How Interconnection Debt is Affecting Nigeria’s Telecom Industry – A Call for Urgent Action

How Interconnection Debt is Affecting Nigeria’s Telecom Industry – A Call for Urgent Action

 

By Anthony Emeka Nwosu

Nigeria’s telecom industry is facing a serious crisis, and it’s not something that can be ignored any longer. The interconnection debts owed to telecom operators by financial institutions, especially banks, have ballooned into a massive issue. These debts, now running into hundreds of billions, have created a ripple effect that threatens to destabilize the entire sector.

The figures speak for themselves—what started as N32 billion in 2022 has now skyrocketed to over N120 billion. This is money that telecom companies rely on to keep their networks running smoothly, maintain infrastructure, and continue providing essential services like mobile banking, payments, and communications. But with financial institutions dragging their feet in paying up, the telecom industry is struggling to keep up.

One of the most impressive aspects of the situation is the way the Nigerian Communications Commission (NCC) is stepping up to address the crisis. The NCC, in collaboration with the Central Bank of Nigeria (CBN), has been working tirelessly to ensure that banks fulfill their financial obligations. This collaboration is a powerful example of regulatory bodies coming together to protect a critical sector and ensure that services remain uninterrupted. Through this concerted effort, the NCC is sending a clear message to the financial sector: pay up, or risk damaging the telecom industry, which is vital to Nigeria’s economy.

However, the debts are doing more than just putting pressure on telecom companies—they’re also causing a domino effect that is hurting the industry in many ways. First and foremost, the failure to settle these debts has a direct impact on job security within the telecom sector. Without the necessary cash flow to expand and upgrade their networks, telecom companies may be forced to scale back operations, laying off employees, and reducing the number of new jobs created in the sector.

Secondly, this ongoing debt crisis is shaking investor confidence. Telecom companies in Nigeria are already dealing with high operational costs, and the added burden of unpaid debts makes the sector appear increasingly unstable. For investors, this is a major red flag. If the sector cannot maintain a stable cash flow and meet its financial obligations, they may think twice before making long-term investments in telecom infrastructure or services. As a result, this could slow down the pace of innovation, infrastructure development, and the expansion of telecom services across Nigeria and beyond.

Lastly, the debts are also preventing telecom companies from reinvesting their profits into their operations. Profit reinvestment is essential for the growth and diversification of any business, but telecom operators who are left waiting for billions in unpaid debts cannot afford to put money back into their networks or expand into new areas of business. This stagnation can have long-term negative effects, limiting the sector’s ability to evolve with changing technologies and market demands.

The good news is that the NCC and CBN are making strides in resolving the issue. Their active involvement is crucial in preventing the further deterioration of the telecom sector. The NCC has done well in leading the way to clear these debts and ensure that telecom companies can continue to thrive. But this effort must be supported by all stakeholders—especially the banks and financial institutions that owe telecom operators.

At the end of the day, these debts are not just a financial issue; they are a matter of national importance. The telecom industry is a pillar of Nigeria’s digital economy, and if we don’t address the outstanding debts, we risk undermining the entire sector. The role of the NCC in making sure these debts are cleared is crucial, not just for the telecom companies, but for the economy at large.

If the debts are paid, if telecom companies are given the resources they need to continue growing, and if investors feel confident that the sector is stable, then Nigeria’s telecom industry can continue to be a leader in Africa’s digital revolution. But if we continue to let these debts pile up, we’ll be looking at a future where telecom companies can’t expand, job opportunities shrink, and Nigeria’s ambitions for digital growth fall short. The time to act is now, and the NCC is showing us the way. Let’s not waste it.

 

 

 

Anthony Emeka Nwosu

 

NCC Takes Action to Resolve N250 Billion USSD Debt Crisis

NCC Takes Action to Resolve N250 Billion USSD Debt Crisis

 

The Nigerian Communications Commission (NCC) is actively working with the Central Bank of Nigeria (CBN) to resolve the ongoing N250 billion debt owed by Nigerian banks to telecommunications operators for Unstructured Supplementary Service Data (USSD) services. As the sector’s regulatory body, the NCC is committed to ensuring a sustainable and balanced resolution that protects consumers, promotes fair practices, and upholds the integrity of mobile financial services.

The Critical Role of USSD in Financial Services
USSD, a mobile communication system used for essential financial services such as money transfers, balance checks, and bill payments, is a vital tool for millions of Nigerians. However, telecom operators have raised concerns about non-payment by banks for these services, leading to an increasing debt burden that has now reached N250 billion.

The debt issue dates back to 2019 when telecom operators proposed a charge of N4.50 per 20 seconds of USSD usage, to be deducted from the fees banks collect from customers. The banks opposed the charges, citing the high cost of the proposal, which they argued would increase service costs by 450%. This disagreement has led to the current financial dispute.

NCC’s Commitment to Resolving the Issue
In light of the growing tension, the NCC has stepped in as a mediator between the telecom operators and the banking sector. Dr. Ikechukwu Adinde, Director of the NCC’s Consumer Affairs Bureau, emphasized the Commission’s dedication to resolving the crisis in a way that balances the interests of all parties involved, especially consumers.

“The NCC’s priority is to ensure the continuity of essential mobile financial services and to protect the interests of consumers who rely on USSD daily for critical financial transactions,” said Dr. Adinde. “We are committed to working with the CBN and other stakeholders to find an equitable solution that resolves this debt issue and ensures the continued provision of these services without disruption.”

Focus on Transparent and Fair Practices
As part of its regulatory role, the NCC is also taking steps to increase transparency in the telecommunications sector. New regulations will soon require telecom operators to clearly communicate their tariff plans, billing rates, and service terms to customers. This move is designed to enhance consumer trust and ensure a more transparent and predictable service environment.

“We recognize that transparency is crucial in fostering a fair and competitive telecommunications industry. Our goal is to provide clear guidelines that ensure fair pricing, protect consumers, and support sustainable business practices across both the telecom and banking sectors,” Dr. Adinde added.

A Balanced Path Forward

The NCC’s actions align with its long-standing commitment to ensuring that the telecommunications industry operates in the best interests of all stakeholders. By facilitating a collaborative approach with the CBN, the NCC aims to resolve the USSD debt dispute while reinforcing its regulatory oversight to prevent future conflicts.

“We are confident that with the support of all parties involved, we will reach a resolution that addresses the current debt crisis and establishes a more structured framework for USSD services moving forward,” Dr. Adinde concluded.

The NCC continues to engage with relevant stakeholders and is optimistic that the ongoing efforts will lead to a fair resolution that preserves the integrity of Nigeria’s mobile financial services ecosystem.