Nigeria’s communication infrastructure is in danger due to increased diesel prices; in February, telecommunications companies spent N50.28 billion on fuel.
This represented a 9.02 percent rise from the N46.12 billion (at N1,153.01/litre) spent in January and a 50.20 percent increase from the N33.48 billion (at N836.91/litre) they spent in the same time of 2023. Since 2022, diesel prices have been skyrocketing.
Because grid electricity is unstable, telecom infrastructure, such as base stations, depends on diesel to run their generators. According to industry data, operators power telecom installations with an average of 40 million litres of diesel per month; in February 2024, the price of a litre of diesel increased to N1,257.06.
The Nigerian Communications Commission said that as of the end of 2022, the nation had 127,294 base stations and 34,862 towers. Additionally, the commission states that in 2022, the telecom sector incurred operational costs totaling N2.09 trillion.
Due to growing business expenses, telcos requested a forty percent rise in call, SMS, and data fees in May 2022. They claimed that their energy costs had increased by 35% at the time.
MTN Nigeria Communications Plc stated in its audited results for the year that concluded on December 31, 2023, that: “Higher operating expenses were the consequence of the 2023 Finance Act VAT on tower leases, higher general inflation, higher energy costs, and the devaluation of the naira.”
Every industry has been influenced by the price of diesel. The national grid does not provide a steady supply of electricity, according to a source in the business.
The industry’s incapacity to boost costs like other industries, according to the source, makes these charges even more exorbitant. “It’s a significant expense for us. It also had a role in MTN’s first financial loss, for example.”
The Association of Licenced Telecommunications Operators of Nigeria (ALTON) president, Gbenga Adebayo, attested to the legitimacy of the 40 million litres of fuel every month. He assured reporters, “It will be over that now.”
He emphasized that the sector’s sustainability is now in jeopardy due to the effect that diesel costs are having on telco operations.
He clarified that the majority of these expenses are borne by infrastructure businesses, who maintain the network infrastructure.
“The infractions are bearing the brunt of the diesel issue since they are the ones who have to source diesel. They are not able to be paid the full cost of services rendered by operators (telcos). Accordingly, if we don’t price appropriately, the industry’s sustainability is in jeopardy,” he stated.
Adebayo pointed out that new pricing structures are required because the current rates for telecom services do not cover manufacturing costs.
He emphasized that this type of energy can only offer some intermediate and transient intervention when asked if this presents a chance for investments in alternative energy. He clarified, “It is not a direct subsidy, and there are limits.”
“You need to obtain other energy sources since even with alternative energy, they do not offer a round-the-clock backup. As an intervention, alternative energy does not currently take the place of conventional energy. The infrastructure for alternative energy is incredibly insecure. Batteries and solar cells are also stolen,” said the ALTON manager.
MTN recently gave ATC control of some of its towers after previously owning them from IHS. The telecom stated that one of the main factors influencing its choice was the cost of energy. Karl Toriola, the CEO of MTN Nigeria, stated, “But beyond efficiency, we will also focus on cost optimisation, green energy utilisation, and sustainability.”
