Call and SMS Charges May Rise as NCC Reviews Telecom Interconnection Rates

Nigerians may face higher charges for calls and SMS if the Nigerian Communications Commission raises interconnection rates under its ongoing review of telecom pricing rules.

The NCC has started reviewing the mobile termination rate, also known as the interconnection rate, eight years after the current framework was last updated. The rate is the wholesale fee one telecom operator pays another when a customer makes a call that ends on a different network.

In simple terms, it is the cost that allows a subscriber on one mobile network to connect with someone using another network. Although the charge is paid between telecom companies, any upward review could eventually affect retail prices paid by consumers.

The current interconnection rate stands at N3.90 per minute and N4.70 per minute, depending on the applicable category. If the NCC approves a higher rate, operators may adjust call and SMS tariffs to reflect the new cost structure.

The review was discussed at a stakeholders’ consultative forum on the determination of mobile termination rates held in Lagos on Tuesday. Speaking at the event, Wole Adenekan, a partner at KPMG, said the existing rates no longer reflect the realities of the telecom industry.

According to him, rates that are set too low may fail to capture the real cost of delivering termination services. This, he said, could discourage fresh investment in telecom infrastructure at a time when operators are dealing with rising costs.

Adenekan noted that cost-based rates are important because they support efficient investment, strengthen competition, and contribute to broader economic growth. He also warned that poorly designed interconnection rates could distort the market.

He explained that if rates are set incorrectly, dominant operators may gain an unfair advantage over smaller competitors. A fair and cost-reflective rate, he said, would help create a more balanced market for all players.

At the same time, he cautioned that inflated termination charges could eventually be passed on to subscribers through higher call and SMS prices.

The review comes after years of major changes in Nigeria’s economy and telecom sector. Since 2018, operators have faced sharp increases in operating costs due to naira depreciation, inflation, higher energy prices, and rising equipment costs.

Telecom companies also now operate in a market shaped by newer technologies and changing consumer behaviour. The rollout of 5G, the growth of artificial intelligence, Internet of Things services, and digital platforms have changed network usage patterns and cost structures.

Another pressure point is the growing competition from over-the-top platforms such as WhatsApp, Telegram, FaceTime and other internet-based messaging and calling services. These platforms have reduced dependence on traditional voice calls and SMS, weakening old revenue models built around interconnection charges.

Adenekan said the 2018 mobile termination rate determination has not been updated for local calls. He added that the 2022 amendment only addressed international termination rates, leaving domestic interconnection charges unchanged.

In her welcome address, Omotayo Mohammed, head of the Competition and Tariff Unit at the NCC’s Policy Department, said the review is an important regulatory intervention aimed at keeping Nigeria’s telecom framework in line with current market conditions.

She said the commission would examine existing retail price controls and asymmetry arrangements to ensure that the market remains competitive while protecting consumers.

Mohammed noted that the current national interconnection rate regime was established through the NCC’s Interconnection Rate Determination of June 1, 2018. It was later adjusted in September 2022 through an amendment to the mobile international termination rate.

She said the telecom industry has changed significantly since the 2018 determination, with rapid market expansion, shifting competition, the commercial rollout of 5G, and the emergence of new players such as Mobile Virtual Network Operators.

She also said macroeconomic changes, especially exchange-rate reforms and inflation, have substantially affected the cost of providing communication services in Nigeria.

According to her, regulation must evolve with the market if it is to remain effective. She said the NCC is acting under Section 108 of the Nigerian Communications Act 2003, which mandates the commission to ensure that telecom tariffs and charges are reasonable, cost-reflective and non-discriminatory.

The outcome of the review will be closely watched by operators, investors and consumers. For telecom companies, the review could help align industry pricing with today’s operating costs. For consumers, however, it may lead to another increase in the cost of staying connected.