Insecurity, Soaring Costs Stall Nigeria's ICT Tax Boom

Nigeria's Information and Communication Technology (ICT) sector has experienced its first decline in Company Income Tax (CIT) in four years, signaling a reversal of the sector's previous growth trajectory. The National Bureau of Statistics reported that CIT from the ICT sector fell to N63.62 billion in the first quarter of 2026, down from N65.52 billion in the same period of 2025. This marks the end of a three-year streak of double-digit growth.

Stakeholders in the sector attribute this reversal to a confluence of challenges. These include escalating operating costs, a significant drop in foreign investment, soaring energy prices, increased infrastructure expenses, and rising borrowing costs. These factors have collectively squeezed operators' profitability, even as demand for digital services remains strong.

“

The industry has experienced significant increases in energy costs arising from the removal of fuel subsidies, inflationary pressures on maintenance and logistics, rising security costs, and the substantial capital investments required to expand and modernise network infrastructure to meet growing consumer demand.

Foreign capital invested in the telecommunications sector saw a dramatic decrease, plunging by 91 percent year-on-year to a four-year low of $7.24 million in Q1 2026, compared to $80.78 million in Q1 2025. This investment drought persists despite a 50 percent tariff adjustment approved in early 2025 by the Nigerian Communications Commission (NCC) to help operators cope with rising diesel prices and other operational constraints.

Engr. Gbenga Adebayo, Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), emphasized that the decline in CIT should be viewed within the context of the industry's challenging operating environment. He noted that while broadband penetration, fintech, e-commerce, and digital services continue to drive demand, growing revenues are not translating into higher taxable profits due to unprecedented cost pressures. These pressures stem from increased energy costs post-fuel subsidy removal, inflationary impacts on maintenance and logistics, rising security expenses, and substantial capital investments needed for network expansion and modernization.

“

These factors have compressed operating margins and, consequently, taxable profits, even as operators continue to invest heavily in expanding network coverage.