New year, new termination rate for Nigerian telcos, in dollars
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Applicable for international calls in 2022
The new year will usher in changes in different areas of the economy and one of these would be in telecommunications services provided by telcos such as MTN Nigeria, the largest network in the country, Globacom, Airtel, 9Mobile, among others.
And one aspect of those changes has been made public by the industry regulator, Nigerian Communications Commission (NCC), which has fixed $0.045 as the new international termination rate (ITR) for voice calls with effect from January 1, 2022. This is good news to local telcos in terms of revenue generation.
The ITR is the rate paid to local operators by international operators to terminate calls in Nigeria. The charge is different from the mobile termination rate (MTR), which is the rate local operators pay to another local operator to terminate calls within the country.
With the new development, mobile network providers in Nigeria will begin receiving revenue from all international calls in US dollars from 2022 as the new ITR is expected to replace the existing one which currently stands at N24.40k and is being received in naira by the operators.
On why the new rate is to be paid in US dollar as against the naira, NCC explained that it will enable Nigerian operators to receive an increasing rate in naira terms to accommodate devaluation, adding that no licensee shall charge or receive effective rate per minute below the determined ITR floor rate.
NCC further explained that ITR being denominated in naira had multiple negative impacts on operators, which was further exacerbated by a series of naira devaluations, which ultimately left Nigeria from being a net receiver with respect to international minutes to a net payer.
“As such, payment discounts, volume discounts, and any other concession that has the effect of bringing the effective ITR lower than the rate determined shall be deemed a contravention of the new determination and will attract sanctions in line with the Nigerian Communications (Enforcement process, etc.) Regulations, 2019,” the NCC said in a statement.
The NCC also explained that operators can negotiate with their international carriers/partners to arrive at a rate above the floor but should put into consideration that the ITR floor is the minimum that can be charged.
On the other hand, while the ITR only pertains to the cost of bringing traffic into Nigeria, the commission said Nigerian operators will continue to pay the regulated MTR, which is the local termination rate, among themselves.
It added the MTRs of N3.90 for generic 2G/3G/4G operators and N4.70 for new entrant operators determined in 2018 would continue to apply for local call terminations until a new determination is made by the commission.
According to NCC, the ITR being denominated in naira had multiple negative impacts on operators, which was further exacerbated by a series of naira devaluations, which ultimately left Nigeria from being a net receiver with respect to international minutes to a net payer.
Umar Danbatta, executive vice-chairman of NCC, noted that the commission carefully considered the information provided by stakeholders and took a view on parameters and regulatory measures before arriving at the new ITR of $0.045,
He added that the process of arriving at the ITR had been conducted transparently with maximum clarity to all parties without compromising the confidentiality of commercially-sensitive information.
Danbatta expressed confidence that the result of the review will make a significant contribution to the development of the Nigerian telecoms sector and prove beneficial to subscribers, operators, and the country at large.