Tech

NCC sets ITR rate at $0.045, to take effect January 2022

Published

2 years ago

December 22, 2021

The Nigerian Communications Commission (NCC) has determined the new International Termination Rate (ITR) for voice services paid by overseas telecom carriers for terminating international calls on local networks in Nigeria at $0.045.

The new rate is contained in the ‘Determination of Mobile International Termination Rate’ issued by the Commission on November 25, 2021. The $0.045 rate is the floor price for ITR services and shall take effect from January 1, 2022. The rate is to be paid in US Dollars to enable Nigerian operators to receive an increasing rate in Naira terms to accommodate devaluation.

No licensee shall charge and/or receive an effective rate per minute below the determined ITR floor rate. As such, payment discounts, volume discounts and any other concession that has the effect of bringing the effective ITR lower than the rate determined shall be deemed a contravention of the new determination and will attract sanctions in line with the Nigerian Communications (Enforcement process, etc.) Regulations, 2019.

The ITR Floor is the minimum that can be charged. Operators will be free to negotiate a rate above the floor and this will be entirely left to commercial negotiation between the operators and international carriers/partners.

However, while the ITR only pertains to the cost of bringing traffic into Nigeria, Nigerian operators will continue to pay the regulated Mobile Termination Rate (MTR), the local termination rate among themselves.

The MTR of N3.90 for generic 2G/3G/4G operators and N4.70 for new entrant Long Term Evolution (LTE) operators determined in 2018, will continue to apply for local call terminations until a new rate is determined by the Commission pursuant to its powers as enshrined in the Nigerian Communications Act (NCA), 2003.

The subsisting regime of interconnection rates was sustained by the Commission’s Mobile (voice) termination rate issued on June 1, 2018. In the determination, it was stated that the ITR of N24.40 determined in 2016 will continue to apply until a new determination is made.

The ITR, being denominated in Naira had multiple negative impacts on local operators which was further exacerbated by episodes of devaluation of naira which ultimately left Nigeria from being a net receiver with respect to international minutes to a net payer.

The Commission also observed that operators continue to face a series of challenges occasioned by the denomination of ITR in Naira, necessitating a need for a cost-based study on ITR. In view of the foregoing and in fulfillment of its statutory mandate of periodic review of regulatory policies, the Commission engaged Messrs’ Payday Advance and Support Services Limited to undertake a cost-based study of voice MTR that is most suitable for the Nigerian telecommunications industry.

Commenting, the Executive Vice Chairman (EVC) of NCC, Prof. Umar Garba Danbatta, said to arrive at the new MTR of $0.045, “the Commission has carefully considered the information provided by stakeholders and taken a view on parameters and regulatory measures in the light of relevant information such as international experience, cost model results, the state of competition in the sector and the Nigerian macro-economic environment.”

He added that the process of arriving at the ITR had been conducted transparently with a view to providing maximum clarity to all parties without compromising the confidentiality of commercially-sensitive information.

“We are confident that the result of the review will make a significant contribution to the development of the telecoms sector in Nigeria and be beneficial to subscribers, operators and the country at large,” he said.

The report concluded by adding that the EVC, on behalf of the Board and Management of the NCC, extended the Commission’s gratitude to all operators and industry stakeholders, who submitted information relating to the regulation of interconnection rates and the costing models as well as the consultant, for their participation in the process leading to the Determination.