Telecom Operators’ OPEX Soars by 85% to ₦5.85 Trillion

Nigeria’s telecommunications sector recorded a massive jump in operating expenses (OPEX), as industry operating costs surged to ₦5.85 trillion in 2024 — the highest on record. This represents an 85 percent increase compared with the ₦3.16 trillion reported in 2023.

Analysis by the Nigerian Communications Commission (NCC) shows that several key cost drivers contributed to the steep rise in OPEX. Most notably, exorbitant Right‑of‑Way (RoW) fees paid by telecom operators to state governments for laying fibre-optic cables across roads emerged as a major burden. Additional pressures came from persistent inflation, foreign exchange volatility, and sharply rising energy costs, all of which strained the operating budgets of mobile network operators.

The NCC’s annual Subscribers/Network Performance Report noted that although some states responded to industry pressure by waiving RoW charges, many jurisdictions still impose fees far above federal guidelines. For instance, Ogun State reportedly charges ₦9,477 per linear meter, Lagos charges ₦6,264, and Oyo imposes ₦5,303 — vastly higher than the ₦145 per meter benchmark set in 2020.

These cost increases came as telecom operators poured billions more into network expansion despite the challenging cost environment. Total capital expenditure (CAPEX) for 2024 surged to ₦2.9 trillion, up 159 percent year-on-year. The jump in CAPEX was driven by foreign exchange rate adjustments and inflation, which significantly raised the naira-equivalent cost of imported network equipment used for modernising infrastructure, expanding fibre networks, and rolling out 5G.

Meanwhile, the industry’s revenue performance partially cushioned the blow of rising costs. Total telecom sector earnings for 2024 reached ₦7.67 trillion, a 44.7 percent increase from ₦5.30 trillion in 2023. Higher demand for data services, growing subscription rates, and expanding enterprise solutions helped operators absorb some of the cost pressures.

For operators, the surge in OPEX has started to bite. In response, telecom companies slashed 383 jobs between 2023 and 2024, reducing their workforce from 17,882 to 17,499. The job cuts were most significant among GSM operators, Internet Service Providers (ISPs), and Value-Added Services (VAS) companies.

Industry stakeholders have expressed grave concern about the cost trajectory, pointing to the RoW crisis as a major challenge to broadband expansion. According to the Association of Licensed Telecoms Operators of Nigeria (ALTON), the high fees imposed by state governments for laying fibre-optic cables remain a major barrier to infrastructure deployment.

The NCC has urged more states to join the list of those offering zero RoW fees to relieve operators. As of the 2024 report, 11 states have reportedly waived RoW charges, including Adamawa, Bauchi, Enugu, Benue, and Zamfara. Officials warn that unless more states follow suit, the overall cost burden will continue to hamper network roll-out.

In reaction to the cost spike, the NCC approved a 50 percent increase in telecom tariffs earlier this year, allowing operators to pass part of the escalating costs onto consumers. The regulator said this move was necessary to safeguard the financial viability of operators and ensure continued investment in infrastructure.

Despite the challenges, industry analysts remain cautiously optimistic. They argue that the strong revenue growth and increased capital investments demonstrate the resilience of Nigeria’s telecom sector. However, they also warn that long-term profitability will depend on cost management, more regulatory cooperation, and genuine efforts by state governments to align RoW fees with federal benchmark rates.

As telecom operators continue to navigate this difficult terrain, their ability to deliver high-quality service at sustainable cost levels may depend heavily on the success of ongoing regulatory reforms and the willingness of states to ease charges that impede network expansion.

The telecom sector’s rising OPEX highlights the tension between infrastructure growth and operational sustainability, signalling the urgent need for collaborative policy solutions to protect both consumers and investors while sustaining sectoral growth.

With continued investment and regulatory adjustments, the Nigerian telecom industry remains well-positioned to expand connectivity, improve service delivery, and maintain its pivotal role in the country’s digital economy.