Telecom operators in Nigeria are pressing regulators to resolve a growing N250bn debt tied to USSD services, with smaller banks settling obligations but major ones lagging behind.
Telecom operators in Nigeria are seeing some progress in the repayment of the accumulated N250bn debt tied to Unstructured Supplementary Service Data (USSD) services.
However, while smaller banks have begun to settle their obligations, tier-one lenders, who account for the bulk of the debt, have yet to make significant payments.
Also read: Africa Energy Bank to launch in Nigeria, boosting energy development across Africa
This development was revealed by the Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON), Gbenga Adebayo,.
Adebayo stated that despite some repayments from smaller players, these efforts fall short of the expectations set by telecom operators, leaving the industry in a precarious position.
“We are seeing payments from smaller players, but the big banks, which owe the most, have not been forthcoming,” Adebayo said, adding that the operators were now awaiting intervention from regulators, including the Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC), to resolve the ongoing issue.
The unpaid debt has raised concerns about the sustainability of USSD services, which are crucial for enabling millions of Nigerians to carry out financial transactions without the need for internet access.
If the debt issue remains unresolved, telecom operators have warned that they might be forced to discontinue USSD services for banks, a move that could disrupt millions of financial transactions across the country.
Adebayo emphasised that coordinated action between the CBN and NCC was critical to safeguarding the interests of both the telecommunications and financial sectors.
“The financial and digital economy depend on this service. It’s critical for regulators to step in swiftly to ensure resolution,” he said.
The ongoing dispute stems from a long-standing issue between telecom operators and banks over the charges for USSD services. In 2021, after regulatory approval, telecom operators began charging N6.98 per transaction.
The initial conflict began in 2019 when telecoms proposed a charge of N4.50 per 20 seconds for USSD services, a proposal strongly opposed by banks due to concerns over rising costs.
In response to the growing debt, which reached N42bn in 2021, telecom operators threatened to suspend USSD services, but government intervention, led by the former Minister of Communications and Digital Economy, Isa Pantami, prevented this disruption.
A revised charge of N6.98 per transaction was agreed upon, but the debt has continued to grow, prompting further threats of service suspension.
“Without a lasting solution, telecom operators may be forced to withdraw USSD services from banks,” Adebayo warned. When asked about the timeline for such a move, he responded, “There is no timeline yet; we are still waiting on the regulators.”
MTN Nigeria’s CEO, Karl Toriola, recently echoed similar concerns, stating that telecom operators might seek regulatory approval to suspend USSD services for banking operations if the debt remains unresolved.
“The debt has become unsustainable for telecom operators. While we remain hopeful that the intervention of the CBN Governor, Olayemi Cardoso, and the NCC’s Executive Vice Chairman, Aminu Maida, will yield results, operators may be compelled to discontinue these services if no progress is made,” Toriola explained.
The pressure on the telecom industry has mounted, with stakeholders calling for swift regulatory action to avoid disruptions to USSD services, which millions of Nigerians rely on for essential financial transactions.
Industry experts warn that if telecom providers act on their threats, it could severely impact banking operations in the country.
In addition to the growing USSD debt, telecom companies are also upset with banks over inadequate payments for leased lines used for services like USSD.
Ejike Onyeaso, Director at Adaba Consult, pointed out that since banks generate substantial revenue through these services, they should adequately compensate telecom providers for their role in facilitating these transactions.
Onyeaso cautioned that if telecom operators proceed with their threats to suspend USSD services, it could lead to significant disruptions in banking operations.
