Business
Tariff hike: Telcos face 35% revenue slump
…as subscribers cut down on airtime, data purchases
Telecommunications firms’ revenue earnings are slowing down despite a moderate growth of 15 percent at the end of Q1’2025, as consumers continued to cut back on spendings on airtime and data purchases, Business Hallmark can report.
This deceleration, findings showed, is largely driven by the recent 50 per cent hike in airtime and data tariffs by telcos, which raised the costs of phone calls, SMS, and data bundles nationwide in February, forcing subscribers to start cutting down on purchases.
The Nigerian Communications Commission (NCC), it would be recalled, had on January 20, 2025 granted telcos request to effect a price increase after about 12 years freeze on tariff.
With the NCC’s tariff hike approval, an SMS, which cost N4 for 160 characters in February now costs N6. Though, a major plank of the increment came into effect earlier in the year, commercial banks began charging their customers N6 for every SMS alert on May 1.
In the same vein, the floor price of voice calls increased from the old rate of N6.40 to N9.6 per minute.
However, BH observed that the hike in data tariff did not conform with the NCC’s approved 50 percent hike. According to BH’s analysis of telcos different data rates, the increment in data plans ranges from 50% to 75%.
Above 50 percent hike
For instance, while the price of 20GB data that sold for N5,000 before the increment now goes for N7,500 (about 50% increment), 1GB, which previously goes for N200 on the MTN Betatalk tariff plan, now sells for N350 (about 75 percent increase).
Meanwhile, despite service providers now earning more revenue as a result of the price review, subscribers hit hard by the hike have resorted to several cost-saving measures, especially through the cutting down on airtime and data expenses.
An online survey conducted by BH to gauge the response of subscribers to the rise in airtime and data costs indicated that about 85 percent of respondents have either cut down on their monthly bundle plans, or opted for cheaper plans.
For instance, while 150 subscribers (representing 50 per cent) of the total 300 survey respondents admitted to have downgraded to much cheaper plans, 105 respondents, representing 35 percent said they had dropped from two to three monthly plans to only one.
Meanwhile, only 45 respondents (representing 15 percent) said they had retained their old subscriptions despite having to cough out more for the plans.
For instance, a Lagos based journalist, who did not want his identity disclosed, told BH that before the recent hike in tariffs, he used to run three data plans, 9mobile’s 15GB monthly at N3,000, MTN’s weekly data plan of 15GB at N2,000, and MTN’s 15GB Always-On data plan at N3,000.
“I opted for the three plans due to the nature of my work, which necessitates that I always have data to access information and process news.
“While I spent the sum of N8,000 monthly to subscribe to my major plan, which is the weekly MTN data plan of 15GB at N2,000, I coughed out extra N5,000 monthly on the 9mobile’s 15GB monthly plan at N3,000 and MTN’s 15GB Always Data-On plan at N3,000, which served as backups.
“MTN’s 15GB Always Data-On plan at N3,000 was the icing on the cake for me. Unlike the two other plans, which I normally exhaust before the month ends, the Always Data-On releases only 500MB daily for the next 30 days.
“So, at every point in time, I must have 500MB data every day for online use, while I used the airtime bonuses to make calls.
“On the whole, I normally spend N14,000 monthly on the 60GB I used to receive from the two telecom companies”, the media practitioner disclosed.
Cost Cutting
He further said that he decided to dump the 9mobile plan since the telco started having problems in December 2024, leaving only the two MTN plans.
“But with the new tariff hike, N3,500 will only fetch me 11GB weekly MTN plan (N14,000 monthly); the least plan on the MTN’s Always Data-On bouquet is the 18.6GB, which goes for N5,500, while 9mobile’s tariff had remained the same, N3000 for 15GB, probably due to the firm’s operational challenges.
“As a result, I moved to other plans to save costs. I presently subscribe to the MTN Daily Smart Data of 2.5GB at N400 (N12,000 monthly) and the monthly Always Data-On plan of 18.6GB at N5,500, at a combined cost of N17,500”, the journalist explained.
