New Telegraph

Telecoms: Cutting Operation Costs via Alternative Power Sources

One of the challenges faced by telecoms operators in Nigeria is the huge amount spent on fuels to power their operation. However, there have been discussions on how they could cut their cost of power by leveraging alternative sources for the industry. Abolaji Adebayo reports

Due to increasing cost of production especially with the amount of money going into the purchase of fuels to power their operations, telecoms operators have continued to agitate for an increase in their tariffs to keep their business. However, the regulatory body, the Nigerian Communications Commission (NCC), has been restraining them from increasing tariffs.

Owing to epileptic and unreliable power supply from the national grid, many telecoms companies in Nigeria depend on diesel generators as backup power source, which is said to be expensive and affect their capital expenditure (CAPEX) and operating expenditure (OPEX). The telecoms industry is said to be the highest consumer of fuel as many operators depend solely on diesel. A small percentage of them use gas as backup to their diesel generators. Their consumption of fossil fuels is occasioned by the fact that their power must not fail for a second to avoid downtime.

Cost

Meanwhile, the cost of diesel has kept skyrocketing, forcing the telecoms operation to agitate for an increase in their service tariffs. While the big companies in the telecoms industry are struggling, some of the small ones are being forced out of business since they cannot cope with the cost of production, especially the high amount going into the fuel.

While they cannot depend on the electricity power supply, which has been hitherto poor in Nigeria, since 2022, the telecommunication companies have been crying out to the Nigeria Communications Commission (NCC) over the poor electricity supply in the country. They complained that the cost of running and powering telecoms services across the country had jumped by 233.33 per cent to about N360 billion every month.

Tariffs

Jotted by the economic hardship caused by hike in fuel, which they depend on for running their services, the telecoms companies have said they might not have any other option than to increase their service tariffs. According to them, the industry may collapse if they are not allowed to increase their tariffs to measure up to their cost of production.

They have continued to complain about the high cost of production, which, according to them, is not in line with what they make as revenue from their services, saying they were running at a loss rather than making profits. They appeal to the regulatory body to consider their plea for the increase to save their business in this tough economy. They made the complaint through their umbrella body, the Association of Licensed Telecoms Operators of Nigeria (ALTON).

Increase

In a chat with New Telegraph, the Association’s Head of Operations, Gbolahan Awonuga, said there was no respite for them than to increase the tariffs. “Nothing can stop us from increasing our tariffs. Telecom operators are the highest users of diesel. Why should we be the only ones suffering from the fuel subsidy removal? “The situation has impacted us negatively and if it continues impacting us, there is going to be a crisis because we are not isolated from the ecosystem.

The telecom companies are losing and many of them may be forced out of the business or leave the country. “Despite the higher cost of production, we are not allowed to increase our tariffs because, in our sector, we can- not just do anything anyhow without the permission of the regulatory agency. The market forces are supposed to determine the price but in our sector that is not allowed. “There is a need for an urgent review of our tariffs unless they want to destroy the industry, unless they want to kill the industry unless they want to force many companies out of business.

We need price determination, the NCC needs to quickly come up with price determination, and we need a price plan. We should not wait until there is a crisis because there are many operators who are finding it very difficult to cope now. “The NCC needs to protect the operators as it is also protecting the consumers, we should be allowed to control our tariffs so that the industry is not faced with a crisis, he complained,” they said.

Alternative energy

Meanwhile, stakeholders and industry experts at a forum organised by the Nigerian Communications Commission (NCC) in Lagos recently highlighted the need for Nigerian telecoms sector to find innovative solutions and alternative sources of energy to address the challenge of power supply, which can improve network coverage, quality of service, reduce network outages, lower operational costs, and reduce the level of environmental pollution caused by generators and the use of fossil fuels.

Though there are arguments that renewable energy is also expensive and also comes with its challenges as well such as the issue of theft whereby some unscrupulous people steal the batteries at the base station and the issue of vandalisation, it is believed that renewable energy is more reliable than other sources of power supply.

Policy

For the deployment of renewable energy, stakeholders said government had to formulate policies that will regulate the use of renewable energy in Nigeria. Meanwhile, the NCC has disclosed plans to introduce policies that will encourage telecoms operators to adopt clean and sustainable energy sources, to eradicate the environmental pollution caused by generators and the use of fossil fuels. The NCC Executive Vice Chairman, Prof. Umar Danbatta, disclosed this during a roundtable discussion with academia, industry, and other stakeholders on research on alternative energy in Lagos.

With the theme “Refocusing Academic Research towards Alternative Clean Energy: Panacea to Paucity of Energy in the Telecoms Sector,” the NCC charged the universities to strengthen their research ability on renewable energy. Danbatta, who was represented by the Executive Commissioner, Technical Services, NCC, Ubale Maska, said the policy would serve as a framework for telecom service providers to contribute to a greener future.

“We believe that this policy will not only benefit the environment but also drive innovation and create new business opportunities within the industry. “However, achieving our objectives requires collaboration and partnership with the academia and other stakeholders,“ he said.

Research

Since Nigeria has not fully developed its renewable energy, there is a need for research to have robust production in the country. According to Danbatta, academia plays a crucial role in advancing research and innovation that can transform industries. He noted that the academia’s expertise, knowledge, and insights would guide in developing feasible alternative sources of clean energy that the telecommunications industry could leverage for a sustainable energy supply. Danbatta said the Commission’s main goals were aimed at refocusing future academic research towards feasible alternative sources of clean energy that could be harnessed by the telecom industry.

According to him, it is essential to identify and explore new technologies, “such as solar, wind, and biomass, that can power our communication infrastructure efficiently and sustainably. “We need the research of the academia to help us understand the potential of these alternative energy sources, address their challenges, and develop strategies for their implementation in the telecom sector.” “Secondly, we seek to promote research in academia that leverages digital technology to improve the livelihoods of Nigerians,” the NCC boss said.

He explained that the telecoms sector was at the forefront of digital transformation, noting that it was necessary to harness its potential to enhance the lives of citizens. According to him, the telecoms sector, like many other industries, has a significant role to play in transitioning to a sustainable energy future. He said it was the NCC’s responsibility to ensure that the growth of the telecoms sector was achieved in an environmentally friendly manner and alignment with the Sustainable Development Goals (SDGs).

He stated that the Commission recognised the importance of clean energy usage in the industry and was committed to promoting regulatory initiatives that would encourage the adoption of renewable and ethical energy sources. Danbatta said studies had shown that renewables and energy efficiency, coupled with electrification, could provide over 90 per cent of the necessary reductions in energy-related carbon emissions. “This presents a significant opportunity for the telecommunications sector to contribute to the world’s energy transformation.

Collaboration

“To be effective, there is a need for collaboration among the government, the operators, and the academia. “Let us leverage the power of collective intelligence to develop actionable strategies that will shape the future of the telecom industry in Nigeria. “We believe that by aligning research efforts towards alternative clean energy sources and leveraging digital technology, we can revolutionise the telecom sector in Nigeria, “Danbatta said.

Maska, in his remarks as Executive Commissioner, Technical Services, NCC, said in the face of global energy challenges and the critical need for sustainable practices, it was incumbent for NCC to explore innovative solutions to reduce the country’s carbon footprint. He said the telecoms sector, being an essential pillar of modern society, must take the lead in adopting cleaner, greener energy sources to mitigate the paucity of energy and contribute to a sustainable future.

Last line

Though seen to be expensive, developing renewable energy specifically for the telecoms industry will present the opportunity for multiple sources of power supply for the industry to thrive and reduce environmental pollution.

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