Telcos Warn of Financial Strain from New FRCN Dues

Telecommunication operators have asked the Financial Reporting Council of Nigeria for a fair annual payment system under its new Financial Reporting Council Amendment Act 2023 (the “FRC Act”), particularly for non-quoted public interest companies.

The operators, under the aegis of the Association of Licensed Telecommunications Operators of Nigeria (ALTON), stated that the new payment structure in the amended act, which is based on a percentage of companies’ annual turnover rather than the previous maximum cap of N1 million, will increase the tax burden on many telecom companies.

In a letter to Rabiu Olowo, executive secretary/chief executive officer, FRCN, the association listed the new payment structure as:

“0.02 percent of annual turnover of N25 million and below; 0.025 percent of annual turnover of more than N25million but not more than N50 million; 0.03 percent of annual turnover of more than N50 million but not more than N500 million; 0.04 percent of annual turnover of more than N500 million but not more than N1 billion; 0.045 percent of annual turnover of more than N1 billion but not more than N10 billion; and 0.05 percent of annual turnover of more than N10 billion.”

It noted that this new payment structure would burden non-publicly quoted telecom companies unnecessarily, potentially impacting their ability to maintain operations and continue providing critical services. It pointed out that the act determines the annual dues quoted companies pay concerning a percentage of their market capitalization up to a pre-determined lower amount.

“A publicly quoted company with a market capitalization of N1 trillion will be required to pay the sum of N25 million as annual dues, whilst a non-publicly quoted company will be required to pay 0.05 percent of N1Trillion amounting to N500 million,” it explained.

The umbrella body for telecom companies noted that while it understands the rationale behind this review, the implementation would pose significant challenges for its members, especially considering the harsh economic conditions.

“The telecommunications industry in Nigeria has been facing numerous headwinds, including rising operating costs and foreign exchange fluctuations,” it said.

It urged the FRCN to consider reintroducing a pre-determined cap on the dues payable by non-quoted public interest companies, like that which applies to quoted public companies, and shift its computation for annual dues to be more profit-based rather than revenue-based.