In a startling development that has sent shockwaves through Nigeria’s telecommunications sector, MTN Nigeria, the country’s leading mobile network operator, has reported an extraordinary surge in tax payments for the first half of 2024. The company’s tax bill skyrocketed to ₦232 billion, marking a staggering 586% increase compared to the same period last year.
Multiple Taxation Weighs Heavy on Telecom Operators
The telecom giant faced a labyrinth of 54 separate taxes in 2024 alone, spanning various federal, state, and local government agencies. According to the Association of Licensed Telecommunication Operators of Nigeria (ALTON), this tax burden is expected to intensify further by year-end.
ALTON’s President, Gbenga Adebayo, revealed to TechCabal that these taxes have inflated operational costs for telecom companies by 50% in 2024. “The multiple taxes are driven primarily by revenue,” Adebayo stated. “There is a perception that the telecoms industry is highly profitable and so can be treated as a cash cow.”
A Maze of Statutory and Arbitrary Levies
While some taxes are statutory, others appear to be imposed arbitrarily. For instance, the newly formed National Association of Telecom Landlords in Bayelsa has introduced levies not recognized by state law. Federal taxes, numbering less than 20, are mostly legally grounded. However, state and local taxes present a complex mix of legally-backed and arbitrary levies.
Impact on Digital Infrastructure
This oppressive tax environment poses a significant threat to the expansion of broadband infrastructure, crucial for integrating millions of Nigerians into the digital economy. As of December 2023, the Nigerian Communications Commission (NCC) reported that 27.91 million people in 97 communities still lack reliable high-speed internet access. In states like Niger, high-speed internet remains entirely absent.
Right-of-Way Fees: A Major Hurdle
One of the most pressing issues is the inconsistency in right-of-way fees, which allow telecom companies to lay fiber optic cables on state-owned land. While most federal government agencies charge ₦145 for fiber laying on highways, the Nigerian Inland Waterways Agency (NIWA) demands ₦2,500 per linear square meter for laying fiber along waterways and bridges.
State charges vary dramatically, ranging from a mere ₦1 per kilometer in Kwara to an exorbitant ₦9,000 in Oyo State.
A Path Forward?
Some states, including Osun, Lagos, Cross River, and Abuja, have invested in fiber ducts to protect cables and lease these to operators. However, the requirement to charge separate fees for the lease and right of way still makes this arrangement costly for operators like MTN, Airtel, and Globacom.
As the Nigerian telecom industry grapples with this unprecedented tax burden, the future of digital infrastructure development and affordable connectivity for millions of Nigerians hangs in the balance. MTN Nigeria has not yet responded to requests for comments on this developing situation.
