Telecoms operators seek downward review of annual operating levy to 1%

Telecom Mast

Lagos – The Association of Licensed Telecommunications Operators of Nigeria (ALTON) has urged the Nigerian Communications Commission (NCC) to downwardly review the Annual Operating Levy (AOL).

The Chairman of ALTON, Gbenga Adebayo, made the call on Wednesday in Lagos, during the ” Vanguard Economy Forum on Telecoms”.

The theme of the forum is ”Unlocking the Revenue and Growth Opportunities in the Telecoms Sector in a Changing Business Model and Digital Technology Environment: Role of Regulator, Operators and OTT Service Providers”.

Adebayo said that there was the need for a downward review of the AOL as the increasing usage of Over-The-Top (OTT) services by telecommunications customers was adversely impacting on revenue of the operators.

He said that the operating levy of 2.5 per cent should be reduced to one per cent, in the face of the reality on the ground in the industry.

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According to him, the 2.5 per cent is being deducted from the operator’s turnover, which he described as not fair enough.
”For example, let me say you sell N1 million, then you remove your expenses, you remove your tax, then you take your profit from it.

”What NCC does is to take the entire turnover, that is all income before tax and before expenses, then take 2.5 percent on it, which in itself is not a fair approach.

”This is because for you to achieve this N1 million, you have spent certain money, so, I feel you should actually take out your expenses before they apply the 2.5 per cent.
”So, what it then means is that the 2.5 per cent is actually additional expenses on the operators. it is high, because it is 2.5 per cent of annual turnover, not 2.5 per cent of profits. They need to consider a downward review, one per cent will be fair,” he said.
The ALTON chairman said that telecommunications companies were loosing money, hence, the urgent action to save them from further loss, due to activities of OTT providers who do not invest in infractructure.

He said that the OTT service providers utilised traditional Mobile Network Operator (MNO) infrastructure to offer social networks, voice and instant messaging services to retain users loyalty and drive stickiness.

Adebayo said that the providers had created large online communities and eventually attracted huge advertisement revenues, but were not being regulated by NCC

The services in Nigeria included Voice and Messaging service applications such as: WhatsApp, WeChat, Skype, Facebook, Viber and IMO among others.
He said that the MNOs had neither rights nor control over the OTT services, as their customers had the discretion to use the internet as desired.

According to him, telecom operators incur the costs; invest a lot on network infrastructure, in order to provide basic and innovative services to customer, while OTT players make the money.

”We recommend that OTT players enter into agreement with telecommunications companies for revenue share or payment of a kind of interconnect fee to operators.
”ALTON support models intended to engender revenue-share arrangements on advertisement-based OTT content. This co-operative model is being developed by operators and may necessitate special data bundles.

”We support innovative solutions by operators to minimise impact of disruptive platforms in the best interests of consumers and of industry sustainability,” he said. (NAN)