Millions of Nigerians affected by the hike have also made drastic changes to their tariff plans, with many cutting back on their SMS and internet use or planning to do so.
Another respondent based in Abuja, Gideon Olatunji, said before the increment, he used to spend about N30,000 on a family plan (unlimited), which covers his family of five for one full month.
“I now get the same plan for N40,000. This is a massive jump of about 50% in cost. It has put a major strain on my already overstretched finances.
“Expenses have been going up, yet income has remained static. I hope it (hike) won’t continue as I doubt I’ll be able to meet up with any further increment”, Olatunji stated.
According to NCC’s Q1 2025 report on the telecoms industry, data consumption fell from a record high of 1 million terabytes (TB) in January to 893,054.80 TB in February—a sharp drop that coincided with the new pricing regime.
Although, usage rebounded to 995,876.10 TB in March, it still did not return to January levels. Experts who spoke to our correspondent on the matter, projected that subsequent data consumption figures will likely trend lower despite MTN Nigeria and Airtel Nigeria, the two telecom firms listed on the Nigerian Exchange Limited (NGX), recording a 15.46 percent increase in average revenue per user (ARPU) in the first quarter of 2025.
According to the financial experts, the Q1’2025 data usage decline points to a deeper response to rising costs.
Responding, an IT expert, Bola Shonubi, argued that consumers in the low and middle-income brackets are, particularly sensitive to sudden price changes in data and telecom services
“While data usage usually dips in February, the scale of this year’s reduction suggests that consumers are reacting more strongly to the price hikes.
“While the operators have gained on one hand, they are losing from the other. The 15.46 percent increase in average revenue per user in the first quarter of 2025 clearly points to this.
“According to data released by Airtel Nigeria and MTN Nigeria, their average combined revenue per user (ARPU) rose to $2.24 in Q1 of 2025, up from $1.94 in Q1 2024.
“What this data suggest is that the two firms, despite hiking the prices of their services by at least 50% in the first quarter of the year, could only raised their ARPU by 15.46%.
“Let me quickly do a quick analogy of what really happened. Assuming I used to buy airtime and data worth N10,000 from MTN on a monthly basis before the recent hike in tariffs. With the increment of 50 percent, my spendings on airtime and data should normally jump to N15,000 assuming I didn’t cut down on purchases.
“But if my revenue increase amounts to only N750 (15%), instead of the expected N5,000, it means I actually cut down on purchases.
“Succinctly put, they (telcos) underperformed by about 35 percent in Q1’25. I am strongly of the opinion that the spike in telecom costs will trigger further cuts among low and middle-income users, who form the core of the market,” Shonubi projected.
Banks Angle
Apart from telcos, commercial banks are also feeling the brunt of the price hike. Many bank customers, who spoke to BH on the recent implementation of the N6 SMS charge on every SMS alert sent by banks, said they are not comfortable with the development.
According to the customers, they had instructed their banks to deactivate the SMS alerts linked to their accounts and replaced it with email alert, which comes at no cost.
“I have stopped using the SMS alerts and USSD codes to access banks products. I recently had a bitter experience where one of my banks charged me N1,300 for forty-five SMS alerts for one month.
“What really annoyed me was that they even charged me for messages sent to me during Easter and my birthday. Can you imagine that? So, I have no option than to put a stop to the nonsense (SMS messages).
“I have also been having issues with the USSD option. One day in March, I tried about seven times to load buy airtime on my line through my bank.
“Each time I tried, I was debited N6.98 for using the USSD option, but I never got the value for the transaction. While the principal sums I paid for airtime and data were actually reversed, the N6.98 were never ever reversed.
“So, I have stopped using USSD codes and now recharge through bank apps. I can’t be dashing out money I can’t afford to banks and telcos”, said a trader at the Jankara Market in Lagos, Jude Onwuka.
