THE cost of powering telecommunication services with diesel has jumped by at least 233.33 per cent in recent months to N30bn monthly, according to analysis and computation of data from Nigerian telecoms operators.
The development brings the annual cost of powering telecoms services with diesel to N360bn.
The operators under the aegis of the Association of Licensed Telecoms Operators of Nigeria said the cost of diesel, which is required to power network towers, base stations, and offices, rose from N225 in January 2022 to over N750 in March 2022.
They stated this in a letter written to the Nigerian Communications Communication, a copy of which was sighted by our correspondent.
The letter read in part, “The telecommunication industry has been heavily financially impacted following Nigeria’s economic recession in 2020 and the effect of the ongoing Ukraine/Russia crisis. This has resulted to an increase in energy costs (which constitutes an appreciable 35 per cent of ALTON’s members’ operating expenses).
“Consequently, the cost of diesel required to power operators’ towers, base stations, and offices rose by a staggering 233 per cent from N225 per litre in January 2022 to over N750 per litre in March 2022.”
According to industry data, mobile telecommunication operators use an average of 40 million litres of diesel per month to power telecom sites. Going by the diesel consumption figure and the current price of diesel, the cost of powering telecoms services will be about N30bn monthly and N360bn annually.
In its ‘2020 Subscriber/Network Data Report,’ the NCC said there were a total of 33,832 towers belonging to mobile and fixed operators as well as collocation and infrastructure companies as of 2020. It, however, added that operators had a total of 36,998 base stations at the end of the year.
According to ALTON, energy costs account for 35 per cent of telecom operators’ operating expenses.
The telecom operators said the ongoing crisis in Ukraine/Russia had contributed largely to this increase, which was impacting negatively on the telecom industry.
This, among other things, is a major reason telecom operators are pushing for a 40 per cent upward review in the cost of calls, SMS, and data.
In a leaked letter to the NCC, ALTON said, “Given the state of the economy and the circa 40 per cent increase in the cost of doing business, we wish to request for an interim administrative review of the Mobile (Voice) Termination Rate for Voice; Administrative Data floor price and cost of SMS as reflected in extant instruments.
As a result of the development, the umbrella body for telcos is pushing to increase the floor price of calls from N6.4 to N8.95 and the price cap of SMS from N4 to N5.61.
Recently, the President of ALTON, Mr Gbenga Adebayo, disclosed that the telecom industry was one of the largest consumers of diesel in the country. According to him, telcos base their network planning, operational expense, and projection plans on diesel prices.
He said there was a need for an intervention to save the sector, or operators might have no other choice but to start a process of price review.
He said, “Diesel is now very expensive, from N250 to over N700. All network planning, operational expenses, and planned projection for the year is based on the fact diesel prices. This has increased. Today, you know the implication of that. This is one problem; cost has gone up.”
According to a source in the industry, the number of litres of diesel consumed by base stations may be more as the nation has added more base stations since the 40 million estimates were given.
Another source in one of the telecom companies added that each base station has two diesel-powered generators.
