxes.
Taiwo Oyedele, the committee’s chairman, didn’t reply to requests for feedback.
Some telecom operators are taking issues into their very own fingers by negotiating immediately with states, in keeping with two folks aware of the matter. In 2023, Lagos State granted MTN Nigeria a right-of-way waiver in trade without spending a dime high-speed web in public establishments. Edo State provided a waiver and tax incentives to operators that engaged with it.
Throughout a telecom stakeholder assembly organised by the Affiliation of Telecommunication Operators of Nigeria (ATCON), State ICT commissioners in Niger, Kogi, and Cross River urged that telecom operators want to interact extra actively with them to resolve these points.
There’s a concern that participating individually is just not a sustainable answer because it provides greater operators the chance to barter juicy offers over smaller operators.
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