Telecommunications operators in the country have appealed to the industry regulator to allow them deduct the cost of diesel used in powering their base stations before their net revenue is calculated for the Annual Operating Levy (AOL).
This is even as the Nigerian Communications Commission (NCC) reviews the AOL regulations with a reduction in deductibles from the operators’ revenue.
The review of the regulations, the NCC said, was to ensure that all licensees are properly and equitably assessed for the annual operating levy as well as meeting both statutory and
regulatory expectations. It added that the review was also aimed at bringing the regulations in line with current realities and sustain the enviable contributions of the communications sector to Nigeria’s Gross Domestic Product (GDP).
The regulator in the amended regulations states that: “Every licensee that is a Network Operator shall pay to the Commission an Annual Operating Levy assessed at two and a half percent of the Licensee’s Net Revenue for the relevant period being its Gross Revenue less its Roaming cost, Interconnect cost, and Value-Added Services payable to VAS providers for the period.
“For the holders of Internet Service Provider Licence, only bandwidth cost is allowed to be deducted from gross revenue to arrive at the net revenue for the relevant period,” Making their submissions during a public hearing on the review, the operators said the NCC should include the cost of diesel being incurred by them as deductible from gross revenue.
Speaking specifically about tower companies, IHS in its submission stated that “for holders of Colocation and Infrastructure Sharing Licensees, cost of diesel to base stations is allowed to be deducted from gross revenue to arrive at the net revenue for the relevant period” should be added to the regulation.
However, responding to the operators’ request, NCC said that while it appreciates that the operational cost element is significant, it cannot be isolated to be a deductible for the licensees.
According to a recent research report by the NCC, three of the leading network operators, MTN, Airtel, and Globacom spend not less than N24.3 billion on diesel annually to power their base stations. Similarly, MTN in its submission to the regulator implored the Commission to approach with caution the implementation of the revenue drive.
According to the operator, “reducing AOL deductibles and increasing fees for resources, on the other hand, without an impact analysis, will drive up costs for operators and may ultimately set the industry on a degrowth path.”
While classifying the operators into Network and Non-network Licences as part of the review, the NCC states that the Non- Network Operator are to pay an Annual Operating Levy of one per cent of their net revenue for the relevant period, “being their gross Revenue less their roaming, interconnect and bandwidth costs for the period.”
“The portion of the revenue generated from the value-added services payable to Value Added Service providers shall be considered as an allowable deduction from the gross revenue of the network operators.
The portion of revenue shall be fully disclosed in the network operator’s audited accounts.
The operators should also provide the Commission with details of the revenue every quarter showing amount payable to each VAS licensee for the period,” NCC stated in the regulation. Meanwhile, the Association of Licensed Telecommunications Operators of Nigeria (ALTON) had recently called for a downward review of AOL.