NCC set to increase termination cost for inbound international calls from N24.40/minute

Blockchain, Fintech and the Future of Banking by Austin Okere

The Nigerian Communications Commission is finally set to increase the cost of foreign calls coming into the country. This was revealed by the Executive Vice Chairman of the commission, Prof Umar Garba Danbatta during the final Stakeholders’ forum to present the study on cost-based pricing of mobile International Termination Rate (ITR).

The study which commenced in March 2020, is aimed at determining the cost-based price of Mobile ITR to ensure healthy competition on traffic handling for voice services between local and international operators in Nigeria. MTR’s are rates that local operators pay to another local operator to terminate calls within the country. ITR is the rate paid to local operators by international operators to terminate calls in Nigeria.

In October 2016, the commission announced a 525% increase for ITR which saw the cost rise from N3.90/minute to N24.40/minute. Before then, ITR has suffered a consistent decline, falling from N4.90 in 2013 to N4.40 in 2014 and even further to N3.90 in 2015. The NCC attributed those consistent declines to the complete elimination of ITR residuals in 2013.

NCC set to increase termination cost of inbound international calls from N24.40
Prof Umar Danbatta, EVC of NCC

While presenting the findings of the study to stakeholders most of whom attended virtually, Prof Danbatta noted that the problem with the current ITR began in 2013 when the NCC, while deciding on a uniform cost for Mobile Termination Rates (MTR) for the Nigerian telecom industry, ordered that MTR are the same irrespective of where the call originated from.

He, however, stated that this was misconstrued by operators at that time to mean that ITR should be the same rate as the MTR. This mixup consequently led to the ignoring of the international cost portion or the ITR residuals.

Arising from these is the persistent fact that Nigeria’s ITR is below that of most countries with which it makes and receives the most calls, making Nigerian operators perpetual net payers. The obvious implication of this is seen in the attendant undue pressure on the nation’s foreign reserves, which continue to get depleted by associated net transfers to foreign operators on account of this lopsidedness,”

Danbatta further stated that regulating the ITR is imperative for developing countries, such as Nigeria, with volatile currencies in order to prevent or mitigate the imbalance of payments with international operators. He also said the Commission was faced with the challenge of arriving at a rate that will balance the competing objectives of economic efficiency while, at the same time, allowing operators the latitude to generate reasonable revenues.

“The overriding need for regulatory options and intervention in relation to the international termination rate in the voice market segment is predicated on some intractable challenges, most common with economies with severe macroeconomic volatility such as ours,” he said.

While the event was held to brief stakeholders on the result of the study and for suggestions for arriving at an equitable rate, it is clear from the Vice Chairman’s explanations that an upward review is likely.

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