The Nigerian Communications Commission (NCC) has introduced a significant new regulation, making it mandatory for six major telecommunication operators in the country to submit their annual financial statements. This directive, part of the wider Accounting Separation Framework (ASF) for the telecoms industry, aims to enhance transparency, improve service quality, and ensure fair competition within the sector.

Dr. Ikechukwu Adinde, NCC’s Director of Public Affairs, disclosed the new regulation, specifying that it applies to leading telecom entities: MTN Nigeria, Globacom Nigeria, Airtel Nigeria, 9Mobile, Main One Cable Company Limited, and IHS Nigeria. These six licensees are required to adhere to this mandatory submission for an initial period of two years, after which the framework will be reviewed, potentially extending its scope to include other operators in the future.

The origin of this regulation dates back to the Accounting Separation Framework (ASF), whose implementation commenced on July 15, 2020. The ASF itself is the result of a comprehensive consultative process and a five-year review period involving the regulator, telecom licensees, and other key stakeholders. Under this framework, licensees are now obligated to submit their Regulatory Financial Statements (RFS) to the Commission within a strict deadline of seven months following the end of their respective financial years.

Beyond promoting transparent financial reporting, the NCC emphasizes that the new regulation will play a crucial role in ensuring the provision of qualitative and efficient telecoms services to consumers. Prof. Umar Danbatta, the NCC Executive Vice Chairman, further asserted that the ASF is designed to foster an industry environment that encourages open and transparent financial reporting while guaranteeing that charges for telecommunication services are both cost-based and non-discriminatory. This enhanced oversight will provide the government with better information regarding revenue generation in the sector and guide strategies for maintaining healthy competition.

This increased regulatory attention on the telecom sector is particularly relevant given its growing importance to Nigeria’s economy. With a notable decline in oil revenue, the Information and Communications Technology (ICT) sector has emerged as one of the highest contributors to the Gross Domestic Product (GDP) in recent quarters. For instance, in Q1 2020, ICT contributed N1.28 trillion, accounting for 7.65% of the total GDP, and even higher in Q4 2019, contributing N2.57 trillion, or about 13.12% of Nigeria’s Real GDP. The continuous boom in the Nigerian telecom sector positions its GDP contribution to increase further, making its robust regulation a governmental priority.

The new financial reporting mandate complements other recent initiatives by the NCC to enhance transparency and revenue generation. Prior to this development, the NCC partnered with the Federal Inland Revenue Service (FIRS) to create an Application Programming Interface (API). This API was specifically designed to ensure greater transparency in the value-added tax (VAT) paid by telcos, aiming to eliminate instances of multiple taxation and assist the FIRS in verifying the accuracy and completeness of tax payments. Together, the API and access to telcos' financial books will furnish the government with superior data concerning sector revenue, enabling more informed decisions about competition and market dynamics. Operators like MTN and Globacom, among others, are now expected to commence submitting their yearly financial reports to the NCC starting from the 2020 financial year.