How N50bn Monthly Diesel Costs Is Threatening Nigeria’s Telecommunication Industry
- By Metropolix ~
- March 22, 2024 --
- 0 Comment
– Telecommunication Masts
By Adeola Idris
Rising diesel prices are threatening Nigeria’s communication backbone, with telecommunication operators’ spending on the fuel rising to N50.28 billion in February.
This was a 50.20 percent increase from the N33.48 billion (at N836.91/litre) they spent in the same period of 2023 and a 9.02 percent increase from the N46.12 billion (at N1,153.01/litre) spent in January. Diesel prices have been soaring since 2022.
Diesel is crucial for powering telecom infrastructure, like base stations, which rely on generators because of unreliable grid electricity. Industry data estimates that operators use an average of 40 million litres of diesel per month to power telecom sites, and the price rose to N1,257.06 per litre in February 2024.
As of the end of 2022, the Nigerian Communications Commission said there were 34,862 towers and 127,294 base stations in the country. Also, the telecoms industry spent N2.09 trillion on operational costs in 2022, according to the commission.
In May 2022, telcos asked for a 40 percent increase in calls, SMS, and data prices because of the rising business costs. At the time, they stated that their energy cost had risen by 35 percent.
In its audited results for the year ended December 31, 2023, MTN Nigeria Communications Plc said: “The combined effects of naira devaluation, higher general inflation and energy costs, and the introduction of the 2023 Finance Act VAT on tower leases resulted in higher operating expenses.”
“The cost of diesel has impacted all sectors. There is no stable electricity supply from the national grid,” an industry source said.
The source said the sector’s inability to raise costs like other sectors also exacerbates these expenses.
“It is costing us a lot. It is also part of what contributed to MTN’s first financial loss, for instance.”
Gbenga Adebayo, president of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), confirmed the validity of the 40 million litres of diesel per month.
Additionall reports from BusinessDay
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