Nigeria’s telecommunications industry is undergoing a profound transformation driven by the rollout of 5G networks and the rapid adoption of Artificial Intelligence (AI) and Internet of Things (IoT) technologies, prompting the Nigerian Communications Commission (Nigerian Communications Commission) to review the country’s existing interconnection pricing framework.

The telecoms regulator, NCC, disclosed this on Tuesday at the Industry Stakeholder Consultative Forum on the Determination of Mobile Termination Rates (MTR) in Nigeria held in Lagos, where regulators, network operators and other industry stakeholders convened to assess the adequacy of the nation’s wholesale telecommunications pricing regime amid changing market dynamics.

Speaking at the forum, Omotayo Muhammed, Director of Competition and Tariff at the NCC, said technological advancements and evolving industry realities have fundamentally altered telecommunications economics since the last major Mobile Termination Rate review in 2018.

Mobile Termination Rates are the wholesale fees paid by one telecommunications operator to another when a call originates on one network and terminates on a different network. Nigeria’s current MTR regime sets rates at N3.90 per minute for established operators and N4.70 per minute for new entrants and smaller operators.

NCC: 5G rollout, AI make interconnection ‘less representative of current realities

According to her, “5G rollout and AI/IoT adoption are reshaping network usage patterns, cost structures, and service delivery modes, making legacy interconnection frameworks less representative of current realities.”

Mobile Termination Rates are the wholesale fees paid by one telecommunications operator to another when a call originates on one network and terminates on a different network. Nigeria’s current MTR regime sets rates at N3.90 per minute for established operators and N4.70 per minute for new entrants and smaller operators.

The NCC noted that several major developments have emerged since the last review, including the rapid rise of Over-The-Top (OTT) communication platforms, the introduction of Mobile Virtual Network Operators (MVNOs), changing consumer behaviour and mounting macroeconomic pressures.

According to the Commission, OTT services are increasingly capturing voice and messaging traffic, reducing reliance on traditional telecommunications services and weakening legacy wholesale revenue streams that have historically underpinned interconnection arrangements.

The regulator also pointed to the emergence of MVNOs as introducing new business models that require more flexible wholesale access and interconnection frameworks.

Muhammed further noted that broader economic conditions have significantly altered operators’ cost structures.

“Significant naira depreciation, inflation, and rising energy and equipment costs since 2018,” the NCC Director said, “have materially altered operator cost structures and the economic case for the current rate regime.”

USSD, A2P messaging and MVNO services under review

Beyond traditional voice interconnection services, emerging digital services such as Unstructured Supplementary Service Data (USSD), MVNO integrations and Application-to-Person (A2P) messaging have grown substantially over recent years but remain insufficiently addressed within the existing regulatory framework, the commission said.

“USSD, MVNO integrations and A2P, all operating at scale, are not adequately addressed by the existing tariff regime and require formal regulatory treatment,” according to the NCC.

Under the proposed review, the telecoms regulator plans to establish an updated regulatory framework covering Mobile Termination Rates, International Termination Rates (ITR), USSD services, retail price floors and caps, and MVNO interconnection arrangements.

The exercise will also determine cost-reflective termination rates across different generations of mobile technologies and categories of operators, while assessing whether the current asymmetric pricing structure designed to support smaller operators remains fit for purpose.

According to the NCC, the review is intended to support investment, strengthen competition and protect consumers in line with the objectives of the Nigerian Communications Act 2003.

The telecoms regulator noted that termination rates that are set too low can undermine infrastructure investment, while excessive charges may ultimately translate into higher retail prices for consumers.

“Rates that are too low fail to signal the true cost of providing termination services and can deter infrastructure investment. Cost-based rates reward efficient investment,” the commission said.

The telecoms regulator noted that termination rates that are set too low can undermine infrastructure investment, while excessive charges may ultimately translate into higher retail prices for consumers.

At the same time, it warned that “inflated termination charges are ultimately borne by end users through higher retail prices. A well-calibrated MTR supports affordable services for all Nigerians.”

The NCC expects the review to produce a transparent, evidence-based and cost-reflective interconnection framework capable of supporting sustainable investment, fair competition and affordable communications services.

KPMG: Review will support sector growth

Also speaking at the forum, Wole Adeloku, Partner at KPMG, the consulting firm engaged by the NCC to support the study, said the review will involve extensive stakeholder consultations, international benchmarking and the development of forward-looking cost models.

According to him, the exercise is designed to stimulate investment and strengthen the long-term growth prospects of Nigeria’s telecommunications industry.

“One of the things I can give as a guarantee based on interaction with NCC is to stimulate investment,” Adeloku said.

“This study is also meant to encourage investment, support the growth of the sector, and even protect the consumer as we support that.”

He added that the study would rely on industry data and consultations with operators to ensure that its recommendations accurately reflect market realities and future sector requirements.

ALTON backs data-driven approach

Gbenga Adebayo, Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), described the review as a critical exercise that will help determine the actual cost of terminating calls across telecommunications networks.

“We need to from time to time review where we are. Sometimes prices go up, sometimes prices stabilise, sometimes prices come down,” Adebayo said.

“For us this exercise is very important. It is the first of very many important steps that is required by our regulator to have a fair and competitive industry.”

According to him, a data-driven review will provide greater certainty for investors by ensuring that regulatory decisions are grounded in verifiable industry data rather than assumptions.

“What our regulator is trying to do by this is to compile the required, necessary data that is guiding our prices,” Adebayo said.

The review comes at a pivotal moment for Nigeria’s telecommunications sector as operators adapt to next-generation technologies, expanding digital services and rising operational costs. The outcome is expected to shape the economics of interconnection, competition and digital service delivery across the industry for years to come.