Why Nigeria’s Tax Reform Matters for Telecoms and Broadband

Why Telecoms Is at the Centre of Nigeria’s Tax Reset

As Nigeria embarks on one of its most ambitious fiscal overhauls in decades, the telecommunications sector has emerged as a critical test case for the success—or failure—of the new tax reform framework.
Telecoms is no longer just a commercial industry. It underpins Nigeria’s digital economy, powering financial services, e-commerce, education, healthcare, and government platforms. With over 220 million active mobile lines and broadband penetration exceeding 50 per cent, the sector contributes an estimated 14–15 per cent to national GDP.

Yet, for years, operators have argued that excessive and overlapping taxes have constrained investment, slowed network expansion, and increased service costs. The new tax reform, driven by the Presidential Fiscal Policy and Tax Reforms Committee, aims to change that narrative.

A Longstanding Problem: Multiple Taxes and Unpredictable Levies
Investigations show that telecom operators face one of the heaviest tax burdens in the Nigerian economy. Beyond statutory federal taxes, operators contend with state and local government levies that range from Right of Way (RoW) charges to environmental and signage fees.
Industry associations estimate that telecom companies are exposed to over 40 different taxes and levies, many of them imposed without coordination.

“The problem is not just how much we pay, but how unpredictable the system has been,” said Gbenga Adebayo, Chairman of the Association of Licensed Telecommunications Operators of Nigeria (ALTON). “You cannot build long-term digital infrastructure in an environment of fiscal uncertainty.”

What the New Tax Reform Promises
At the heart of the reform is a push to:
Harmonise taxes across federal, state, and local governments
Eliminate nuisance and duplicative levies
Expand input tax credits, especially for capital-intensive sectors
Digitise tax administration to improve transparency and compliance
For telecom operators, the reforms could potentially reduce operational friction and restore investor confidence—if implemented effectively.

Input Tax Credits: Relief for a Capital-Intensive Industry

Telecoms infrastructure requires heavy upfront investment in fibre optics, base stations, power systems, and imported equipment. The reform expands input tax credits, allowing businesses to offset taxes paid on inputs against output obligations.
“This reform recognises that capital-heavy sectors like telecoms need cash-flow efficiency to grow,” said Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee. “Properly implemented, it reduces pressure on pricing and supports long-term investment.”However, operators remain cautious. Past experiences with delayed refunds and administrative bottlenecks have raised concerns that theoretical benefits may not translate into real cash-flow relief.

How Major Operators Could Be Affected

MTN Nigeria

As the largest operator by subscribers, MTN bears the greatest exposure to Nigeria’s tax environment. Analysts say predictable tax rules could accelerate its 5G rollout and rural broadband expansion.

Airtel Nigeria

Airtel’s growth strategy depends heavily on foreign capital. Industry sources say consistent tax policy could lower investor risk perception and improve funding flows into network expansion.

Globacom

As an indigenous operator with extensive infrastructure ownership, Globacom stands to benefit significantly if illegal local government levies are eliminated.

9mobile rebranded to T2

Still in recovery mode after years of financial restructuring, 9mobile (T2) remains the most vulnerable. Experts warn that persistent tax uncertainty could undermine its turnaround efforts.

Will Consumers See Lower Tariffs?

Government officials insist that the tax reform is not designed to increase telecom tariffs. But industry analysts caution that pricing outcomes will depend on actual cost reductions, not policy announcements.
Rising energy costs, foreign exchange volatility, infrastructure security challenges, and taxes all influence pricing decisions.
“If reforms genuinely reduce operational costs, operators can avoid passing expenses to consumers,” said a telecom economist in Lagos. “If not, tariffs will eventually reflect those pressures.”
Consumer groups note that millions of Nigerians now depend on mobile data for income, education, and access to public services.

Regulatory Coordination: The Role of the NCC

The Nigerian Communications Commission (NCC) has classified telecom infrastructure as Critical National Infrastructure, a designation meant to protect networks and encourage investment.
Experts argue that tax authorities must align with this policy stance.
“You cannot declare telecoms critical infrastructure and still treat it as an easy revenue target,” said a former telecom regulator.
There are growing calls for a single-window compliance framework that aligns NCC regulatory reporting with tax administration to reduce duplication and compliance fatigue.

Foreign Investment and Nigeria’s Global Standing

Nigeria competes with peer African markets such as Kenya, Egypt, and South Africa for telecom investment. Analysts say those markets benefit from clearer tax regimes and targeted incentives for digital infrastructure.
“Capital follows certainty,” said an investment analyst. “If Nigeria gets implementation right, telecom investment will respond quickly.”

Risks That Could Undermine the Reform
Despite its promise, the reform faces significant risks:

Resistance from states reliant on telecom levies

Weak enforcement against illegal taxes
Slow digitisation of tax systems

Policy reversals driven by political pressure
“The real danger is partial reform,” a policy analyst warned. “Without discipline and coordination, the sector may see little change.”

In conclusion: A Defining Moment for Nigeria’s Digital Economy

Nigeria’s new tax reform represents a defining moment for the telecom sector and the broader digital economy. If faithfully implemented, it could unlock faster broadband expansion, stabilise pricing, and restore investor confidence.
But telecom operators and investors are waiting for evidence—not assurances.
As one industry executive put it:
“The success of this reform will be measured not by policy documents, but by what happens on the ground.”

Nigeria’s new tax reform could reshape telecom operations, investment flows and consumer pricing. This investigative report examines expert insights, operator impacts and the risks that will determine the future of Nigeria’s digital economy.